Periodic outbursts of forecasts about the benefits of computing can be called epidemics of macromyopia, or looking only at what's out on the horizon and not at where you put your feet. You can tell whether an organization was infected with it after it has backed off from widely promoted computer initiatives.

GE appears to be suffering from a case of severe macromyopia. On May 4, The Wall Street Journal announced in a headline, "GE Reshuffles Its Dot-Com Strategy to Focus on Internal Digitizing." So far, GE has realized only 5% of its revenue through the Internet, far short of its goal of 30%. Its suppliers wouldn't readily convert their formats and methods to fit GE's systems. I also suspect that suppliers finally realized that if their systems were latched into GE's supply systems, their bargaining power with GE would diminish. Apparently, GE's visionaries didn't fully consider that implementing B2B is as much a political phenomenon as it is a technological one.

So now, a year after ordering its operating managers to realign their IT to look outward to customers and suppliers, GE management is calling for a quick retreat. The new marching orders: Concentrate IT investments on inward affairs, such as getting administrative processes to function more effectively. So it's dejà vu all over again, with a goal of extracting $1.6 billion in savings this year. GE has taken a smart, realistic approach in backing off from a mission that couldn't be executed and that could have been avoided if anyone had taken the trouble to study the enormous obstacles to implementing the highly desirable EDI concepts. But the most likely reason for the reversal can be traced to the company's hard-nosed approach to delivering steadily increasing earnings, even as the economy deteriorates.

So if GE needs more profits soon, where can it find them? When you follow the money, there's only one indicator that reveals where there may be a major opportunity: reduction of overhead costs. Here, the GE record isn't good. Its overhead costs as a percentage of the cost of goods sold increased steadily from 18.1% in 1991 to 21.5% in 1999. That shows that GE hasn't been pursuing a sufficiently concerted program to improve the productivity of its information management. If GE could restore its overhead cost ratios to 1991 levels, it would pick up $1.2 billion in savings. So it's apparent that this is exactly what it has decided to do now.

Someday, GE's B2B dreams will come true, though nobody can tell when, since noneconomic forces such as national politics will continue to interfere with efforts toward global supply-chain integration. GE's sudden turnaround from an external focus to an internal focus should serve as a lesson on why CIOs shouldn't confuse their operating managers by promoting promising technologies prematurely. Careers will get hurt, precious time will be lost, and money that could have delivered added profits will never be recovered.

Paul A. Strassmann (paul@strassmann.com) suggests that CIOs include in their resumes how often they had the courage to kill projects early.