GE Comes to Lunch. Want to Guess Who the Appetizer Will Be?

  • Written By: D. Geller
  • Published: March 13 2000

Event Summary

General Electric Information Services (GEIS, a division of General Electric (NYSE: GE),) will become a holding company managing two new business units. GE Systems Services takes over the current infrastructure operations, including data centers, networks, and help desks. The other new company, GE Global Exchange Services, has four divisions that will focus on Internet Data Exchange, Enterprise Application Integration (EAI), E-procurement, and the creation of trading exchanges.

Market Impact

This is not a simple case of a clicks-and-mortar company suddenly deciding that the future is in E-commerce. General Electric has been setting this table for a while.

GEIS was a pioneer in creating trading exchanges based on the EDI standard, and has been a strong participant in XML standardization efforts, including CommerceNet's and Microsoft's. GEIS' Trading Process Network was an early E-procurement experiment. Also, early in 1999 GEIS entered into a partnering arrangement with Global TeleSystems Ltd. of India. Under the agreement Global TeleSystems was to develop E-commerce software and systems for GE. (Perhaps not coincidentally, Global TeleSystems has announced plans to launch its own business-to-business service in Indian markets.) However, this arrangement does not represent the bulk of software in this comprehensive offering.

GE has the infrastructure, acumen, existing customer base and financial strength to rapidly become a major player in the E-procurement space, which is the core of any E-commerce initiative. Its major a priori weakness may be that it does not have the cachet of such pure-play vendors as Ariba and Commerce One, but a few major customer signings could have observers chanting a different tune. GE will be using a package called Purchasing Experttm, which it has previously offered in Europe, Asia, and Africa. Since these markets are not as competitive as North America, it is certainly possible that the software will not stack up to the current industry leaders. The software will be available in June.

Whatever impact the entry of this large company might have had on the market was dwarfed by the announcement, just two days later, of a major partnership between Ariba (NASDAQ: ARBA), i2 (NASDAQ: ITWO) and IBM (NYSE: IBM) (link to as yet unwritten article). These three companies are laying out a buffet consisting of hosting, procurement, and supply chain capabilities that will be hard for GE to match. As IBM's senior V.P. William A. Etherington said during the announcement, "It's not the big that will eat the small - it's the fast that will eat the slow."

GE will have to act in Internet time to show major strength, and it must have a first-rate software offering. It would not be foolish for GE to evaluate whether Purchasing Expert will stand up against Ariba or Commerce One. If not, a different strategy might be appropriate. Attempting to partner with Commerce One (which we think unlikely) or to purchase a second tier vendor like Concur could be the best way for GE to keep from being relegated to the children's table.

User Recommendations

A user looking for a hosted E-procurement solution, especially one with existing ties to GE or one that is heavily reliant on EDI can expect GE's solution to be of interest. This is also true for users that will be interested in developing new electronic communication pathways with business partners, as GE's focus on XML is likely to be a real strength. However, GE's ability to deliver is still in the future, and we don't see any compelling reason from this announcement that a user who is ready to act today should wait for that tomorrow.


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