GE Energy and GE Healthcare Case Study 1. What are the business benefits of using information technology to build strategic customer relationships for GE Energy and GE Healthcare? What are the business benefits for their customers? Technology is no longer an afterthought in forming business strategy, but the actual cause and driver. Networking and data storage & analysis technologies enabled GE to gain a competitive advantage by providing unique products and services to their customers. What were those services? For GE Energy and GE healthcare it was remote monitoring and diagnostics of equipment and GE invested a lot into this.
An interesting note abut GE energy from the case is how unlike many of their competitors had at that time was GE’s ability to send a technician ahead of a failure based upon the constant remote monitoring of its products. Other companies’ techs were on a planned schedule or using assumptions to provide their service. It a turbine failed than it was too late. This is especially important because for their power turbine business the customers were major utilities and downtime because of failures created huge opportunity costs and hefty regulatory compliance fees.
The customers also had the benefit of having diagnostic info at hand and GE also provided instructions on the use. The obvious benefit to this for GE is that they can charge a premium. Most competitors could not charge more than $100/hr for their techs, but with GE’s unique strategy they could charge $500 to $600 per hour. For GE Healthcare it’s along the same lines of unique strategy that provides added benefits for their customers. These customers were typically Medical radiology clinics that use an MRI machine.
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What was unique was that GE typically leased their MRI machines whereas their competitor’s strictly sold them. That meant customer had a huge upfront cost. If you know anything about the healthcare industry you know that getting these expenses financed was not an easy task. So a benefit was a lower upfront cost and instead only pay for upkeep and use. GE used IT to make this beneficial for them. These products could be networked and accessed at customer sites and the cost of connecting them was minimal.
Also, GE was able to monitor these remotely and diagnose problems so the techs that were sent already knew the problem and could be prepared to fix it as quickly as possible. Also their customers were provided access to data and knowledge about the current status of their machines. GE was also able take on other tasks like monitoring their customer’s spare parts because they were not tied up all the time. Because of the benefits for the customers and the ease of remote monitoring GE’s profitability was increased. Beyond that GE’s had great efforts in IT for data analysis of the customer’s service data.
They were able to estimate the number of “images” that will be required over the life of the contract established with the customer. They were also able to use this demographic info to estimate the amount they charged because they knew the approximate amount of images they would take. 2. What strategic uses of information technology discussed in this chapter and summarized in Figures 2. 3 and 2. 5 do you see implemented in this case? Explain the reasons for your choices. There are several strategic uses of GE’s Information Technology. 1) Differentiate.
GE was unlike their competitors because they had consistent monitoring and maintenance of their high-quality power turbines. What made this extra special was that this could be done remotely. GE did not have to send techs out on routine maintenance which cost their customers money. They were also able to provide feedback consistently to their customers about how their products were functioning. They also lowered upfront costs to radiology clinics by leasing MRI machines instead of straight selling. 2) Innovate. GE’s design of remote diagnostics was truly an innovation.
Using the internet and networking to link them and their machines at customers sites had never been done before in these industries. There was continual monitoring where as before the monitoring was done by clinic staff of techs that were onsite for routine maintenance. They formed a truly unique and efficient network. 3) Promote Growth. This different and innovative network setup allowed them to expand all over. Whether they want to expand regionally or globally they have the IT to monitor and diagnose their products from anywhere in the world.
No need to setup full staff in each location because they could do more than anyone else from a single location and dispatch techs to take care of problems before they occur and could train customers only when needed. In addition they were able build in switching costs. They invested in Information System people, support personnel, hardware and software (upgrade, update) and large networks that their customers were dependent on and thus long relationships were formed. 4) Alliances. GE was able to work with its customers and adhere to their needs in ways that were less expensive with their pay by use idea.
This was able to be done via the networking they set up. They also worked with techs in the area of their customers and provided info so they could make the necessary repairs without having to physically check the products and decipher or troubleshoot onsite. 3. How could other companies benefit from the use of IT to build strategic customer relationships? Provide or propose several examples of such uses. Explain how each benefits the business and its customers. When thinking of other companies using IT to build strategic customer relationships a few come to mind.
The first area could be automobile manufacturers. With the high power internet and the wide range of service these days IT and the internet could easily be utilized. Every automobile needs maintence and for years these has been outlined in the car or trucks manual. “At 30,000 miles flush coolant system”, etc, etc. This goes beyond On Star which provides emergency detection. Some Cars and trucks nowadays are equipped with hard drives that communicate with the internet. Couldn’t the cars ECU that monitors various functions and sensors be linked remotely to the manufacturer?
Where a signal would pop up and they could diagnose a problem before it happens? Toyota for example had the problems with the braking system. If they had a system in place like GE did that monitors than that catastrophe could have potentially been avoided. Then Toyota could send the warning remotely to the cars hard rive and display the message in real time for the customer to see. The same info could then be sent to the closest or preferred Toyota dealership. The same system could also be used for standard service. At 30000 miles a message could be sent that tells the customer it’s time to flush the coolant system.
The strategic uses are plenty. There is the obvious innovation that would come along with such a system. This would differentiate them from other manufacturers that still use the old methods of service and maintenance. If this is successful and developed correctly the growth could be substantial. They could also create barriers of entry if their system becomes patented. They could create alliances by using a large cell phone provider to establish towers where the signals could be retrieved and sent from. AT&T claims to reach 97% of America so that would result in 97% of Toyota customers in the US.
