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Going Digital: General Electric and its Digital Transformation General Electric: Preparing for a Digital Storm remain in the Dow Jones Industrial Index GE started taking steps to transform since the original index was established itself from an organization predominantly GE is the only company in 18962. involved in selling hardware or industrial equipment to one selling data-based to be listed in the Dow services. It started building software The Need for Jones Industrial Index around its products, enabling its Transformation consumers to create new revenue today that was included streams and become more efficient. In Over the last century, GE made the doing so, it also wanted to secure the in the original index in bulk of its revenues by selling industrial value being created by its equipment. 1896. equipment and maintenance services As Bill Ruh, Vice President and Head of to its customers. However, in recent GE’s software and analytics business, years, it faced increased competition In the same way that Millennials seem to said: “We want to deliver software from companies that were not just in the adopt the latest digital technology with services across all our products at the business of selling equipment. These new ease, our economy’s younger companies Silicon Valley speed. We are not going to competitors used information generated also display a natural aptitude for the new sell software. If you look at Google, they by large machines or equipment to provide economy. However, while the stories of have software but they sell advertising, services that improved productivity and the digital natives are instructive, what Amazon too sells retail. What we are reduced downtime. about more established corporates with going to do is sell services wrapped longer histories? How can a company GE realized that this trend had the around our machines that make them 4 that is over a century old transform itself potential to reduce it to just a commodity more efficient” . to thrive in a digital economy? equipment provider. CEO Jeff Immelt underlined the importance of this shift, For GE, responding to change is part of and the need to make drastic changes its modus operandi. This is a company We want to deliver in GE’s business model, when he said that has famously made change a core in 2013: “We know that there will be software services across capability and a constant in its history. For partnerships between the industrial over 120 years, GE has ploughed forward all our products at the world and the internet world. And we under a banner of “Building, powering, cannot afford to concede how the data Silicon Valley speed. moving and curing the world. Not just gathered in our industry is used by imagining. Doing1.” This constant focus –GE Vice President other companies. We have to be part of on innovation and transformation has that conversation”3. made the company the only one to still 2 Betting Big on Software and Analytics to Drive the Next Wave of Growth Since 2011, when GE resolved to expand its business into the software and analytics I took over an industrial domain, it has developed and introduced GE currently monitors nearly 40 software products under its company, now it will be “Predictivity” brand.8 These solutions and analyzes 50 million known as an analytics have been seeing strong traction across data elements from 10 industries. For instance, one of these company. products, PowerUp, is being used by million sensors on $1 –Jeff Immelt, CEO, GE E.ON to improve its operational efficiency. trillion of managed In one year, over 1,400 turbines have been assets daily to move contracted under the PowerUp services. Using the product on a trial run, E.ON customers toward zero experienced an overall increase of 4% unplanned downtime. GE is betting big on software and in power output on 60% of its turbines9. analytics to bring about its transformation, If rolled out across E.ON’s entire turbine with Jeff Immelt stating: “I took over an range, it is the equivalent to adding industrial company, now it will be known 19 new wind turbines. Revenues from as an analytics company”5. GE’s focus ‘Predictivity’ solutions were expected to on data analytics was clear back in 2012 touch $1.1 billion during 2014 and are when it set aside up to $1.5 billion for estimated to bring in $5 billion by 201710. small take-overs to boost its presence in analytics. By 2013, the company was able to introduce a wide range of big Figure 1: Connecting the components of the Industrial Internet data products. These include predictive software products, a Hadoop-based big Connecting Minds & Machines data software for ingesting and managing industrial data, and a relationship with Amazon Web Services to share industrial data in public cloud6. Intelligence Flows Extraction and Storage GE’s transformation was based on a Back Into Machines Instrumental of Proprietary Machine combination of