GE Mulls Massive ERP Implementation

There could be a $1 billion sale out there for a lucky enterprise software vendor.

A General Electric official said Tuesday that the company would like to implement a massive enterprise-resource-planning system to tie together its 11 business units and countless divisions. "We have looked at it, and we'll continue to look at it," said Richard Dobbs, financial-services leader at the diversified consumer and business-to-business manufacturing and services company.

GE now uses PeopleSoft, SAP, and a number of other ERP systems. Dobbs, speaking at the Gartner outsourcing conference in Los Angeles, said the company ideally would like to "rationalize its ERPs." He put the cost of such an effort "north of $1 billion."

However, integrating the entire company's operations through a single system could ultimately prove too expensive and complicated an effort to undertake, Dobbs said. "It would be hard to get our hands around that," he said. As an alternative, Dobbs said he would like to see a major outsourcing company pair up with a major ERP vendor to provide GE with a "wing to wing" ERP offering on an outsourced basis.

GE is embracing outsourcing in a big way. It was one of the first major companies to use offshore labor in low-cost countries such as India using so-called captive operations--facilities located abroad but internally owned and operated. Now, however, GE has come full circle to embrace outsourcing as the best means to access low-cost labor and efficient IT and business-process services.

"Outsourcing is the way of business now," said Dobbs. Last year, GE spun off its India-based business-process-outsourcing arm, General Electric Capital International Services, for about $500 million to private investors. The company also last year sold a number of other BPO facilities to Affiliated Computer Services, which ACS now operates on behalf of GE under a 10-year outsourcing contract.