Discussion on:

GE's $200 million bet to resurrect IT

That is $769K and change for each job. Or enought for each "worker" to buy a 100k house and get 50K a year for 13 years or their $13/hr for 24 years. Hell, I'll take that.

There are a lot to variables in play, but I'll hold the applause until after a couple of years running. Even if, the place might still go under. Didn't hear a lot of chatter about customers in the article. Material peice of a business plan is that if customers don't buy you go broke. Maybe this is part of GE's discussion but much like with the Volt, I'm not hearing it.

FYI $13.00hr is just over 1/2 the average wage in the US. After income taxes SSI, sales tax, yatty yatty, you are talking poverty level for just one person working with a family of 4. A single person could finance a car on it though.

While a firm capitalist, I am convinced that there is probably some level of government interaction that is good. But do the math on this one and it has "insane" written all over it. A billion dollars to create poverty level jobs? Really?

So if all goes well, and you work all your life at one of those jobs, you can expect to die poor. Wage cropping action. And yet, it is better than millions of Americans are doing right now.

Public companies don't invest money to create jobs. They invest money to make money, which requires skilled workers to make it happen and ends up injecting money into the local economy and has beneficial effects on the entire ecosystem.

You also have to remember that those 1,300 jobs are only the jobs that are for full-time workers at GE. Lots of other contractors and consults end up getting work out of the reinvestment. The manufacturing business is also far more automated than it used to be, so much of the investment is also in equipment, systems, software, etc. So that money goes to companies that are making hi-tech products to help GE be more efficient (and the people at those companies are highly-paid specialized workers). The economics are lot more complex (and favorable) when you look at the whole picture.

But I still long for the days when people invested in a business because it was THEIR business and would never consider it the taxpayers responsibility. If we paid less taxes maybe GE would have found investors instead of having to hit up Uncle Sam.

"The federal government stepped in and provided assistance from the Recovery and Reinvestment Act of 2009 and ultimately gave a slew of tax breaks and incentives for GE..." Why, if not to create jobs?

And by the way, how much is a slew? How much skin does GE and its investors have in this game, and how much is supplied by Uncle Sugar?

I think it is great that GE is bring jobs back to the US. I agree with Jason Hiner, investing $1B in their facilities is going to have a positive affect on lots of different businesses in the local area and even surrounding states.
However, I think it would be better to highlight the IT overhaul after 20 years, the process changes that make their IT dept more efficient and more of a business driver and finally a nice new datacenter. Rather than what it is costing them.
As @maszsam has pointed out, on the surface spending $150 million on new software to save up to $60 (over five years) doesn't on the surface make sense. Add in a $1B datacenter and then it seems like they are just creating a showpiece to say..."Look what I did". It doesn't seem practical or efficient.
As the title implies....I hope the "bet" includes a lot of efficiency for their business that will translate into billions for the economy, that have not been discussed in either article.

Great job, GE! And kudos to the team who are making it happen... When we look across the industry, however, we see more ERP failures than we see successes. Consider, for example, the multi-year CSC / Oracle ECSS project for the Air Force, which has been declared dead only recently: over $1 billion spent, "negligible value received". In that case, and in many others, the better solution would have been to modernize the old applications, add SOA for integration, remove redundancy, and become more agile with a code base uniquely adapted to the requirements. The last thing that should be done in these situations is the traditional, spend-3-years-writing-requirements-and-blow-the-budget waterfall approach.

So why is the GE experience different? It has to come down to the people, to the sociology, to getting committed people in one room and making a difference. And that is why this lesson is going to be hard to duplicate and use as textbook material -- because there will be different people with different motivations in every case. Hats off to Mr. Kocsi, too, he's obviously a leader and in the end, that's the one thing that is always in short supply: leadership.

Now the question is, once the ERP is in place, how does information processing STAY agile? Because customizing the ERP going forward is a limited option...

An inspiring story. And my favorite part: I didn't see any mention of Microsoft.

