Speeding ProcurementBy CIOinsight
Thinking Out Loud: CIO Gary Reiner
CIO INSIGHT: You've put so-called "digital cockpits" in the hands of managers throughout GE. What are they and how do they work?
The goal of the cockpits is to get information to individuals as quickly as possible with as little cost to the back office as possible. The cockpits are for management decision-making and to better enable managers' reactions. Every business in GE has its own type of digital cockpit. Most businesses will have 10 to 20. For example, the sales leader will have one. The manufacturing leader will have one. The engineering leader will have one. That's per business unit, around different sets of metrics. Engineering will have cockpits around the status of projects under his or her purview. They'll be able to know the status of projects all the time. Manufacturing will have cockpits on yields, by machine. Sales and marketing will have orders per day, per customer. And for our short-cycle businesses, if something is off, the metric will turn red and typically the sales leader will get an e-mail automatically, saying we're off on this particular customer in this particular region on this particular day. Machines are sending automatic e-mails to a particular manager in charge of a process that's running into questionable operation.
Okay. I get an e-mail. What then?
It depends on each manager's personal style. Most people will forward that e-mail to the relevant person who has to fix it and tell them to fix it. Within IT, every business has its own digital cockpit. We're now organized around 13 businesses, but even within those businesses, there are sub-businesses that will have their own digital cockpits as well. So we're talking roughly 50 in all.
These cockpits track the performance of all our mission-critical applications. When they fall below a certain yield, then the CIO of that business and I get automatic e-mails simultaneously, and then my job is to take action on those signals. Also, on a daily basis, I'll look at an overall cockpit, which is the aggregation of all of these individual business cockpits, to see which applications are having trouble. These are all cockpits built by IT with input from the business side. Take the sales cockpit as simple example. Sales and IT in collaboration designed it, IT built it, sales uses it and IT maintains it, and we stay in alignment that way. Marketing also has its own cockpit, built in cooperation with us.
You're also using IT to speed procurement.
This year we will do about $18 billion in e-auctions. Suppliers bid for our business over our Web-based application. It saves us incrementally over $1 billion a year. What we try to do in every way possible is to ensure there's competition in our supply base, just like our customers do with us.
We also do purchase orders digitally. Say somebody wants to buy a computer. They go into our database of prenegotiated contracts, select the computer available to them, and then a message gets sent to that person's approver, saying: "Do you approve of this person buying a PC?" If the answer is yes, then an EDI signal takes that order and puts it directly in the order-entry system of the supplier. This ensures that the people who do buy are buying off prenegotiated contracts. Before, you had a number of situations where a buyer would go and cut his or her own deal. For doing that, GE would pay a higher price, and there wouldn't be the same kind of controls over whether they could buy a particular item in the first place.
How is IT being used to boost sales?
Take, for example, one of our businesses in the financial services area. When a salesperson would cut a deal with a customer in the past, it would require approval from GE headquarters. Oftentimes, the customer would get upset because they'd get an agreement with the salesperson and then headquarters would sometimes reject the deal. So we put in place a Web-based wizard that allows the salesperson to put into the application the specifics of the deal and create a map in the red, yellow and green metrics format. Green in this case means the likelihood that the deal would be accepted. It's all based on artificial intelligence, where you put rules into the application, so the salesperson knows if the proposal they're considering is green, yellow or redred means it will get rejected, yellow means "callwe have to discuss," and green means approved. The payoff? Approval times are faster, people are not working on bad deals anymore, and, you get much happier customers because they can get feedback right away. We've doubled the capacity of salespeople.
Being able to make decisions even faster, and being able to have your processes operate even faster. Our management team has changed enormously in the last four years in terms of its comfort level with this stuff. The big change will be when wireless really works. Then you free up sales and service people to really do their jobs remotely. That's the next great leap. Linux is also going to be a big technology changer as well, because it's going to allow you to do a lot more on cheaper platforms. We are using a lot of Linux, and we are rolling out more and more of it.
How does the move to real time tie in with GE's famous Six Sigma quality push?
Six Sigma is a five-step process: Define the scope of the process you're focusing on, measure its current performance, measure how good it is and how defective it is. Then you analyze it, so as to understand why defects are occurring. Then you improve it and control it so it stays defect-free. Digitization is the improve-and-control phase of Six Sigma. It gives you the tools you need to keep improving.
Gary Reiner Career Highlights
GENERAL ELECTRIC CO.
Senior Vice President and CIO, 1996present
Vice President, Corporate Business Development, 19911996
BOSTON CONSULTING GROUP
Research Analyst, 19801986
MBA, Harvard Business School, 1980
BA, Economics, Harvard University, 1976