Description
GE Digital Strategy
GE’s Digital Revolution: Redefining the E in GE
Agenda
• • • • • • • • Overview of GE GE Culture Global Initiatives Philosophy behind e-business initiative Steps taken Current Issues Analysis of the e-business initiative Conclusion
Certain Facts about GE
• 115 Year History (1892) - only remaining company from original Stock Market • Market Capitalization - 560 Billion Dollars • World`s largest company, acc. to Forbes • Most Admired Company for third straight year in Fortune • World’s Most Respected Company for two years straight in Financial Times
GE Industry Verticals
Plastics Others Financial Services
Electricity
GE
Aircraft Engines
Medical
Consumer Electronics
Entertainm ent/Media
Jack Welch & GE Culture
• Being the # 1 or # 2 competitor in every business they operate in. • WorkOut Sessions • Stretch Goals & Industry Benchmarking • Vitality Curve Concept
GE Global Strategic Initiatives
• Globalization – 1985 to 1998
– Increased the share of global revenues from 20% to over 40%
• Product Services – 1994 to 1998
– To reduce GE’s dependence on traditional industrial products – Share of revenues provided by services increased from 15% in 1980 to 67% in 1998
• Quality - Six Sigma – 1996 to 1998
– Returns of $ 750 million
• eBusiness - January 1999
– ??
Key Issues
• Success of the E-business initiative • Sustainability of the initiatives • Viability/Effectiveness of e-sell, e-buy & emake as an organization-wide strategy • Future organization structure(whether the ebusiness teams should be broken up and rolled back into the company)
Why E-Business?
• Boom in Internet Revolution & Dot Com • Huge opportunities available from the Internet • Stall the threats from the new Internet startups • Digitization meant increasing efficiency of back end processes
Initiatives to drive E-Transformation
• dyb.com gyb.com • Learning from successful IT organizations like CISCO and SUN. • Best Practices Program used for benchmarking against world class companies. • Organization-wide dissemination of learning from success & failures to different businesses using the GE social architecture, results in Learning Curve effect. • Creation of a separate group, dedicated to the e-cause by internal recruiting from different business teams. Initial team consisted of 62 members.
dyb . Com @ GEPlastics
• Supported by Gary Reiner, GE`s CIO • 7 member team • Understanding the threats as posed by a hypothetical Internet company to GE • Devise Pre-emptive moves and counter-measures • Focusing on new opportunities provided by the Internet as a sales channel • Immediate priority- Develop websites to facilitate online transactions and provide value added services • Evolution of GEPlastics.com to make it more customeroriented by taking inputs from dyb.com
Evolution of E-Business @GE
E-Sell
CUSTOMERS
E-Buy
SUPPLIERS
E-Make
INTERNAL TRANSFORMATION
? Initial efforts focused on increasing the revenues through online sales ? Subsequently, focus shifted to maximizing profits through e-procurement
? When online sales and procurement did not result in expected top line and bottom line benefits, focus shifted on reducing costs in back office operations
E-Business @ GE: Pros & Cons
• Pros
– Achievement:
• Online sales of $1.2bn in 2000 compared to $100mn in 1999
– Cut Procurement Cycles in half. – Lower transaction costs=Better Margins.
• From $50/TX in ‘99 to $5/TX in ‘00
– Number of its suppliers has come down, but the remaining ones have become more efficient. – Increase
• Reach • Range • Richness
• Cons
– E-Make
lan to save 10 billion but at last saved 1 billion – E-Sell:Achieved only 5% of sales instead of the 30% potential as promised – E-Buy:25% of online purchases instead of a target of 100% – E- Employees:Not clear about the stability & clarity of their roles in the future
Company Performance
2000 1999 1998 1997 1996
Revenues Growth % Net earnings Growth %
129853 111630 100469 16% 12735 19% 11% 10717 15% 11% 9296 13%
90840 15% 8203 13%
79179
7280
Employees at year end 313000 310000 293000 276000 239000 Growth % 1% 6% 6% 15%
Scalability of the E-Initiative
• E-Sell – Scalability depends upon the specific business unit & the market
• E-Buy – Scalable due to centralised purchasing of raw materials thus achieving: • Cost Reduction • Time Reduction
• E-Make – Cost Savings would depend on scale of back office operations for each specific business unit
Challenges Ahead
• Clarity & Stability of roles & career path for EBusiness team? • Disbanding of e-Business team & offloading of responsibility to line managers?