They could expand this globally and utilize other cell phone providers in other regions of the world. Perhaps the most important is the loyalty customers would have. They are completely dependent on Toyota not because they made their car, but it is up to Toyota to make sure everything is functioning properly. This could also help profitability with their service departments because customers would be reminded of scheduled maintenance. Another example where companies could benefit from use of IT to build strategic customer relationships would be DELL. Dell is the foremost example of the demand-pull business model.
Customers configure their own PCs on Dell’s Website, and once an order is initiated, Dell’s suppliers can see the ordering information and production schedule on Dell’s extranet. This is a fine piece of IT if I do say so. They were the first to do this. What if they took it a step further? Presently they do not offer ways to find spare parts online. I needed a new driver, but I had to go to a third parties website to find it and it wasn’t easy. Dell could make it so by inputting my serial # from the order I placed to get my laptop I could look up parts for that model and then using their extranet the manufacturer could ship me that part.
Another idea is If I bought the laptop from third party I could log onto Dell’s site and register my laptop so I could be in their system and not have to go to a third party who doesn’t specialize in Dell models. I think this could add a bit of differentiation to their already strong innovation. They have the network in place so upgrading costs would be minimal. It would also enhance customer dependability because they would be a one stop shop for computing needs. 1. Use the Internet to discover if GE Energy and GE Healthcare are expanding or strengthening their uses of IT to build strategic customer relationships.
What benefits are they gaining for themselves and claiming for their customers? GE Healthcare is still strengthening their use of IT to build strategic customer relationships. GE Healthcare has recently came out with what they call Centricity Advance. It is a web-based EMR (electronic medical recording) solution launched last week by GE Healthcare and specifically designed for the smaller physician practice (gehealthcare. com). Unlike most clinical and financial management solutions, Centricity Advance is a web-based service that costs less than a tandard client-server software type of program and is maintained and supported with little or no strain on the healthcare provider’s resources, freeing up more time for patient care. To me it seems like they are taking the same strategy behind their MRI machine monitoring and utilizing it for EMR solutions. Benefits for customers include anywhere/anytime access, and since system management is centralized and controlled by GE these small practices don’t have to worry about data protection, updates, equipment failures and other typically stressful responsibilities of user-driven IT management. It is part of their service.
For GE it is customer dependability for the same reasons I stated for their MRI service. It also differentiates them and helps their healthcare business grow into new territories. As you may notice these small physician clinics are very common and everywhere. 2. Use the Internet to discover other companies whose products are networked, monitored, diagnosed, and managed at customers’ sites like the GE companies in this case. Alternatively, choose other companies you can research on the Internet and propose several ways they could implement and benefit from similar uses of information technology.
Sara Lee was one of the first to initiate scan-based trading with large retailers that sell its baked goods. Using this technology, Sara Lee does not get paid until a loaf of bread, for example, is sold and passes through the point-of-sale scanner. What does this mean? Sara Lee is working with its customers and monitors their sales to see how much of their products are sold at each location. This is great data to have and the main benefit for the customer is that they don’t pay until the product sells. Another example is something that AT&T is doing.
After merging with Cingular and Bell South, AT&T needed to integrate the supply chain functions of its multiple business units. The company designed the Supply Chain Management Platform to provide an enterprise view of supply chain data–including procurement, financials, ordering and shipping information. The system enables AT&T to fulfill orders from customers using any channel and deliver to any location while maintaining a centralized real-time inventory. Orders are compiled and organized as they come in and users can categorize them according to channel and type.
AT&T has saved more than $500 million and has improved its purchasing power by combining accounts with its vendors. Warehouses have been able to keep inventories low and only order what is necessary, which has reduced overall inventory costs. The company can also identify merchandise that it has sold when it is returned, resulting in fewer fraudulent returns (CIO. com). 3. What business control and security concerns might a business customer have with the extent of its dependency on GE for the use and maintenance of assets that are vital to the operation of the business?
Discuss the rationale for these concerns and what measures both the business and GE could take to reduce any security threats and improve a customer’s secure control of the business assets it obtains from GE. Being dependent upon GE for the use and the maintenance of assets can be a concern for some companies. Because GE not only sells the product but also provides the monitoring and maintenance they have total control over the company. If there is a problem you have to wait for GE to send a tech to help. This could potentially cause delays.
Another concern about this dependency is that for GE Healthcare their customers using the MRI machines usually have to sign a contract for a certain number of years. If after 2 years the clinic isn’t satisfied with the machine or service they likely have to continue with GE until the contract expires. There may also be some security concerns when you use a company that you are dependent upon. When using the internet you run the risk of viruses, worms, intrusions, among other threats. If somehow these things make their way into GE’s systems your business could suffer.
This is especially important for GE Energy customers because their turbines are a critical element to major utility companies and the regulations surrounding this type of business. REFERENCES Centricity Advance: Ahead in the clouds. GE Healthcare Newsroom. June 15, 2010. Retrieved Jun. 19th, 2010 from: http://newsroom. gehealthcare. com/articles/cellular-magic-on-show-in-times-square1/ CIO. com. The 2010 CIO 100 Winners: Driving Future Business Growth with Technology Innovation. June 1, 2010. Retrieved June 19th, 2010 from http://www. cio. com/cio100/2010/1
