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Almost five years ago, at an event held in London’s Battersea Power Station, GE CEO Jeff Immelt discussed his vision of sharing machine data through an industrial internet.
Immelt drove GE’s strategy to move the company into the digital age. This involved building intelligence into its products, such as internet-connected aircraft engines, wind turbines and medical scanners, to support predictive maintenance, powering a services-based business model.
Bill Ruh, then vice-president for software at GE Research, was given the role of leading this digitisation initiative at GE, with the formation of the GE Digital business unit.
However, as the company’s core businesses struggled, Immelt was ousted from the top job, and a new CEO, John Flannery, took over in August 2017.
Data is still a critical component of GE and GE Digital, but it is now looking at an outcome-based business model.
Since 2015, GE’s goal has been to link the products sold through its business units to its Predix platform to power services that use predictive maintenance. The idea of an outcome-based business model refines the approach GE Digital has previously taken with Predix, with an emphasis on creating value by using advanced analytics to achieve a business goal.
Speaking to Computer Weekly about the ups and downs at GE Digital, Ruh, who is now both the CEO of GE Digital and the chief digital officer (CDO) at parent GE, says it learned that building its own cloud infrastructure was not the right choice for GE.
“At one time, we looked at Facebook and it was building its own cloud datacentre, and it seemed like it was the right thing to do – but that was not the right thing for us to do, even for a company the size of GE,” he says.
“Under John Flannery, we have focused our strategy. The vertical GE businesses sell the GE Digital portfolio to their vertical customers. GE Digital continues to grow our strong commercial business focused on non-GE industrial verticals”
Bill Ruh, GE
Instead, GE turned to Microsoft Azure and Amazon Web Services (AWS), which provide the capabilities it needs. “We are much happier. We look to the cloud providers at the bottom of the stack. In the middle of the stack we use a lot of open source, like Kubernetes for containers, Splunk for monitoring, then we integrate it all as an industrial-oriented platform.”
The refocus of GE Digital goes over and beyond adopting a technical architecture based on a public cloud strategy and proven open source components. Fundamentally, GE’s ambition for the digital age was pioneered by Immelt. But GE now has Flannery as its CEO, who has a different agenda.
When asked how the change in CEO has affected GE’s digital strategy, Ruh says: “Under John, we have focused our strategy. The vertical GE businesses (such as aviation and power) sell the GE Digital portfolio (such as Predix APM and ServiceMax) to their vertical customers. GE Digital continues to grow our strong commercial business focused on non-GE industrial verticals, such as consumer packaged goods, chemicals, heavy equipment manufacturing and automotive.”
Building a platform business
Ruh says GE recognises it needs to work with other companies to support customer requirements. “We are not the be-all and end-all of applications. We are also working with people building their own applications. For instance, we integrate ServiceMax with CRM [customer relationship management] software because the customer data needs to be integrated. We also integrate with the ServiceNow platform. You must be able to integrate or allow [other applications] to run on your capability.”
This strategy helps to spread Predix into areas beyond GE’s traditional focus areas. Discussing the Predix applications market, Ruh says: “It is not an app store with a million apps, but getting the right ones allows us to move forward faster.”
For instance, Saudi company Obeikan is building food and beverage applications on top of the Predix platform, which helps GE expand into an untapped market for Predix, says Ruh. “We don’t have food and beverage domain expertise. We are not trying to have 1,000 people in every vertical, and we have not explored the niches that are adjacent or competitive to our business. We look, instead, at emerging sectors, such as the food and beverage industry, chemicals, mining and heavy equipment manufacturing,” he says.
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Within GE itself, Ruh says some of the businesses are extending GE Digital’s offerings into their own product lines. For example, GE’s rail business has ported its railway operation software, Raildocks, into ServiceMax, and now sells that application.
Since the rail business has developed its own software, Ruh says there is no business driver to look for other rail software providers to partner with. “We have a model where the business owns its customers and we bring the platform. Our customers themselves are also partners, and build and sell their own apps. Every business is looking to expand their digital business, and we work with them,” he adds.
In total, Ruh says GE has 120 applications being sold on top of the Predix platform.
Focus on outcomes for customers
An outcome-based business model focuses on the outcome for the customer rather than selling a specific product. Customers receive extensive maintenance and support services after they have purchased the product, helping to nurture their relationship with the supplier.
In addition, customers only pay per outcome. For example, they will only pay for a jet engine while it is in the skies, or an MRI scanner that is fully functioning and able to carry out a scan on a patient. Essentially, this type of model ensures that the customer always has the right outcome, enabling them to grow their own business while fostering a healthy client supplier relationship.
As GE Digital evolves, Ruh is keen to work with companies in sectors GE does not operate in to find new application areas where an outcome-based model using the Predix platform can be deployed. Ruh says many industries are being disrupted. “Industries are like dominos – the hard part is finding out who will fall next.”
For instance, the automotive industry is moving at a faster rate compared to many, because it is under threat from new players. The food and beverages sector is also moving fast, not because it is under threat, but because there are so many efficiency and productivity gains to be had.
“We are seeing 20% efficiency gains in food and beverages,” says Ruh. Why? Because, he says, if the production lines can be kept running smoothly, food and drinks manufacturers can improve efficiency by a fifth. “Once the production line is efficient, then you can start making use of data on what’s being produced,” he says.
For instance, this data enables manufacturers to deal with recalls and problems, and to understand where problems occurred. “Manufacturers can put sensors in pallets and in warehouses, and even on the packages themselves, to help them understand the root cause of the issue. Was it heat? Was it bacteria? How many pallets were affected?” According to Ruh, better insight into products can also be used to drive the performance of employees in these industries.
The outcome-based business model relies on sensors connected to the internet of things (IoT) and advanced analytics to provide traceability and improve efficiency by optimising production and reducing operational failures due to machinery breakdowns.
“Customers don’t to buy milk. They want milk based on demand and they want a guaranteed outcome – having the right product at the right time. The thing is, you cannot put a sensor on every carton, but you can have one on every pallet or on the machines,” says Ruh.
GE’s digital direction
Summing up, Ruh says under Flannery’s leadership, the Predix platform remains a focus area for GE’s digital strategy.
“We built GE Digital to create digital solutions for the industrial world and set out to make GE the proving ground for our new ways of working and our vision of the future,” he says. “We have learned and adjusted as the market has evolved and as our customers have realised the opportunity. As John has stated many times, GE remains committed to digital.”