GE is shifting huge portions of its app portfolio to the cloud, and the company's new CIO will work with LOB execs to drive savings through its cloud initiative.
Speaking at the Oracle World 2015 conference, the newly promoted CIO for GE told attendees that when it comes to digital disruption, CIOs are now clearly the most important person sitting at the executive management table.
GE CIO Jim Fowler, who has been tasked by GE CEO Jeffrey Immelt with driving a billion dollars in productivity gains over the next three years across all business units of the world's largest company, said CIOs have the most visibility into all aspects of the business. Given that level of visibility, Fowler has been given a mandate by his CEO to work with line-of-business executives at GE to drive those savings, which Fowler said makes him probably "the luckiest CIO in the world."
Previously, Fowler served as CIO of GE Capital, which GE is starting to divest as part of a deliberate effort to focus on its core industrial business units. Along with that effort, GE is shifting huge portions of its application portfolio into the cloud. The challenge, says Fowler, is determining what applications are core to the business versus ones that support the business. If it’s core to the business, GE will build it on top of a platform-as-a-service (PaaS) environment.
In fact, GE holds a minority stake in Pivotal, a unit of EMC that focuses on the commercializing the open source Cloud Foundry PaaS. If the application is determined to not be core in terms of helping GE sell another airplane or locomotive, Fowler says GE will make greater use of software-as-a-service (SaaS) applications that reduce the burden on the internal IT organization in terms of proving updates and ongoing patches.
"We're going to build things that differentiate us," Fowler said. "I'm going to build that and buy the rest."
GE, which has previously identified the Internet of things (IoT) as a trillion-dollar opportunity, will primarily tap into that opportunity using its own software, while relying on providers such as Oracle for SaaS applications to support activities that are less core to GE as a business. As part of that effort, Fowler said GE is squarely focused on integrating traditional IT and operational systems to drive additional business value.
Specifically, Fowler said that GE is going to attempt to drive $15 billion in revenue from digital investments and that by 2020, Fowler said GE plans to have 70 percent of its applications in the cloud. A big reason for that, said Fowler, is that an oil and gas application that costs $65,000 to run on premises now costs GE $6,000 to run in the cloud. At the same time, changes to an application that used to take 20 days can now be done in the cloud in two minutes, Fowler said.
Just as importantly, Fowler noted that making use of cloud applications at a global level will make it possible for GE to access applications that can be used to review 10 million potential job candidates, which is something the internal IT organization could never build on its own.
Because CIOs now have visibility into every aspect of the business that is touched by IT, Fowler, citing the mandate from his CEO, said that CIOs need to be less passive at a time when rivals can take advantage of IT to disrupt almost any business overnight. In the case of GE, Fowler said that paranoia is manifesting itself in a move back to its industrial roots that is nothing less than the largest and most important transformation in the 132-year history of the world's largest company.