Case Study

Changing GE Real Estate with Innovative Data-driven Decision Support (Adapted from: Power, D. J., "Transforming GE Real Estate with Innovative Data-driven Decision Support", January 12, 2007 at URL DSSResources.COM ) GE Real Estate, a unit (entity) of GE Commercial Finance, is one of the world's leading business-related real estate investors and lenders. Beginning in 2000, when Michael Pralle united the firm as President and Chief Executive Officer (CEO) and Hank Zupnick became Chief Information Officer, computerized conclusion (decision) support has been a major strategy nabler. Pralle has changed GE Real Estate from a U.S. focused firm into one of the globe's largest and most diversified commercial real estate investment firms. The business does business in 20 countries and has a portfolio valued at more than USD $48 billion. In 2006, GE Real Estate contributed 8 percent of GE's total net income. Compared to 2000, net takings more than tripled to USD $1.8 billion. GE Real Estate's performance is attributed to the three divided growth strategy that Pralle implemented: "manage the business through real estate cycles; establish a deeper attendance (presence) in large, underserved countries, including Mexico and in Eastern Europe; and maximize opportunities in emerging marketplaces, particularly India and China." To make this approach work GE Real Estate needed to enlarge its use of the World Wide Web, look up computerized transaction processes and implement innovative decision support capabilities. According to the GE Real Estate web site (www.gerealestate.com), Pralle "has used the power of technology to perk up service quality in what is essentially a face-to-face business. GE Real Estate has spent $50 million on information technology since 2002. Those speculations have reduced transaction cycle times by 65 percent and improved the accuracy and reliability of Real Estate deals."

The concern has also used computerized decision support to improve its risk supervision practices. Non-performing assets were at an industry-low of 0.55 percent in 2005. Pralle "believes this risk management regulation will be a critical competitive advantage as the real estate business expands into emerging markets characterized by differing legal systems, currency directives and concepts ofproperty rights."

As Chief Information Officer of GE Real Estate, Hank Zupnick's confront was to use information technology to help drive worldwide growth. When Zupnick joined the company in 2000, he and his staff began to recognize where technology could help its real estate professionals become more productive and make investment decisions more effectively. Another vital application for technology was to help the firm better manage transaction risks due to unfinished or inaccurate information. Hank watch over a team of professionals located in North America, Europe and Asia, and continues to relate information technology strategically to help GE Real Estate operate more efficiently, responsively and gainfully. Since his arrival at GE Real Estate, Hank has watched over the multimillion dollar speculations in technological improvements. His players' (line up) has implemented a number of ventures that have yielded quantifiable improvements all the way through the business. By automating contract origination, authorization and closing processes, the operation cycle has been shortened dramatically and the company act in responses faster to client requests from now onwards. With other technology innovations, IT projects have made deal in sequence more detailed and reliable, while the current ranks of each deal in progress worldwide is available from a Web portal. Decision support upgrading have also reinforces GE Real Estate's controllership capabilities by implementing universal financial control systems. Perhaps most significant, Zupnick initiated and led projects to create business intelligence records that enable the company to more accurately measures marketplace conditions and manage portfolio risks. In an article at CIO.com, Zupnick elucidated how the CFO at GE Real Estate offered to fund a businesswide data warehouse that would help us grow and supervise our global commercial real estate business, as an alternative he chose to start with low-cost claims and built a data mart. GE Real Estate was pricing sandwiched between 20,000 and 30,000 deals a year. Much of the information GE Real Estate's managers relied on was stock up in spreadsheets or in hard-copy reports. Shaping out how GE's loans were performing in each particular market and what kind of risks should be factored into a $30 million deal required employees to gather data manually from several sources. "Errors are inescapable in a manual development, and they could be costly: misinterpretation of GE's loan-portfolio presentation in Denver or Dublin could mean charging a client's too low an interest rate and exposing GE to too much risk. Charging too high a rate could punctual the customer to take a lower rate from a different lender."

"We make a decision that a data warehouse and Web-based reporting system would be the ideal solution. But we are also familiar with it could be very expensive and time-consuming to develop, and the method is full of doubts. GE's theory of technological development has entailed the mechanization of 600-plus individual transactional and servicing-related procedures, which is more than a third of the company's modus operandi.

QUESTION 1

(a)What was the enlargement (growth) strategy of GE Real estate?

(b)What were the plans of using Information Technology in GE Real Estate?

(c)Distinguish between Transaction Processing Systems, Management Information System and Decision Support System.

(d)Give instances of implementation of each of the above at GE Real Estate

(e)Make a distinction between a Data warehouse and a Data Mart.

(f)Elucidate why GE Real Estate preferred to establish a Data Mart rather than a Data Warehouse.

QUESTION 2

(a)Portray the process to be followed for strategy formulation in an organisation

(b)What is the role of information and communication technology in strategy formulation and implementation in an association? Give instances.

(c)Assume that you want to set up an offshore software development company in a small African country. Give explanation that what issues will need to be investigated with a PEST analysis to understand the environment there.

QUESTION 3

(a)Think about the world market for operating systems for PCs. Perform a Porter's FIVE forces analysis of this industry structure and comment on the attractiveness of the industry.

(b)Suppose that you are in charge of a new company which has developed a new operating system for PCs. Explain what is Porter's model of competitive advantage and develop and give good reason for a clear positioning for your company within the worldwide PC operating system industry.