What about Leo c. 1949?

Britain was the birthplace of commercial computers. The Ferranti Mark 1 produced in 1951, the first one went to the university but the next nine were sold commercially, (including in Canada so the US might just have noticed). However there is a lot of Sperry hype on how Mauchly & Eckert invented the first computer. Not true as the US courts showed in 1973. However it wasn't the Brits it was Atanasoff who built the first proper digital stored program computer, but the Brits were the first to commercialise them. Next thing you'll believe is that Edison invented the electric light bulb.

Finally a rejection of the idiocy epitomized by J Welch who made himeself rich, destroyed GE's stock value for millions, closed and shuttered a major manufacturing companies multiple plants and layed off hundreds of thousands of workers from good paying postions... GE needs to get back to manufacturing and producing and doing it smart and economically. We can do this and begin a resurgence of American manufacturing in high technology desireable products...

Bravo!!

... it just sounds to me like through their whole history they just wanted to beat workers into submission, and when they failed to get as much as they wanted, they off-shored ... and now that the locals are desperate for work they are starting back up again.

Government grants + tax-breaks + workers on $13 per hour ??? ... isn't that called incompetent management &/or no business case whatsoever?

I think your comment about GE being the first commercial organisation to have a computer is wrong: LEO, Lyons Electronic Office, was running for J Lyons, the UK baking and catering company, in 1951. I guess this is what Mike@ was questioning above

They promised in 2010 and 2011 for their Challenge in Ecomagination.
In the end nobody got NOTHING.
Only a few local friends.

Just months of work on ideas and projects for the contest for 933 viable ideas.
The just put OUR ideas on ice.

http://www.ecomagination.com/ar2010/overview/ecomagination-challenge/

Just all words and empty promises.
T L.

I'm all for bring blue collar factory jobs back to North America but why do we have to ship our skilled IT jobs to India to do it. Bringing unskilled jobs to North America and shipping skilled jobs to 3rd World Countries in the end will make North America 3rd World. If we keep shipping all our it jobs to India soon there won't be enough qualified IT professionals in North America and we will need to start hiring East Indian IT professionals and moving them here because the unemployed IT guys here don't have the skills companies want. Oh wait companies like Morgan Stanley have been doing that for years. Their IT department is basically run by East Indians. No offense to the East Indians, they do a good job but this is at the expense of local unemployed IT professionals. All in All, this GE plan seems like a nice idea but is only trading unskilled jobs for skilled jobs (I do understand that's generalization and some factory jobs are skilled).

"a plant that was on the verge of shutting down just four years old."
Since the plant is referred to as "historic", I assume this was meant to say "four years ago." or was the plant really only 4 years old?

Are their people and smart machines on the floor whose information is being collected and reported accurately, easily, and in real time? Are plant floor processes and work orders being driven and managed by systems integrated with the planning and ordering systems? Inquiring minds want to know as these are key elements of a scuccesful seamless manufaturing company's information model. Or should be.

I admire GE for wanting to bring jobs back to the US, but as long as there are unions, they will be back in the same mess they encountered in the 80s.

In 1951 Lyons Co. in England installed the world's first business computer called LEO. GE's was first in US.

When I first saw the headline I thought GE was recreating the old ITS group. I was hired on in 1999 3 months before Y2K and as soon as the event fizzled was laid off and ITS was majorly downsized. Good read none-the-less.

...is Good Buddies with 0bama, so that is how he got so much of my money, er, sorry, Federal Government money that grows on magical trees. GE also has had several years of not paying Federal taxes. Almost the definition of fascism.

I recently purchased a cooktop from GE via home depot. I have not yet installed it but have read the installation instructions. They only covered how to anchor it to the counter for wood or tile countertop while we installed a granite counter. After calling around to various GE contacts all we got conflicting suggestions or a plra of ignorance. After considerable investigationfrom non-GE web sites I found a satisfactory method. However, it does not generate much confidence in GE's attention to details considering that engineered and natural stone are very popular.

