SAN FRANCISCO: General Electric (GE) is in the midst of an aggressive digital transformation that will see the firm move 70 percent of its IT into the cloud within five years.
Jim Fowler, CIO at the industrial company (pictured below left in conversation with Oracle CEO Mark Hurd), shared his ambitious plans at the Oracle OpenWorld show in San Francisco, as the conglomerate attempts to transform from a heritage business into a digital leader.
"GE is undergoing the most important and largest transformation in its 130-year history," he explained.
"We're going from being a financial services company with an industrial company. We're selling off our financial services assets, and we're also at the same time buying Alstom's energy assets and bringing in 65,000 employees between now and the end of the year with the focus to get back to our roots, to be a core industrial."
Fowler said that the sector GE operates in is a prime target for increased cloud investments.
"We believe that industrial companies are at a crossroads. Revenue is rising and cost is going down; industrial productivity is half what it was in the nineties," he noted.
"Going forward, it's going to be important to become a digital industrial, and it's the cloud that enables it. By 2020 we will drive $1bn of industrial productivity into the business and we will grow a $15bn digital business with digital products and services. Change is afoot."
Fowler added that over the past 18 months, GE has moved a further 10 percent of workloads into the cloud, meaning that currently just over 20 percent of the firm's applications run in the cloud. And the company has even more aggressive targets.
"By 2020, I'll be at 70 percent of my load running in the cloud," the CIO said.
The cloud has already offered an array of benefits for GE, but cost has not been the most important factor.
"Our oil and gas is a great example. They moved a simple configurator application that processes about $600,000 in orders. It was costing us about $65,000 to run the application that was the configurator. As we moved into the cloud, that $65,000 became $6,000, almost a 90 percent reduction in cost," Fowler said.
"But that wasn't the real benefit. They got a global scale, so they were able to process more quotes and orders; they went from changes taking 20-day cycle times to get processed, to now they can push a change to the application in two minutes and we're seeing that consistently."
Fowler also enthused about the Oracle Taleo talent management system, which he said would let GE take 10 million additional hires through its recruitment system. The 10 million seems a startling number, especially considering GE's current workforce of around 300,000, but even though Hurd queried the figure, Fowler was adamant that this was the target.
Fowler's point was that with systems like Taleo, GE can make use of someone else's technology expertise to run its non-core applications.
"It's not differentiating us in the marketplace; we're not going to sell another jet engine because we've customised the heck out of a recruiting system. But you've invested in a way that's mobile and scalable globally," he told Hurd.
"I want to buy things that don't differentiate me in the marketplace: how I book an order, how I print an invoice, how I track inventory in my plants.
"We're not going to sell another gas turbine locomotive because we've done that differently than our competitors. We're looking for a partner for that and we're going to focus on the things that differentiate us, helping energy customers get better analytics out of a gas turbine. How to take data off a locomotive and process it in a way to help my railroad customers get an extra mile of productivity out of that vehicle. I'm going to build that."
A good example of this sector-targeted innovation is the Predix Cloud that GE is developing specifically tailored for industrial data and analytics.
Fowler also gave insight into his relationship with the rest of the organisation, advising that technology innovation and excellence is only possible with full support from the CEO.
"I'm probably the luckiest CIO in the world right now. I have a CEO who sits in front of every one of his leaders and says: this matters," he said.
"And he backs that up with goals and objectives. I've got a $1bn productivity goal to drive across the business over the next three years. Each of the CEOs of the lines of business owns part of that number."
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