General Electric (GE) is one of the largest, most successful, and most respected companies in the world. What lessons can we learn from their CIO to more successfully architect and manage our enterprises?
Fortune Magazine, 21 July 2008, reports on an interview with Gary Reiner, the CIO of GE, who has been in his role for a dozen years and oversees a $4 billion IT budget.
In purchasing IT, a major corporate expense these days, buying on reverse auction can save your enterprise mega bucks. A reverse auction is one where the purchaser puts out the specs for what they are looking to buy, and sellers bid their lowest price they are willing to sell at. (This is the opposite of a traditional auction where a seller puts out their wares for buyers to bid their highest price they are willing to purchase at). You want to avoid selling on auction at the lowest price (by differentiating you product so it isn’t treated as a commodity), but you want to purchase on reverse auction to get the best price for your purchases. In our organizations, perhaps enterprise architecture can partner with procurement and finance to leverage reverse auctions in planning for and purchasing major IT investments to reduce total cost of ownership (TCO) thereby more effectively managing scarce IT resource dollars i.e. getting more modernization/transformation for the IT dollar.
GE’s CIO is responsible for Six Sigma, driving down deviances and defects in its processes. GE’s CIO says that “Six Sigma is a wonderful tool, but it is [just] a tool. What we are talking about as a company is outcomes, and the two outcomes we really want are product reliability and customer responsiveness…on the responsiveness side, it’s often less about Six Sigma and more about getting the right people in the room to map out [the processes for] how long it takes for us to do something…[and] take out those things in the way of meeting customer needs responsibly.” From an enterprise architecture perspective this is closely aligned to the idea of IT as an enabler for business, but one where business process improvement and reengineering comes first.
GE businesses are information-based. “In every one of our infrastructure businesses, we do something called remote monitoring and diagnostics, where we attach sensors to our equipment. So there are sensors in every locomotive, every gas turbine, every aircraft engine, [and] every turbo compressor. We’ve got software that resides with our customer or in our shops…that analyzes that data and is able in many cases to predict problems before they occur. We can prevent outages from occurring.” This information-based approach is similar to enterprise architecture and IT governance. The enterprise architecture is the information-based planning for the organization’s business and IT. And the IT governance is the information-based management and monitoring for selecting, controlling, and evaluating investments. Together enterprise architecture and IT governance are our “sensors” for predicting/planning the change and preventing problems/ensuring more successful IT project delivery.
GE sees a number of emerging technologies as having a major impact in coming years. The first, man-machine interface will evolve from keyboards and mice to “multitouch gestures,” such as “the ability to use your hands directly on screens.” Secondly, organic light-emitting diodes (OLED), “extremely thin screens…so thin that you’ll be bale to roll them up and fold them and carry them…you’ll be carrying around your screen.” And third, is cloud-computing, ‘having all your applications centrally located…[with] almost every document you create is for collaboration” and built on the web. In short, it’s really all about increased mobility of communications and ubiquity of information. Enterprise architecture should help facilitate the adoption of these new technologies.
At GE speed to market is critical to bringing new product innovations to market, providing value to customers, and maintain an edge on the competition. IT is an enabler for new product development processes. In enterprise architecture, innovation is critical to breaking old paradigms and thinking out of the box and making real change that has contributes to significant improvements in organizational results. In product development, for example, I believe this involves everything from next generation computer aided design and manufacturing tools (CAD/CAM) to business intelligence systems and fusion engines for analyzing your customers and market changes to advances in automation and robotics for speeding and improving the manufacturing process.
GE is helping lead the way building sound enterprise architectures in corporate America!