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. 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...
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