Best PracticeBy Mel Duval | Posted 2007-06-12 Email Print
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From its embrace of ITIL, its clever balance between centralized and decentralized IT, and its rigorous management training, General Electric's tech team follows best practices. It's won a number of IT awards. And it's helped GE grow into a $163 billion b#2: Balancing Centralized & Decentralized I.T.">
Best Practice #2: Balancing Centralized & Decentralized I.T.
At its core, GE's I.T. strategy is built on a carefully defined balance of both centralized and decentralized systems. A centralized set of technologies, including computer hardware and companywide software applications, serves as the I.T. backbone. In addition, each business unit has a largely autonomous CIO working with the unit's general manager to determine which applications should be purchased or built and run locally in support of its business goals.
"The centralized I.T. governance model Reiner adopted has the I.T. strategy set from the top, but at each business unit there is an independence of execution," observes John Carrow, formerly a systems engineer and later a general manager in GE's Aerospace division (divested in 1993), and now senior vice president for strategic client development at Unisys. "This allows for flexibility in the business units. I think Reiner has achieved the right balance." Adds I.T. consultant and former CIO Strassmann, "This decentralized strategy enables GE to be highly adaptable."
This approach explains why GE's I.T. operations are so effective, observers say. By affording the business unit and division CIOs a level of freedom from daily operations, they can spend most of their time working with their general managers to create ways to energize the business through the use of different technologies.
"I didn't have to worry about data center management," says Kiran Garimella, a vice president at webMethods and former CIO of the equipment finance division of GE Healthcare Financial Services. "They remove any kind of lower-level distraction from their CIOs at GE by having a core network infrastructure, including data center management, under shared services." The costs for this infrastructure are then charged back to the various business units. "It's a very good balance of responsibilities, because otherwise I wouldn't have been able to do some of the initiatives I accomplished as a result of that independence," Garimella adds.
GE's I.T. management scheme hasn't gone unnoticed elsewhere, for sure. The GE plan is followed by other companies, especially those with multiple large business units producing diverse products and services. "I'm very familiar with the GE I.T. structure, which is very similar to ours," says Gary Cantrell, vice president and CIO at Textron, an $11.5 billion conglomerate with several diverse businesses, including helicopters, business jets, golf carts, automotive fuel systems and resort property financing. "We have a CIO for each business unit and an applications staff at each unit.
"Our I.T. management strategy is to leverage our brand focus, and to do that, you have to have some autonomy for the CIOs at the business unit level," Cantrell adds. Interviewed by Baseline in April at The Hackett Group's Best Practices Conference in Atlanta, Cantrell points out that at the same time, Textron's information-technology operation provides its business units with a common consolidated infrastructure and centralized shared services, such as warehouse and transportation management systems, used by all its business units. "You've got to have that balance," he says, and GE does.