This week, General Electric, specifically the company’s GE Digital group, hosted a group of Wall Street equity analysts at its campus in Silicon Valley to present a report of progress. Division CEO Bill Ruh predicted that GE is delivering the winning formula in efforts to leverage industrial networks and the Internet of Things (IoT) in assisting businesses to enable new industrial outcomes concerning asset management.
As Supply Chain Matters has pointed out in previous commentaries, GE has invested significant dollars and resources into the growth of its new digital business since its founding in 2011. Upon listening to the webcast of this briefing, it was clear to this author that GE intends to leverage its perceived first mover market advantage in enable the notions of industrial networks.
Development efforts surrounding the core GE Predix operating system began in 2012 as an internal effort to connect the vast amount of sensor data generated by equipment products. By 2013, GE began to analyze data among fleets of machines and equipment to discover important analytics related to operational performance and maintenance needs. Operating units began to correlate certain operating environments with performance outliers and needs for unplanned maintenance. It was then that GE executives began to view Predix as a data and analytics platform tailored for the unique and demanding requirements of many forms of equipment networks made up of aircraft engines, turbines, wind mills or sophisticated medical equipment. That includes collecting very significant volumes of real-time data and harnessing that data into more predictive analytical insights into asset up-time and reliable performance.
In this week’s update, Ruh indicated to analysts GE’s forecast of over $6 billion in revenues for this unit this year, with a goal of over $15 billion in revenues by 2020. That 2020 revenue forecast is now lower than previous estimates indicated earlier this year. As we have noted in our other IoT focused commentary, there is still a lot of market education and maturation required.
He outlined four pillars to support this level of growth:
- A keen focus on customer outcomes particularly in business services growth.
- Support of incremental productivity needs of customer.
- The launching of “killer’ applications
- The leveraging of GE’s Predix operating system in the enabling of the Industrial Internet ecosystem. Ruh indicated that by the end of this year, there will be 20,000 developers working on Predix enabled applications.
What makes GE’s approach to IoT enablement unique is its current ability to leverage both advanced digital technologies as well as the deep vertical industrial equipment domain knowledge that exists across GE’s industry verticals. With a strong presence in transportation, commercial and military aircraft, alternative energy, and medical equipment sectors, there are a lot of potential opportunities to leverage. From an organizational perspective, GE currently leverages both a business horizontal and business unit vertical leadership structure surrounding GE Digital.
From a broader go-to-market strategy perspective, executives placed emphasis on ongoing efforts to open the Predix platform environment to more developers and partners and building out a richer ecosystem surrounding the platform. Other efforts are directed at building solid customer references in both traditional and outcome based pricing deals, building digital commercial scale among different key industry verticals.
GE Digital executives went to great lengths to point out their belief that industrial based IoT applications and network opportunities will be a far larger market segments that consumer focused IoT applications, pegging the latter segment as greater than $225 billion by 2020. That stated, during open Q&A, executives indicated a belief the 2017-18 timeframe will be the point of industry inflection in IoT enabled efforts. From this author’s lens, that is fairly consistent with comments and observations we’ve heard from other IoT focused technology and services providers.
One other area we wanted to highlight for our readers was that of GE’s stated approach, namely this this is an ongoing race, and that came across quite clearly in executive level presentations and open Q&A. This is an industrial company that is fostering a software industry type culture of fast innovation and maintaining market dominance. As a further point of reference, GE itself elected to begin efforts to move its corporate headquarters from pastoral central Connecticut to Boston’s seaport tech district principally to foster an overall culture of fast innovation. In March, Jeff Immelt took to the stage to tell Boston’s business leaders just how important their city is in his grand plan to redefine the industrial conglomerate- “I want people that are down in the Seaport, I want them to walk out of our office every day and be terrified. I want to be in the sea of ideas so paranoia reigns supreme.”
That is indeed a different corporate culture for a diversified industrial manufacturer.
GE is in a race among other enterprise technology providers, systems integrators and industry platform providers a race that presents differing roles of partner, co-developer and perhaps key competitor.
Like previous market inflection points such as Client-Server, ERP, RFID, Cloud and now IoT, the race is on, and rather than a sprint, it is a marathon that features many hills and valleys and environmental changes along the route. Only this time, the make-up now includes some very interesting new players, one’s that live, breathe and practice industrial networks, equipment, services and understanding of asset management.
Let the race continue.
Bob Ferrari
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