All that work seemed to pay off. GE Power Systems (dossier), a $10 billion unit based in Schenectady, N.Y., that sells power-generation equipment and parts, created a site where customers can order from an online catalog of replacement parts. They can also use the site to compare the performance of GE generators to that of others.
Similarly, GE Aircraft Engines (dossier), a $10.6 billion division based in Cincinnati, put its catalog of spare engine parts online. Customers can check pricing and availability in real time. Aircraft Engines has also developed Web sites where its biggest suppliers can go to schedule deliveries and handle billing.
GE Polymerland, the distribution arm of GE Plastics, a $6.9 billion unit based in Pittsfield, Mass., has a site where customers can use online tools known as wizards to decide what types of plastic or resin they need for a mobile phone case or auto part. Then, they can order the materials for injection molds online.
And GE Medical Systems has created diagnostic tools and a wizard that helps GE's salespeople and customer technicians work together to set up magnetic resonance imaging equipment. The unit has also begun to offer software for its equipment over the Web. Medical Systems CEO Jeffrey R. Immelt was recently named to succeed Welch as GE's Chairman and CEO. (Welch, 65, had planned to retire early this year but agreed to stay on to manage GE's acquisition of Honeywell International (HON).) Immelt has already indicated that he's committed to GE's Web strategy.
These divisions are at the forefront of GE's efforts, but the business practices and technologies they've developed are being adapted and implemented by other units. To be sure, GE deserves credit for moving faster than many other large companies to get wired. And its approach is sound. The company is trying to reduce costs and boost efficiencies by digitizing paper processes, while at the same time improving customer service and sharing more information with suppliers.
These endeavors are unlikely to make GE vastly more profitable, though, because the company isn't using the Internet to reach new markets or create major new sources of revenue. And while the company should be able to save money by moving internal processes online, the massive cost reductions GE has been touting - which come from eliminating positions because customers and employees serve themselves - have proved elusive at other companies.
GE projects that its units will generate about $7 billion in online sales for 2000. If successful, GE will produce online revenue that's more than double what Amazon.com (AMZN) is expected to post for 2000. That sounds impressive, given that GE's been at this e-business thing for just two years. But what GE executives rarely point out is that very little of the online revenue represents new business. The company is simply moving existing customers to the Web.
"It's not like we created a new market or a new channel," concedes GE Plastics' Podesta. "Most of the customers who were online were the same customers who were making orders by phone."
Some customers may order more plastic resins or light bulbs from GE because it's easier to purchase products online. Or they may order upgrades for turbines or aircraft engine parts suggested by GE based on the results from online diagnostic tools. Jean-Michel Ares, VP and CIO for GE Power Systems, says that through August his unit had received about $50 million in orders for power-generation parts and services that it wouldn't have gotten if customers weren't able to order online. That's nothing to sneeze at, but it's hardly earthshaking revenue for a $10 billion business.
