JACK WELCH'S CYBER-CZARCan Gary Reiner make GE's info-technology bet pay off?
In his five years as a trusted lieutenant to General Electric CEO John F. Welch, Gary M. Reiner has handled many critical assignments. He has overseen efforts to accelerate product development, speed up manufacturing, and shorten supply lines. And he has headed one of the corporate strategy groups that Welch uses to make sure his management ideas translate well to the shop floor and office cubicle.
But the task that Welch handed the intense but personable Reiner in April may be the biggest challenge yet for the former Boston Consulting Group partner. Reiner, 42, has been named chief information officer, General Electric Co.'s first corporate computer czar in many years. He will be Welch's point man for integrating GE's many far-flung investments in information technology. GE won't say, but Information Week estimates that the company spent some $758 million on computers and communications in 1995. GE also is a traveler on the Information Superhighway. The company has been selling electronic communications through its GE Information Services (GEIS) unit for years and, with MSNBC, the new cable-TV network and Web site its NBC unit just launched with Microsoft Corp., it's now in new media.
BRAINSTORMS. But like other large enterprises, GE hasn't gotten the payoff it expected from its technology investments. One reason: While its dozen businesses all have technology officers, the corporation hasn't focused on using computing strategically--at least not with the same zeal with which Welch has pushed to pare the roster of suppliers or generate free cash flow, for instance.
Until now. Reiner's job is to get GE on the cutting edge--from equipping its sales personnel with the latest technology to building self-diagnosis into industrial machines to using the Internet to buy and sell spare parts and plastics, for instance. ``I've got to make [information technology] a competitive advantage for GE,'' says Reiner.
More important, by appointing Reiner, whose specialty at Boston Consulting was automation, Welch has made it clear that computing is no longer just a support function, but a key means for hitting corporate goals. ``I need somebody who isn't a techie,'' says Welch. ``I need somebody who can make it flow.'' Says Forrester Research Inc. senior analyst Blaine Irwin: ``Welch is very fired up about it. He understands how technology can be leveraged.''
Using technology to share ideas across GE is key to Reiner's mission. He has visited every major business unit since his April appointment to see firsthand how each uses computers. In addition, he is holding quarterly brainstorming sessions for all the unit technology officers.
GE also is making extensive use of a new corporate intranet, an internal Internet setup that connects the networks within each division. A GE employee at the motors business in Fort Wayne, Ind., for example, can use the intranet to find out how buyers in other divisions rate a potential supplier. To help draw employees into using the system, the home page displays a particularly popular piece of data: GE's current stock price.
Perhaps Reiner's most important moves will be in electronic commerce. GEIS now reports directly to Reiner. And a former aide of his, Harvey F. Seegers, has replaced GE veteran Hellene S. Runtagh as its head, following her resignation in late June. With its private computer network, GEIS has deep experience in setting up paperless links between suppliers and their customers worldwide--a technology called electronic data interchange (EDI). The challenge now is to harness the bustling, low-cost, and very public Internet as an electronic-commerce medium, both to help GE and as the basis for new services that GEIS can sell to others.
BARGAIN HUNTING. After a year and a half of testing, GE has started to move its purchasing activities to the Internet. In June, it went live with a setup called the Trading Process Network, which helps match buyers throughout the company with suppliers of everything from refrigerator handles to printer paper (box). GE expects to purchase at least $1 billion worth of its goods this way in 1996 and 50% of the total by 2000. The payoff, according to Orville A. Bailey, manager of purchasing and supplier productivity solutions, is that GE can select from a broader base of suppliers as well as cut its purchasing costs. Plus, the setup will help GE, already famous for getting price concessions from suppliers, to drive an even harder bargain by pooling orders from across its units and winning higher volume discounts.
Reiner has many other plans afoot. Service technicians at the aircraft-engine unit, for example, now scan parts data and diagrams on laptop computers, instead of lugging around printed manuals. ``But that's not ubiquitous within GE,'' Reiner says. So through the quarterly technology councils and spin-off subgroups, Reiner will prod other businesses to follow suit. ``If we encounter a best practice in one of our businesses, a person from that business would get up with charts and show the others how,'' says Reiner. GE Medical Systems, for example, has a program that dials into magnetic resonance imaging (MRI) machines and remotely diagnoses faults, in some cases before they cause trouble. Now, that same setup is being adapted to other products, starting with turbines for generating electricity and extending to jet engines and motors.
Another key task Reiner must tackle is to bring some order to GE's internal databases and software. By setting standards for how each business unit should organize its customer databases, for instance, the units' data may be more easily combined to yield new marketing intelligence. A customer buying GE's plastics, for instance, might also be found buying its light bulbs. Plus, Reiner is leaning toward purchasing more packaged software vs. developing systems in-house. ``Why reinvent the wheel?'' he says.
Why, indeed, when you've got a more pressing assignment from Jack Welch: reinventing the way this $70 billion company uses information technology.
By Tim Smart in Fairfield, Conn.
Updated June 14, 1997 by bwwebmaster
Copyright 1996, Bloomberg L.P.