The tone at GE Minds and Machines 2017 in San Francisco was pretty upbeat. Attendance rose significantly from 2016, with more than 3,700 people from 59 countries on hand. Some key Predix partnership advancements with Microsoft Azure and Apple were announced. New CEO John Flannery delivered an unequivocal keynote backing GE’s commitment to going digital via Predix, both internally and with customers. Compared to last year’s event, which focused on the transition from the physical to the virtual, 2017 emphasized proof of use, providing numerous user stories and evidence of scalability using Predix.
Honestly, I didn’t anticipate optimism for the week, particularly given a bit of a gut-punch third quarter for GE, but there it was. Having had a few days to process the whirlwind of keynotes, presentations, executive meetings, strategy discussions, and sessions (ARC participated in three, including yours truly in one on power generation plant optimization) I can see reasons for the positive vibes.
GE Predix and Utilities: Scalability Where Others Have Struggled
Despite the conducive market conditions, many digital transformation solution providers have struggled to demonstrate scaled adoption in the utility industry. In contrast, GE’s first-day keynotes featured two utilities discussing significant change in their markets and their charge toward comprehensive digital transformation they deem imperative to succeed.
Significant change? Charging toward comprehensive digital transformation? Utilities...? Wait, what?
The first example came from Exelon, a Fortune 100 North American energy company that engages in the full spectrum of the market: power generation, competitive energy sales, transmission, and delivery. In 2016, the company selected Predix to support its entire fleet of hydroelectric, natural-gas, nuclear, solar, and wind generation resources. At this year’s event, Exelon’s Director of Innovation, Brian Hoff, announced on stage that the company was expanding that relationship to use Predix analytics for transmission and distribution across all six of its utilities. Predix analytics will be used for outage prediction and real-time monitoring for preventive maintenance.
Given this comprehensive use of Predix, there was one element to Exelon’s presentation that probably went under the radar, but I believe it worth a mention. One of the core capabilities of a Predix-type edge-to-cloud platform is a development and runtime environment where end users can create and deploy microservice-based apps. Common thinking has been that this is the last platform functionality end users will embrace, due to complexity of transitioning from traditional IT architecture, processes, and resources to platforms.
However, Exelon talked about two applications that they have created using the Predix app development environment. The first, called Udentify, is for integrating visual images from the field (and eventually customers) into Predix Asset Performance Management (APM) for artificial intelligence analytics. The other, EcoCRED, is an employee tool that uses gamification to reduce commuter emissions from employees. They were straightforward, to be sure, but the implications are not.
This development environment is crucial to gaining what are likely to be the most valuable benefit of digital transformation: the ability for a company to identify and quickly capitalize on a business or market need in a low-complexity way using internal resources. Though there might be other examples out there, this was the first time I’ve seen production examples (on any platform) from an industrial end user.
Another utility, New York Power Authority (NYPA) keynoted. President and CEO Gil Quiniones discussed the three major trends disrupting power utilities and how his organization is changing to cope with them. By using Predix, Quiniones stated that NYPA will become the industry’s first end-to-end digital utility in the United States.
NYPA will use Predix digital twin capabilities in three new hubs:
- NY Energy Manager – Will deliver digital twins of business customer facilities, with about 10,000 total now growing to a planned 20,000 by 2020.
- Integrated Smart Operations Center – Plant, substation, and transmission digital twins will enable continuous real-time monitoring for asset health, security, and efficiency. In times of emergency (think of the Northeast 2012 derecho), the hub will serve as an end-to-end operations center, leveraging the real-time visibility of the digital twins.
- Advance Grid Innovation Lab for Energy – This hub will be within the Smart Operations Center. In it, the entire State of New York grid will be granularly digitized, including generation, transmission, and distribution infrastructure.
In addition to their core missions, these hubs will also serve as incubators for the region for ongoing digital innovation by OEMs, utilities, academia, and other interested parties.
GE Predix Focus on Execution in Core Markets
As Microsoft CEO Satya Nadella commented in a conversation with Flannery, reboots are necessary in business. In reaction to some of its recent financial performances, GE is in a bit of a reboot mode, concentrating most Predix efforts on core markets (automotive, utilities, healthcare, oil and gas), emphasizing an applications-first market strategy, and continuing to look at the overall health of the company.
Despite some of its market setbacks, GE does have a unique combination of market advantages.Of course, it’s massive installed base and asset knowledge have always been the obvious advantages. However, GE is also the first industrial company that went all in on digital. It has taken lumps for doing so, certainly, but it also has taken away insight that can only be gleaned from being the first ashore.
Predix and GE Digital orders are up, a more focused market strategy is being applied that emphatically stresses execution, and Flannery is likely to continue to examine the business with hard metrics in mind. The company will need to navigate some intense shareholder pressure and manage the gap between the perceived value of digital transformation and adoption rates. Yet, GE intends to succeed in a market characterized as, in Flannery’s own words, a “wholesale transformation of companies made up of machines, people, software, supply chains, fully integrated.”