GE Is All in On Digital

New GE CEO John Flannery put any doubts about GE’s future to rest yesterday in this blog post – it’s digital!  Was there ever any doubt?  Not by this analyst.  In fact, my reaction to Mr. Flannery’s appointment as Jeff Immelt’s successor was GE’s direction would remain the same, but that Flannery would apply greater fiscal discipline to the process.  Flannery’s blog confirmed my thinking in stating, “We will broaden and strengthen our partner relationships to create a strong Predix ecosystem.”  To me, this means that, GE will place greater emphasis and reliance on partners to create applications for its Predix platform.  In fact, ARC wrote about IIoT ecosystems in a recent blog. 

Asset performance management (APM) is frequently referred to as the low hanging fruit of the Industrial Internet of Things (IIoT).  This characterization is misleading as APM is neither simple or particularly easy, but it is a proven operational and maintenance strategy well suited for the digital enterprise.  APM requires a complex infrastructure of sensors, platforms, connectivity, analytics, work processes, and applications to enable people at all levels of the enterprise to make data-driven decisions.  That’s a tall order for a single supplier, hence the need for an ecosystem.  GE has elected to partner with Infrastructure as a Service (IaaS) providers Amazon Web Services (AWS) and Microsoft Azure for cloud computing.  Predix is the cloud application Platform as a Service (PaaS) that provides the development, runtime environment, and computing hardware for APM applications in this case.  GE will rely on other Predix ecosystem partners to provide Software as a Service (SaaS) apps in addition to its own to improve asset performance. 

Regarding the vertical approach Flannery discussed, ARC research indicates that this is what manufacturing owner/operators prefer.  They want to deal with suppliers who have expertise in their industry processes and can provide a systems approach to optimization as opposed to point solutions for individual assets.  However, there is reluctance on the part of these owner/operators to put all eggs in the basket of a single supplier, confirming the validity of an ecosystems approach.  The driving factors in APM adoption are cost reduction and efficiency improvement.  APM solutions deliver actionable information that can help manufacturers increase maintenance efficiency and effectiveness, avoid costly unplanned downtime, minimize the need for scheduled downtime, and maximize equipment availability, all while increasing safety.

The thing about revolutions is, they don’t happen overnight.  According to Wikipedia, the first patent for a steam powered device was issued in 1606 yet steam engines were not commercially available until 1781 to mark the start of the first industrial revolution.  Obviously, the pace of change has accelerated by orders of magnitude, but transforming industrial giants into digital enterprises is going to take time.  Revolutions are fluid by nature and IIoT is a revolution that will require strategy adjustments for both manufacturers and the suppliers that serve them as transformation takes root.  Revolutions also require leaders and GE is one of them in this case.  Leaders get the glory when things go well, but must also take their lumps at times.    

The digital train left the station a while ago and there’s no turning back, not in our personal lives or in the industrial world.  No doubt, Apple and Steve Jobs had their detractors when it introduced the iPod in 2001.  When it launched the iPhone in 2007, it changed how the world communicates.  Every industry has been and continues to be challenged by disruption - new sources of competition, new business models, new services, etc.  The industrial world is no exception; however, it is more conservative and may take longer to change.  The prize for those that stay the course will be enormous.