tactics: developing data- Industrial machine Data Stream driven solutions and opening up its big data platform to external applications. Providing Clients with Data-driven Solutions to Physical and Human Networks Industrial Data Systems Improve Machine Efficiency Secure GE is attaching sensors to its machines Cloud-Based that enable it to capture performance Networks Data Sharing Machine-Based data. This data is then analyzed to with the Right Algorithms and provide real-time information to improve People and Data Analysis machine efficiency, prevent downtime Machines and enable effective scheduling of predictive maintenance (see Figure 1). By attaching sensors to its machines, GE Remote and currently monitors and analyzes 50 million Centralized Big Data Data Visualization Analytics data elements from 10 million sensors on $1 trillion of managed assets daily. The overall goal is to move customers toward zero unplanned downtime7 and GE has christened this convergence of industrial machines, data and internet connectivity the ‘Industrial Internet’. Source: Innovation World 2013 Keynote, Bill Ruh, GE Software—The Emerging Industrial Internet 3 Throwing Open the Big Data Figure 2: Savings as a Result of 1% Improvement in Efficiency Platform to enable Cross- Industry Application Driving customer outcomes A sign of GE’s rapid digital progress can Power of 1% Annual impact be seen in how it has transitioned its internal big data platform as an external Airlines 1% fuel $2-3B service. Before late 2014, GE had used its Big Data platform Predix to build its proprietary Predictivity solutions. The Utility 1% fuel $4-5B platform was built in order to bring all of GE’s industrial machines onto one cloud- Oil & Gas 1% uptime $5-7B connected system. The goal was to drive a 1% increase in performance per Healthcare 1% productivity $4-5B industry. For instance, just in aviation, a 1% increase in performance can mean savings of around $15 billion in jet fuel and Transportation 1% mile velocity $5-7B other costs in a few years11(see Figure 2). Source: Company presentation However, in October 2014, GE announced it was opening the Predix platform to Apart from opening up its big data and collaboration company, to help its other companies that would like to create platform to others, GE is also partnering employees and partners take advantage their own customized industry apps. With with Intel and Cisco to develop the next of the cloud to share content across this move, GE intends to make Predix generation of Predix-ready devices. This devices and platforms15. the default platform for industrial Big would allow operators to integrate Predix Data. As Dave Barlett, Chief Technology into existing infrastructure, increasing its Officer for GE Aviation, says: “We want uptake amongst companies with existing Predix to become the Android or iOS of industrial assets. the machine world. We want it to become We want Predix to Using Smart Tools to Encourage the language of the Industrial Internet .” Collaboration Among Employees become the Android Throwing open Predix also helps GE in or iOS of the machine monetizing its big data platform directly GE is fostering a digital culture across the and provides an opportunity to expand organization by adapting new devices world. We want it to in geographies and industries where it and services. GE was among the early become the language of had little presence. In December 2014, adopters of devices such as the Apple GE licensed its Predix software platform iPhone and iPad. In order to maximize the Industrial Internet. to the Japanese telecom giant SoftBank its mobile capabilities, GE set up the GE Dave Barlett, CTO, GE Aviation Telecom, allowing it to build apps for Mobile Center of Excellence, an internal shipping, manufacturing and other group that develops tools to make mobile industries. This deal is expected to earn devices more useful for its many business potential revenues of $200 million across units14. Similarly, GE also partnered major industries in Japan over the next 5 with Box, an enterprise content sharing years13. 4 Making Digital a Key Part of the Organizational DNA GE’s digital transformation is not the Building the right team to achieve the Oracle Corporation. In May 2015, GE result of being in the right place at the vision named her CEO of the Industrial Internet right time. Instead, it is the result of a Software Group17. Another key hire was structured approach that involved a GE has long been recognized as a Harel Kodesh who joined GE as CTO of strong top-down digital vision, capability breeding ground of outstanding business GE Software. Harel was CEO and founder development, achieving all-round buy-in leaders. However, the nature and potential of Nurego, an analytics company, and and a constant focus on innovation (see of the talent required for its software and prior to that a senior executive at EMC Figure 3).

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