Good read and inspiring stuff!!!! GE achieving their deadline to deliver their business goals is absolutely necessary to make the rest of the world think twice before investing in bigger projects. This can either be a classic case study in years to come based on GE's achievements from here on. Agree with Jason that economics is complex but such innovative and bold ideas will only take GE further in potentially creating the green jobs, which in turn sets the ball rolling in the US manufacturing industry.

Kudos to Mr.Kocsi and team for their achievements so far.

Fail fast, fix fast. Ok, let's look at the second half of that: Fix fast. Now the first word: Fix.

Hello? The IT dept. and some workers probably recommended for years that databases be combined, systems integrated, etc and it fell on deaf ears and was not approved. The key to all these improvements is that they just decided to actually do it where before there was corporate malaise at the thought of spending any money or making any change. The Big Room just helps workers overcome their fear of calling the helpdesk.

When we were doing these kinds of things in the 1980s, the IT department tried to put us out of business. We were making changes to systems and interfaces almost overnight to improve the user interface. Management finally got their wish (after our "good" management that supported us left) and we were all driven out of our jobs, IT consolidated our project and it finally failed. What IT (IBM Shop) would have taken 18 months to design, we implemented in days or weeks on our DEC system. This was in a government setting and it was a fun and the most productive time in my life. I often spent 80-100 hr weeks writing code (self taught) and managing systems while still having to do my other duties managing another department and up to 100 employees at various times. I was single at the time, couldn't have done it with a family! In the end it wasn't appreciated and I had to move on, probably because it was a threat to the status quo.

It is so great to hear of a project like this that is successful. If we can learn from this about how to make this happen and can transfer these ideas to others it will be worth all the tax money spent because this is a "real world" laboratory.

The only way these kinds of advances can be made is with real leadership and commitment from management, management who is not afraid of short term failure for long term gain. I applaud GE for this example of investment and belief in our (US) system and in our homegrown ingenuity. You may complain about the low factory worker starting pay, but I guarantee that the people in the big room were making more than the $13 per hour and deserved even more than what they were paid. I'll bet they are all proud of the work they have done and that is worth a lot. Now, how to keep that environment alive and productive into the future.

I'm retired now, but would go back to work in an instant if I could work at a shop like that.

By the way GE, I'm already looking into purchasing a hybrid water heater and now am not afraid to buy one from GE.

Great article. Favorite part- I sat down with the CEO and the CFO and they told me that the thing that they loved about the IT department here is that it did everything that they asked. The thing that they hated was the IT department did everything they were asked. They were looking to us to provide guidance as opposed to just following orders; to take a swing and do something different.

Let me see - this is a success because its a company GE didn't want in its portfolio but couldn't sell so being smart enough not to invest their own money, grabbed some government handouts, beat the workers back to 1980's pay scale, threw some people in a room and declared victory? No doubt appliance sales must have improved recently or you would not have been granted access to do this story. Probably improving with the improved economy that Jack was refuting right before the election.

Back to red flags - How about the CEO quote that IT can't be what holds this project back. Are you kidding me? This is a business that was held up as a raging success 15 years ago for having figured out how to successfully offshore IT and lower costs. Now we hear that We didn't really invest in IT for 20 years. That will get you savings every time.

I wonder how much easier this upgrade would have been with local IT folks that had 15 years worth of experience maintaining these systems and investing in their manufacturing IT skills? And when I say "local IT folks" I'm not talking about managers. Would love to know how much was paid to offshore resources during this time.

Also wondering what's become of all the other save-the-day business/IT innovations now that we've moved on to Agile? No mention of (in addition to Outsourcing, which failed here) Six Sigma, DFSS, DMAIC, Work Out, CAP, Work Life Balance...

Before they could even have the success that they had, they had to have all sorts of tax breaks to make it profitable. What does that say? To me it says that current taxes kill US businesses and keep people unemployed.

