WAC

G.E and Industrial Internet:

By: Umair Siddiqui

06995

General Electric ,a company what some might consider “low tech, formed in 1892 by
Thomas Alva Edison, had grown over the years into a large industrial corporation with
interests in diverse businesses such as aviation, power, rail, healthcare, and oil & gas with
revenues of US$ 147.669 billion for the financial year ended 2013 (Refer to Exhibit I for
GE’s five-year financial summary). GE recorded revenues of US$ 800 million from its
‘Industrial Internet’ segment for the same period.The company constantly focused on one
concept which was constant innovation in order to remain in business.

This case discusses the digital transformation that the company achieved with its
Industrial Internet initiative. The initiative started in 2011 with GE setting up a center at
San Ramon, California, aimed at adding networking and distributed intelligence
capabilities to all its machines ranging from industrial and grid control systems to aircraft
engines. The data derived could be analyzed to increase efficiency since each and every
aspect of an industrial operation could be monitored and tweaked for optimal
performance, thus reducing down-time and enhancing productivity across all the verticals
the industrial giant served resulting in the savings of billions of dollars which every
company wants.

The history of the Industrial Internet at GE could be traced back to 2004 when the
company stood as one of the most valuable companies in the world. However, it was not
as big as Apple, Microsoft, or Google. Immelt realized that the success of most of these
companies was attributable to software, an area where GE did not have a huge presence.
G.E with their remarkable research and developments came up and introduced a concept
of industrial internet by shifting their business interests on technology and use of
advanced softwares within their products to create efficiency in the systems where it was
to be used.

Digital transformation has created an opportunity for General Electric to differentiate its
manufactured products through data-collecting sensors, the Industrial Internet of Things
(IIoT), and smart machines. Interestingly, this old economy company is a leading
innovator in the cutting-edge Internet of Things (IoT) space. By using GE machine with
dozens to thousands of sensors mounted on them collecting data, customers can perform
analytics to improve asset performance and minimize unscheduled downtime.

As part of its Industrial Internet strategy in 2012, GE launched its Predictivity line of IoT
services. According to GE, the Predictivity platform could help companies in industries
such as aviation, healthcare, energy, transportation, and manufacturing to benefit from
real-time insight and analytics. By 2013, GE’s Predictivity solutions had clocked
revenues of US$ 290 million. In June 2013, GE launched its Big Data and analytics
platform for the Industrial Internet, robust enough to manage the huge data produced by
large-scale industrial machines in the cloud.

Several internal surveys conducted in GE found that it sold US$ 4 billion worth of
industrial software every year, used for monitoring wind turbines and running pumps.
This was in contrast to the billions of dollars made by other companies. To add to its
troubles, companies such as IBM were developing software that could discover why
machines such as gas turbines failed by simply studying raw feeds from vibration motors
or gauges. Considering that it sold industrial equipment worth US$ 60 billion a year, GE
had not focused on these applications as a niche.

GE’s Industrial Internet solutions solved many problems, according to Paul Rogers
(Rogers), Chief development Officer at GE’s San Ramon software center. Rogers cited
the instance of oil firms, and said that in earlier times, an employee was sent in a truck for
monitoring the oil wells. Since most of the oil wells were in remote locations and were
unmanned, it nearly took three weeks to discover and fix the pumps that had stopped
functioning. According to Rogers, this process led to oil firms incurring huge losses. This
problem could instead be solved through GE’s applications where sensors could be
placed on the oil wells or assets.

Taking its Industrial Internet forward, in August 2014, GE created a pioneering

industrial-scale data lake software system in collaboration with Pivotal that could change
the way large industrial entities stored, managed, and gathered insights from the analysis
of Big Data. According to Dave Bartlett (Bartlett), computer scientist and chief
technology officer for GE Aviation, industrial data lakes would help companies predict
future problems and run machines more efficiently, sustainably, and profitably. They
would also help GE maintain and service machines.

In June 2014, GE stated that the growth of the Industrial Internet technologies could be
inhibited by some challenges. Because to gather information and insights you need access
to the data and customers need to feel comfortable with sharing data. So the first
challenge is the security and privacy of the data – that is essential. The second challenge
is the creation of a substantially broader platform that allows customers to gather value
from all the Industrial Internet solutions that can be applied from different providers. The
company put great efforts in order to derive the solution for these.

General Electric has historically been a manufacturer of mechanical and electrical

hardware, what some might consider “low tech.” This shift into computing, software,
and data analytics shows how important computing has become to the modern economy.
In some sense, every company is becoming a technology company. GE as used its scale
to invest in technology that smaller competitors cannot afford while moving the industry
and world forward. This created new revenue streams and cache, differentiate its legacy
products, and build barriers to entry around its business and a long-term advantage over
competitors.