The combination of the ServiceMax platform and GE Digital’s Predix platform, being pitched as the analytical cloud for the industrial internet, creates some interesting opportunities for the two working together.
We began to see evidence of this at this GE’s Minds and Machines event in Berlin this week, where it was announced that a new integrated solution of GE’s Asset Performance Management portfolio and ServiceMax’s field service management solution would be made available in late 2017.
The new integration solution aims to automatically collect and analyse service data - from predictive maintenance needs to failure information and recommended work actions - to help industrial companies move from beyond traditional asset monitoring to advanced predictive maintenance.
For example, instead of an asset breaking, someone being sent out to identify the problem, then having to go and get the right tools/parts to address it, then fixing the asset at a later date, the solution aims to predict when a problem will occur, allowing someone to turn up to service with what they need before it experiences any downtime.
You can see how the blend of the GE Digital and ServiceMax’s technology are very closely aligned.
I got the chance to sit down with Scott Berg, chief operating officer at ServiceMax, and Deborah Sherry, general manager and chief commercial officer at GE Digital, this week in Berlin to discuss how the integration between the two companies is going and to get an idea of what customers are demanding as they transition to becoming ‘industrial internet’ companies.
Speaking about the APM announcement, Sherry said:
Asset Performance Management is a sweet spot for GE, it is one of the things we are superb at. We have really deep expertise in that. And in all of these industries it is about field service as well, right? 75% of the world’s economy is services in industry. I think Predix is important, but one of the reasons why this marriage was so great, is that those capabilities and pulling together our ability to address assets, and the fact that everybody that has assets in the field needs to manage them - not just what the data is telling you, but what are the solutions?
If that’s what the data is telling you, here’s what you need to do and here’s who needs to go and do it. Pulling that together has meant that we can serve a greater value chain of activities. Basically we can help the clients with the analytics and the solution even better, together.
Berg agreed, and added that the combination of GE’s capabilities with ServiceMax’s platform means that companies can operate a predictive, end-to-end service function - moving away from the break/fix dilemma. He said:
We have always been focused on the activity around services and managing it. If you think about the evolution of that, it would have been interval based management - every year, every month, every quarter. And it was condition based maintenance - whenever it does a thousand cycles.
The really big leap forward here with APM is that it becomes truly predictive and it becomes a closed loop process. The plan and the profitability of the asset and how you’d like to operate it for an outcome, what jumps out of that is recommendations for when service should occur and what should occur.
What goes back into that is not only the IoT data, but what did the human being do when they got there to make that a closed loop process? And now that becomes part of the knowledge and then you do even better predictive maintenance after that. That’s really the opportunity here.
With regards to the integration into GE Digital’s business, Berg said that from an administrative and systems standpoint, the two companies should be fully integrated as of 1st July this year. However, beyond this, the two companies are working together commercially to find strategic alignments across both their customer bases and their technology portfolios. Berg explained:
I think it’s been really exciting actually. There was a lot of knowledge of us within GE, because they were one of our larger customers anyway. I think the exciting thing is that you can see how much more reach we have as a product and a brand, and how quickly we have been able to figure out where our alignments are with strong GE business units. And what our target customer base would have been. Those are the immediate things.
If you look further forward, I think what we are trying to do is enhance our product to take better advantage of all our GE knowledge to go deeper into things like power and energy related businesses.
Commercially we are working on strategies to partner with commercial leaders in the business units to bring our expertise as an overlay into those business strategies.
I think there are a lot of natural fits across all of the traditional GE businesses. Because our traditional customers have been industrial companies anyway. I think the quickest wins are around OEM manufacturers, we specialise in those areas. We are finding parts of the GE ecosystems that are ready and able right away for that kind of thing.
Making that investment decision
Throughout the Minds and Machines event this week, GE spoke about the potential for industrial companies to establish new business models as they invest in Predix and ServiceMax. I wanted to get a better idea from Sherry about how existing customers are already doing this, as it isn’t always immediately obvious.
One of the interesting points that came out of the discussion was that companies are able to use the data that they collect from their existing assets to sell on to other companies that may find the insights useful. This allows for a shift from just being a company selling or operating assets, to one that is essentially a data and service company. Sherry provided an example of Schindler, a Swiss company that operates lifts and elevators. She explained:
Schindler is leveraging Predix for a million elevators and escalators, that more than a billion people a day use. They work in office buildings and apartment buildings and retail shopping malls. Retail shopping is an example where Schindler is getting into new lines of business because they have data now on when people are moving on those elevators and escalators and when they’re not. They know exactly where they’re going.
Number one that data can be used for things like energy savings. But number two, they know who is going to what parts of the shopping mall. So they can actually sell that data back to shopping mall owners, to charge differential rents on the most valuable real estate. That’s a whole new line of business for them.
However, this shift from being an asset company to becoming an ‘industrial internet’ company isn’t an easy one. Sherry admits that the biggest challenge that faces customers right now is trying to figure out what is the best bet to take and where to invest. She said:
Everybody wants the right ROI, right? And so, how do I know that I’ve spent my money in the right way? They have to make a bigger infrastructure spend. And if you’re rolling it out to 300, 400 factories around the globe, that’s a major decision. And most companies worked in more fragmented ways and had very fragmented systems, so any one decision was lower risk.
So they are all struggling with knowing the right bets.
However, GE is incredibly confident about the capabilities of its platform and insists that companies that aren’t investing in digital tools - even if they aren’t GE’s - are essentially throwing money down the drain. Sherry said:
Not adopting digital technologies to improve your productivity is an opportunity cost. There is no example of, whether we are doing it for ourselves, or for our clients, where anybody will tell you that they installed any of these products that did not drive them benefit.
You wait at your own expense, your competitors will launch ahead of you. You are just throwing your company’s money down the drain by not making the investment soon enough. It’s just a fact of life now that those businesses that are investing in digital technologies are massively improving their productivity.
Sherry said that gains could be anything from 3% - which could still equate to millions of dollars in a large industrial company - to as much as 25%. GE is so confident of this that it is now often selling based on outcomes - for example, it will promise an X% increase in efficiency. And if it achieves that, it gets X% in return. Therefore, if it over performs, it’s an even greater return for both the customer and GE.
However, beyond the investment decision, there are also structural, cultural and skills challenges that face companies making this transition - challenges that shouldn’t be underestimated and ones that GE has experienced first hand as it underwent its programme to becoming a ‘digital’ company. Sherry advised companies to consider the following:
As soon as you move away from thinking about just the asset, and the industrial process, and start thinking about your business holistically from product design, to delivery and market, and more, because you need to track and maintain assets and how you service it; and you look at the entire chain of activity that is your business, not just the asset, and you’re really trying to manage that, it’s about a deep management capability in utilising software and analytics for your business.
That’s a hiring change, that’s a skills change. Number two, it’s a culture change, that we are ourselves are going through - from traditional industrial, with long product cycles, and perfection, to being able to launch and iterate software. Being able to use those analytics to make and drive your decisions.
And really looking at your whole business, your people and your processes, everything, so that you can have a holistic management approach through software and analytics. The advice is you need to think about how you bed that down in your culture - talk about education, hiring, structures, incentives.