They had to get the unions to agree to $13/hr _STARTING_ wages. Meaning that companies can't afford to pay exorbitant union wages for every single person whether they are qualified or not. No one that commented mentioned how the unions leech money from the workers, how rich the unions and union bosses are, and how they really do enrich themselves off the backs of the poor.

One of the themes in the comments seems to be that 1980s wages are a joke and that they're beating the workers into submission. Really? Again, here is an opportunity to work, not a forced labor camp. These same people would have complained if the company had just closed the doors altogether.

I do not appreciate that GE appears to get all these tax breaks because they are huge donors to the Democrat party and Mr. Obama. If it is so good for GE and he's serious about putting people back to work, then it seems to me that this whole notion of raising taxes is not the way to get people employed after all.

I was excited to see that they were using Windchill for PLM. I would like to have seen some detail of the systems they implemented and how that worked, how did they integrate the Oracle ERP systems with Windchill, what pieces of Windchill did they use, what other PTC products did they use. What architecture does all of this run on? How many servers are required to support all this? Did it really take some huge datacenter to support this one division? Perhaps that could be a topic of another article?

The company is unwilling to pay what it owes. They want Special Dispensation to make money and will go out of their way to screw as much as possible out of the system for their own benefit.

There was a Multi Million Pound Business in the UK back in the early days of the 20th Century who paid all of 14.30 TAX over a 50 year period. They used the same argument that not paying Tax allowed them to employ people and some idiot politicians accepted that stupid argument.

The reality was that all not paying any Tax did was make a few people very rich and did noting to support the country that they depended on for their profits. In defending them from the aggressors the Country that had been Robbed went broke and no one could understand why that happened.

In this case GE has taken it one step further and they have experience that Off Shoring isn't the solution but they have used it as the Big Stick to screw all Governments and Unions into accepting what is better for the company while drastically reducing costs. Personally I wouldn't be surprised if GE got Tax Breaks to move the Production Off Shore in the first place from both the US and the country that they where moving production to.

Bosch has done much the same thing and Off Shored their White Goods Production out of Germany and as a direct result they have cut prices charged for their finished product but at the same time have produced a range of goods that is unlikely to survive the warranty period and still be usable. Their Fridges have an issue with Coolant Lines inside the cabinet splitting and rendering the unit unrepairable.

So their costs have actually increased as they sell a unit and then before the warranty ends they have to replace it with a free one or give a refund. Very much like the Old Soviet idea of making things we don't need to make any spares or product improvements we just make more and use the excess production to replace the failed units that we built.

In the case of Fridges customers may buy on price initially but they soon learn that cheapest isn't necessarily best. I know quite a few people who bought cheap fridges who didn't survive the warranty and now have purchased the expensive ones from a different maker which where way too expensive when the originally purchased the unit only to now believe that they have got better value for their hard earned money. This would not be unnecessary if there where Sales People on the floor who where willing to do the right thing by their customers instead of relying on volume for their Commissions. As suggested above the reliance on Volume Production and sales is nothing more that a continuation of the Old Soviet Era methods of making more than should be necessary to cover the failures of the substandard product.

When any company starts believing that Price is the Be All and End All of their products they have failed and are in the process of dieing.

Col

Maybe GE should stop hitting uncle sam in the first place. It's a free market - supposedly, government needs to stay out of it altogether, and how much we pay for corporate welfare should be entirely irrelevant to begin with - "investors" being an excuse for the inflated "profits" and legalized larceny going on, so I cannot agree with your comment, TNT. Especially as the article states wage devaluation, so let's start guessing why the economy is still in the dumpster... more on that in a moment.

MCLBD's points are far stronger and closer to the truth . And we wonder why the economy has gone downhill, when we're reducing pay levels from 2010 levels to 1980 levels, without the cost of living and other factors going down to match. Indentured serfs, anyone?