The Many Sides of GE


When community leaders in Indianapolis embarked on a mission two years ago to create the "hospital of the future," a gleaming, $60 million, 210,000-square-foot facility that opened in February, they naturally turned to one of the information technology world's most capable providers for help. It wasn't IBM Global Services that got the nod to outfit the new Indiana Heart Hospital, but GE Medical Systems, a unit of General Electric Co.

The result? The world's first all-digital medical facility, an institution so advanced that it could actually reduce medical errors by 80 percent, while saving physicians and administrators precious time and money. It's precisely this type of stealth activity that points to the secret life of GE.

The Indiana Heart Hospital job is exactly the kind of project company chairman and CEO Jeff Immelt thinks GE should showcase as it redefines itself in the post-Jack Welch era.

"Our company today is totally committed to making health-care information technology,both in the short term and in the long term,a big part of [our health-care business]," Immelt says. Speaking at an industry gathering in San Diego of some 7,000 CIOs representing health-care provider organizations, Immelt made it clear that GE intends to leverage its role as a supplier of medical-imaging and diagnostic systems to become a leading provider of IT software and services to the health-care industry. It's a strategy that GE has had on the fast track since the late 1990s, and one the $131.7 billion diversified conglomerate is driving through many of its businesses, including financial services, industrial systems, aircraft engines and even plastics. The e-commerce portal managed by the company, gepolymerland.com, for example, is one of the plastics industry's most prominent e-commerce portals. Immelt says GE has only scratched the surface with its e-commerce efforts, which started with much fanfare by his predecessor. "I think the Internet Age is just beginning," he says. "We've received 5 percent of the power of what the Internet and information can bring, and I want to make sure that we are right in the middle of it."

Add it all up and GE is unquestionably one of the world's largest IT solutions companies. One rival estimates GE is responsible for the delivery of "billions of dollars" worth of IT-related goods and services annually. The funny thing is, few people have any idea how influential GE is when it comes to providing IT solutions. And that includes professionals in the health-care industry. Despite the fact that GE believes its health-care IT business could generate as much as $1 billion in operating profit within the next few years, GE still isn't on many radar screens in the growing category of computerized patient-record systems. At least not yet. Gartner market analyst Thomas Handler, for one, says GE is not making the short lists of IT managers of large health-care providers. "It's not that they're coming up in a lot of deals, but they are nibbling away at the edges," Handler says.

If Immelt gets his way, GE will be doing more than nibbling. Immelt is looking to leak GE's "secret" not just in health care, where the company is hoping to make mileage out of the work it did in Indianapolis, but in nearly every other industry where GE competes. Executives throughout the company are borrowing a page from GE Medical Systems and trying to leverage their influence as providers of industry-specific services and equipment so they may play a bigger role in defining some of the IT solutions their vendors, partners and customers consume.

Coordinating these efforts, however, is an immense job. Even communicating the message behind the undertaking has challenged GE managers, who struggle to balance the company's natural inclination to keep its inner workings secret with the new opportunities to broadcast their organizations' complete capabilities. If they should somehow manage to align their agendas with the opportunities at hand, however, the men and women of GE could very well alter the competitive landscape in IT solutions. That is, if GE's sheer size and complexity doesn't bog it down.

The Big Picture

To get an idea of just how big GE is and how far-reaching its IT expertise is, consider GE Aircraft Engines. The $11.1 billion division provides IT services to customers in the form of Remote Diagnostics. If you've never heard of Remote Diagnostics, you don't hang around commercial aircraft maintenance facilities. Like many GE businesses, it is nestled beneath several layers of corporate hierarchy. But make no mistake: This information arm of GE Aircraft Engines is a player in its field. The group's Remote Diagnostics business service provides a bevy of IT services and software tools, including eTrend, which encompasses GE's FleetVue, QuickPlot, DataAnalyst, Fleet Alarm Manager and Root Cause Analyzer. Those tools provide customers with a real-time view of the status of aircraft engines.

That's just one way in which GE delivers IT solutions to customers. The company also has more traditional business units devoted to IT, which may be more familiar to computer industry companies. These include GE's $700 million Information Technology Solutions (GEITS) division, which is based in Newport, Ky. GEITS, No. 17 on the 2002 VARBusiness 500 ranking of the largest solution providers based in North America, offers product and services to manage all aspects of IT and e-business. GEITS has developed solutions for backup and recovery, storage-area networks, converged networks and server consolidation to simplify data-center overhead. As with other solutions companies, the company derived, at least until recently, a hefty portion of its revenue on the sales of high-end servers, desktop PCs, printers and even PDAs. The company resells midrange server gear from HP, IBM and Sun, as well as networking equipment from Cisco and others. As with other GE divisions, GEITS offers customers solutions built using GE's own best practices and the Six Sigma methodology. (Six Sigma is at the center of many engineering, design, manufacturing and fulfillment processes and built around delivering the highest level of quality in products and services with the least amount of defects.) They help keep costs down, improve productivity and increase quality, according to GE.

Other GE businesses that provide basic IT goods and services include GE Capital International Services (GECIS) and GE Access. The former is a complex business unit that reaches customers around the world, while the latter is a Boulder, Colo.-based wholesaler of midrange computing products and services.

