General Electric powers up digital growth on the Industrial Internet

Profile picture for user slauchlan By Stuart Lauchlan October 4, 2015
Summary:
General Electric's making some bold predictions for growth from its digital operations, but can it deliver the platform for the Industrial Internet?

Jeff Immelt
Jeff Immelt

The digital company…that’s also an industrial company.

That was the bottom line messaging from the Mind and Machines conference, staged last week in San Francisco by General Electric (GE).

It’s a bold claim, backed up by the headline-grabbing prediction that the firm expects its digital operations to drive software revenues up to $15 billion by 2020.

Assuming that this prediction is within the realms of probability, it’s a validation of CEO Jeff Immelt’s strategy of using software and digital tech to beef up productivity gains for the firm’s traditional industrial portfolio of offerings.

That’s important, he argues, because industrial productivity has been on the wane from 4% per annum between  1990-2010 to an average of 1% between 2011-15.

But there’s now a chance to turn that around, he states:

My thesis today is that, as an industrial company, it’s our turn.

The opportunity for industrial companies is to grab this next age of productivity.

We have to turn connectivity into insights, and insights into outcomes.

When that is done correctly, then what results has its own name, he adds:

That’s the Industrial Internet.

Big business

It's a huge opportunity to be tapped into, states Immelt:

We believe the Industrial Internet could be twice the size of the consumer internet.

Inside my company, I say fast beats slow but big and fast can beat small and fast.

What the Industrial Internet empowers is the reinvention of the sort of heavy industries in which GE operates. And just as disruptors of other industries, such as Uber, are software companies rather than, in that instance, cab firms, so it will be in the Industrial Internet space, Immelt predicts:

This merger of the digital and the industrial is really the genesis of what I say: ‘If you go to bed tonight as an industrial company, you are going to wake up tomorrow as a software analytics company’.

GE has been eating its own dog food here, no longer managing fleets of engines, for example, because every engine, turbine or MR scanner is now what Immelt calls “unit of one with its own P&L (profit and loss)” in terms of how it could be operated and analysed.

He points to the railway engine business as another case in point:

We used to think of this as a locomotive. Now it's a rolling data center.

For its part, GE has to date made productivity savings in its own operations of $400 million and now expects that number to rise to $1 billion.

Moreover, says Immelt, if other companies follow GE’s lead then the new generation of industrial digital firms could add an estimated $1 trillion to global GDP, adding:

It's not a concept. It's reality. It’s not just going to be inside GE.

Productivity remains absolutely critical to the future of our industries.

We're in the early phases. This is critical to drive industrial productivity in the future.

It's going to move quickly, and there is no reason why any industrial company shouldn't be a participant.

Platform play

For its part, GE is looking to its it Predix open operating systems for the Industrial Internet as a major growth engine, promoting asset performance management as being what Immelt defines as the "seminal way to get started with the Internet”.

The company predicts that half a million applications will eventually be written for the Predix platform, generating more than $5 billion in revenue this year and $15 billion by 2020.

The program has about 4000 developers today, and GE is hoping for 20,000 by next year. GE customers including Boeing Co., ConocoPhillips and Rasgas are among those cited as already building apps on Predix.io.

At the Mind and Machines conference, GE also unveiled its Digital Power Plant hardware and software platform for tapping into individual machine data for analyzing, dispatching and overall management of a plant's power resources.

Among the firms to digitise their power plants is US energy provider Exelon, which is using Predix across all its generation facilities and hopes to get 2% more energy out of its wind farms.

Ganesh Bell, general manager of software and analytics for GE, argues:

To transform the entire energy value chain, we need a purpose-built, modern digital industrial stack – from software-defined machines, to the controls, to the cloud.

GE also announced partnerships with a couple of Indian services giants, Infosys and Genpact, to build out new solutions for the Internet of Things (IoT) pitch.

Infosys Chief Executive Vishal Sikka says in a statement:

The Internet of Things is about dissolving the layers of complexity and the intermediaries that create distance between the point of manufacturing and the point of consumption, between understanding and preventing points of failure in the manufacturing process, in machines or in critical processes, and between what the customer wants and what is delivered.

The value comes from bringing intelligence directly to these end points, and in and in doing this we can completely reimagine the notion of industrial manufacturing, and every industry, and we look forward to doing much more in our work with GE in these areas.

Meanwhile Genpact is one of the Predix early adopters, developing, testing and demonstratiing solutions to tap into the Industrial Internet , combining Genpact's patented Smart Enterprise Processes (SEPSM) and unique Lean DigitalSM approach with the Predix, platform.

My take

Bold predictions, bold goals. But who would bet against GE being the company that manages to pull this off? One to watch very closely indeed if you’ve any interest in the future shape of the IoT industry as well as the emerging Industrial Internet .