• Scope of implementation of digitization across various businesses
Recommendations
• Centralized IT Team v/s Existing E-business Team
– – – – For scalability, a small e-biz team cannot drive initiatives Create a specific IT function at GE under the CIO Would bring greater focus and role clarity Success would depend on cooperation of line managers in implementing suggestions of IT Team – Provide Integration of disparate business units
• Right expectations from digitization
– Not all businesses would result in dramatic cost savings – Focus on large scale businesses
• Have a centralized web portal for procurement of raw materials & MRO supplies
– Lower setup costs – Higher discounts for more bulk purchases due to common procurement items across departments
REFERENCES
• en.wikipedia.org • E-business @ GE, Vivian Zhao • GE Case Study, Boyett,Challey,Fergusson
doc_616721223.pptx
GE Digital Strategy
GE’s Digital Revolution: Redefining the E in GE
Agenda
• • • • • • • • Overview of GE GE Culture Global Initiatives Philosophy behind e-business initiative Steps taken Current Issues Analysis of the e-business initiative Conclusion
Certain Facts about GE
• 115 Year History (1892) - only remaining company from original Stock Market • Market Capitalization - 560 Billion Dollars • World`s largest company, acc. to Forbes • Most Admired Company for third straight year in Fortune • World’s Most Respected Company for two years straight in Financial Times
GE Industry Verticals
Plastics Others Financial Services
Electricity
GE
Aircraft Engines
Medical
Consumer Electronics
Entertainm ent/Media
Jack Welch & GE Culture
• Being the # 1 or # 2 competitor in every business they operate in. • WorkOut Sessions • Stretch Goals & Industry Benchmarking • Vitality Curve Concept
GE Global Strategic Initiatives
• Globalization – 1985 to 1998
– Increased the share of global revenues from 20% to over 40%
• Product Services – 1994 to 1998
– To reduce GE’s dependence on traditional industrial products – Share of revenues provided by services increased from 15% in 1980 to 67% in 1998
• Quality - Six Sigma – 1996 to 1998
– Returns of $ 750 million
• eBusiness - January 1999
– ??
Key Issues
• Success of the E-business initiative • Sustainability of the initiatives • Viability/Effectiveness of e-sell, e-buy & emake as an organization-wide strategy • Future organization structure(whether the ebusiness teams should be broken up and rolled back into the company)
Why E-Business?
• Boom in Internet Revolution & Dot Com • Huge opportunities available from the Internet • Stall the threats from the new Internet startups • Digitization meant increasing efficiency of back end processes
Initiatives to drive E-Transformation
• dyb.com gyb.com • Learning from successful IT organizations like CISCO and SUN. • Best Practices Program used for benchmarking against world class companies. • Organization-wide dissemination of learning from success & failures to different businesses using the GE social architecture, results in Learning Curve effect. • Creation of a separate group, dedicated to the e-cause by internal recruiting from different business teams. Initial team consisted of 62 members.
dyb . Com @ GEPlastics
• Supported by Gary Reiner, GE`s CIO • 7 member team • Understanding the threats as posed by a hypothetical Internet company to GE • Devise Pre-emptive moves and counter-measures • Focusing on new opportunities provided by the Internet as a sales channel • Immediate priority- Develop websites to facilitate online transactions and provide value added services • Evolution of GEPlastics.com to make it more customeroriented by taking inputs from dyb.com
Evolution of E-Business @GE
E-Sell
CUSTOMERS
E-Buy
SUPPLIERS
E-Make
INTERNAL TRANSFORMATION
? Initial efforts focused on increasing the revenues through online sales ? Subsequently, focus shifted to maximizing profits through e-procurement
? When online sales and procurement did not result in expected top line and bottom line benefits, focus shifted on reducing costs in back office operations
E-Business @ GE: Pros & Cons
• Pros
– Achievement:
• Online sales of $1.2bn in 2000 compared to $100mn in 1999
– Cut Procurement Cycles in half. – Lower transaction costs=Better Margins.
• From $50/TX in ‘99 to $5/TX in ‘00
– Number of its suppliers has come down, but the remaining ones have become more efficient. – Increase
• Reach • Range • Richness
• Cons
– E-Make
lan to save 10 billion but at last saved 1 billion – E-Sell:Achieved only 5% of sales instead of the 30% potential as promised – E-Buy:25% of online purchases instead of a target of 100% – E- Employees:Not clear about the stability & clarity of their roles in the futureCompany Performance
2000 1999 1998 1997 1996
Revenues Growth % Net earnings Growth %
129853 111630 100469 16% 12735 19% 11% 10717 15% 11% 9296 13%
90840 15% 8203 13%
79179
7280
Employees at year end 313000 310000 293000 276000 239000 Growth % 1% 6% 6% 15%
Scalability of the E-Initiative
• E-Sell – Scalability depends upon the specific business unit & the market
• E-Buy – Scalable due to centralised purchasing of raw materials thus achieving: • Cost Reduction • Time Reduction
• E-Make – Cost Savings would depend on scale of back office operations for each specific business unit
Challenges Ahead
• Clarity & Stability of roles & career path for EBusiness team? • Disbanding of e-Business team & offloading of responsibility to line managers?
• Scope of implementation of digitization across various businesses
Recommendations
• Centralized IT Team v/s Existing E-business Team
– – – – For scalability, a small e-biz team cannot drive initiatives Create a specific IT function at GE under the CIO Would bring greater focus and role clarity Success would depend on cooperation of line managers in implementing suggestions of IT Team – Provide Integration of disparate business units
• Right expectations from digitization
– Not all businesses would result in dramatic cost savings – Focus on large scale businesses
• Have a centralized web portal for procurement of raw materials & MRO supplies
– Lower setup costs – Higher discounts for more bulk purchases due to common procurement items across departments
REFERENCES
• en.wikipedia.org • E-business @ GE, Vivian Zhao • GE Case Study, Boyett,Challey,Fergusson
doc_616721223.pptx