Based in India, GECIS employs more than 10,000 people and provides more than 450 business processes to customers both inside and outside of GE, according to Mohan Sawhney, who is with the Kellogg School of Management, Northwestern University. In addition to basic outsourced accounting and customer-care services, the group is also responsible for providing IT help desk, e-learning and other IT services, including application development and support to customers.

GE Access, meanwhile, is the world's largest wholesaler of midrange computing solutions from Sun. The company also offers software from Brocade, Check Point Software Technologies, Veritas and others to more than 200 Sun VARs in the United States, Canada and Europe. Clearly, of all the GE businesses making news in IT these days, GE Medical Systems IT (GEMSIT) is taking the lead.

"The real calling here is how can we handle mission-critical, life-critical information in a way so it moves as fast as the patient," says Greg Lucier, president and CEO of GEMSIT.

Although a leader for years in systems for diagnostic imaging, cardiology and patient monitoring, GE Medical Systems has only recently begun to take on the leaders in health-care IT solutions. They include Cerner, McKesson and Siemens just to name a few. While these organizations have had a head start, GE Medical Systems has a rich base of customers that it can pursue and plenty of financial muscle to make up for lost time.

"There just weren't that many barriers to entry," Immelt recalls of his company's decision to go after a bigger piece of the health-care market, which, thanks to pressing health-care-provider obligations to comply with the Health Insurance Portability and Accountability Act (HIPAA) of 1996, is growing at a rate of five times that of the gross domestic product. After spending $3 billion in acquisitions and more than $500 million on R&D, Immelt insists GE Medical Systems is prepared to play a key role in linking medical imaging and devices with health-care information systems to provide what GE calls "digital cockpits." Those digital cockpits revolve around an integrated digital-delivery platform GE has developed called Centricity, which is based on Microsoft's Windows and helps accumulate and integrate imaging data and other information fed in from various medical devices. Coordinating all of that information is nothing short of a true medical miracle. Ironically, that's been easier for GE to achieve than the seamless integration of its various business units.

Getting IT Together

As it often does, GE is reorganizing to better align its business structure with prevailing market opportunities. That means big changes for some of GE's more prominent IT-oriented businesses, including GEITS and GE Access.

At the beginning of 2002, the two businesses were just a few of the many units with ties to GE Capital, which was divided into four units last summer. Though the company's financial businesses generated 40 percent of its earnings, the move gives GE management more contact with its various financial businesses. As of now, GE Access and GEITS are no longer paired in the way they once were. Although they served different customers,the former catered to computer VARs while the latter to their end-user customers,GE originally thought that two IT equipment divisions were best-aligned with GE Capital. In reality, however, the two barely knew of each other's existence, let alone coordinated activities. GE Access feared that catering to GEITS would create the appearance of conflict and alienate its VAR customers. Furthermore, GEITS never pushed GE Access to provide services that any other tier-one distributor couldn't, so synergies between the two were never realized.

GE Access has been reorganized under GE Vendor Financial Services (VFS), which is a division of GE Commercial Finance headed by division president and CEO Michael Neal. GEITS, meanwhile, has been reorganized under GE Equipment Management, which is headed by president and CEO Arthur Harper.

According to GE, VFS, which is run by group president and CEO Dan Henson, provides financial solutions for more than 100 manufacturers of health-care, telecommunications, office-industrial and IT equipment and software. The roster of clients runs the gamut from lawn mower-maker Toro to copier giant Xerox. Based in Danbury, Conn., VFS employs approximately 4,000 people worldwide and serves equipment brokers and dealers and VARs of all kinds. Because of that expertise and experience, GE Access is a logical fit, especially from an equipment-leasing point of view. Because VFS already caters to more than 4,500 dealers and VARs, adding several hundred more IT solution providers won't likely be a problem.

As part of the ongoing evolution at GE Access, John Paget, senior vice president at GE, is taking on a greater role than merely running GE Access. He moves up to serve as general manager of GE Technical Financial Services, which provides a bevy of world-class financial services including leasing. Into his old role steps Anna McDermott, who has managed GE Access' Sun business for years.

GEITS is also evolving. After restructuring, the company is expected to be a $700 million business, down somewhat from past years. Despite this drop, the division hopes to post a profit this year, according to the company. To offset soft sales, the division is undertaking some radical steps. Chief among them: getting out of commodity IT product reselling and consolidating its energies around key geographic and vertical markets.

In 2002, GEITS consolidated its operations into eight metro areas, including Chicago, Dallas, Los Angeles and New York, among others. In addition, the company made an attempt to develop a health-care practice of its own. It also poured millions of dollars into developing better online-ordering capabilities and combined its product and services groups so they can better coordinate go-to-market activities in the field.

In addition to those changes, GEITS also replaced its top executive. Randy Dobbs, the former head of the unit, has left GE. In his place steps John Bucci, the former head of GE's European Equipment Managing division.

In his new role, Bucci will have to figure out how a business unit that provides exacting IT services will fit into an organization that specializes in fleet and rail services, truck leasing and modular space solutions. The easiest and perhaps smartest way to resolve the issue simply may be to borrow a page from the greater GE playbook and make the IT group an integral part of virtually everything the business does.

After all, that plan is working elsewhere throughout GE, including in Indianapolis.