General Electric Lends Name to SaaS Movement; Deploys Aravo’s SIM Technology

Nov. 2.08 | About: General Electric (GE)

One of the myths about the Software-as-a-Service (SaaS) market which has continuously frustrated me is the misconception that this movement is best suited for the ‘simple’ needs of small- and mid-sized businesses [SMBs] and not robust enough to satisfy the complex requirements of large-scale enterprises.

While SaaS certainly levels the playing field for SMBs, I’ve written, consulted and spoken extensively about the widespread interest and adoption of SaaS, which THINKstrategies has seen over the past three to four years. Despite my efforts, many of the industry analyst firms and trade publications are still debating whether enterprises should consider and deploy SaaS.

On Wednesday, General Electric (NYSE:GE) lent its name to the SaaS movement by announcing that it had deployed an on-demand Supplier Information Management [SIM] provided by Aravo Solutions, Inc. GE’s deployment of Aravo SIM [TM] was driven by its need to transform its supplier information management processes across all of its business units worldwide.

GE relies on one of the world's largest and most complex supplier networks of over 500,000 suppliers across thousands of business units in more than 100 countries. Gaining greater control over the complexity of this supplier network is essential in today’s increasingly tough economic environment.

Aravo’s web-based, SIM platform will enable GE to automate and streamline its supplier information-related business processes, improve the quality of its supplier data, and reduce costs. The improved business processes and supplier data quality can also help GE satisfy its corporate compliance requirements.

GE also expects the new SaaS SIM platform to make it easier for its suppliers as well. Aravo’s solution includes a self-service interface to initiate and maintain its information, which reduces the time and expense of these administrative tasks.

GE’s implementation of Aravo’s SIM platform began in March 2008, and it is now deployed worldwide. The completion of the first phase of this SIM platform deployment announced this week supports GE's corporate supplier management organization. GE will deploy the SIM platform to all its business units by year-end, and plans to expand its use of the platform in 2009.

This deployment may be the largest to date in the SaaS market. (Let me know if you know of any larger.) It is not only an important validation of the enterprise readiness of SaaS, but also clearly shows that enterprise SaaS still requires significant planning to be implemented successfully.

Winning GE as a customer is not only a major milestone for Aravo, but also a landmark endorsement for the overall SaaS movement. Of even greater value is GE’s willingness to talk publicly about its choice of a SaaS solution and confidence in the business benefits of this decision. In last week’s press release, GE’s senior vice president and CIO, Gary Reiner, stated:

We evaluated a number of alternatives for managing our suppliers and their information, but Aravo SIM [TM] was the best commercially-available solution capable of meeting our complex, global needs. We expect that Aravo SIM will deliver significant cost savings, while improving data accuracy, compliance and productivity.

Tom Hattier, GE's Corporate Initiatives Group - Shared Sourcing Services Manager, added:

Our sourcing and compliance strategies require our employees to see 500,000 vendors with a common view across hundreds of global systems. Coordination requires strong vendor management discipline, both lean and simple, backed up by a global platform that can lock in the process. Aravo SIM met these requirements extremely well. The service allows us to syndicate the information to our various purchasing, accounts payable, and other systems so that we can have one consolidated view of what's going on with all of our suppliers.

Anyone who has tried to get a major corporation to participate in a press release of this nature knows that it is nearly impossible. Therefore, this announcement is a clear testament to business benefits GE is already generating from the Aravo solution.

The announcement should serve as a wake-up call for legacy software vendors who have refused to believe that enterprises would accept SaaS for their mission-critical operational needs. It should give SaaS vendors targeting enterprises greater encouragement. Moreover, it should give IT/business decision-makers within large-scale enterprises greater confidence that SaaS is a viable alternative to legacy, on-premise software.

Disclosure: None