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Episode Seven: Man And Machine
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At the heart of its strategy is the GE Trading Process Network, through which various units of General Electric Corp., GEIS' parent, ordered $500 million in goods and services from vendors last year, according to Bruce Chovnick, VP-global Internet solutions for GEIS.
COST BARRIERS DEMOLISHED
"Only 5% of the companies that could benefit from EDI actually do," he says. The Internet, he adds, will demolish the cost barriers that now keep the other 95% of businesses from doing business online.
"GEIS is reinventing itself around the Internet," Mr. Chovnick says.
This, in turn, lets companies like Textron reinvent themselves. Textron will have 43 trading partners linked to it via the Trading Process Network by the end of June.
Gloria D. Wandyez, a director of purchasing with Textron, said TPN cuts a full hour of labor costs off each quote she gets from suppliers.
Best of all, the costs of converting suppliers to TPN is borne by GEIS, she says.
"GEIS takes our suppliers through an online and telephone training session. Then it takes maybe an hour to get comfortable with it," she says. "It's very user-friendly."
GEIS estimates TPN will handle $1 billion worth of transactions by midyear and $4 billion by the end of 1998 as it's rolled out to more companies.
GE itself has cut 10% to 15% off winning bids for its supplies using TPN, Mr. Chovnick says. Total procurement costs, he says, are down 30% and the time to process purchase orders made through TPN has been cut by half. GE divisions spend $30 billion a year on other companies' goods and services.
FAR-REACHING IMPACT ON B-TO-B
Because GE is so big, its commitment to business-to-business electronic commerce over the Internet will have far-reaching impact.
"We cannot underestimate the social implications of this type of shift," says Alyse Terhune, research director in electronic commerce strategies for the Gartner Group, Stamford, Conn.
Making the shift, she says, will take "ability, resources and financial wherewithal. That's something GEIS can bring to the table."
But, big as GEIS is, that shift is not something it can bring about alone. GEIS has been busy recently inking partnerships with companies to expand the reach of TPN.
Thomas J. Sherry, senior VP for customer care at Owens & Minor, said the alliance emerged from work both companies were doing for Columbia Health Care.
"We have to build an interface between ourselves and GE," Mr. Sherry said, for GEIS to process transactions for Columbia.
"I can reduce my operating expenses" with the link, Mr. Sherry says, but by extending it to other suppliers, "it provides a competitive advantage in going after healthcare providers who aren't customers now."
GEIS LAUNCHES NEW PRODUCTS
In addition to TPN, GEIS last year launched three products aimed at linking its EDI customers to the Web: