GE has been around for 125 years and it’s the only company in the Dow Jones Industrial Index today from the original Index in 1896. “Change is the competency we have built up to survive this long,” Deborah Sherry, General Manager and Chief Commercial Officer, GE Digital Europe, told delegates at TM Forum Live!
She said a key driver for transformation is productivity, citing stats that in the 20 years to 2010, productivity was rising about 4 percent a year on average. Since 2011, that has slid to 1 percent as a global average She noted that, “Global productivity needs a reboot” and outlined how GE Digital is tackling this through a platform approach which has allowed the company to develop new business models, markets and products – for itself and its customers.
Disruption is coming
GE’s CEO, Jeff Immelt, noticed that third parties were extracting data from the equipment GE sold and understanding more from it than his company or customers did. He saw the threat of disintermediation and complete business model disruption, and understood digital disruption was coming to industry too. Sound familiar?
Immelt met with Silicon Valley companies and took away three big lessons:
- All these companies built platforms that enabled them to rapidly scale;
- They used these platforms to drive complete business model change; and
- They built the software skills and people culture that enabled rapid iteration – fail fast, succeed fast.
So he acted on that and hired Cisco’s Bill Ruh, making him CEO for GE Digital and Chief Digital Officer (CDO) for GE. Ruh took those Silicon Valley lessons and created GE Digital, drove a culture change and launched the Predix platform.
Saving $730 million in a year – $1 billion next
Sherry said that in 2016, GE Digital delivered $730 million in productivity gains using its own products and methodologies. It is targeting $1 billion in productivity gains in 2017. By 2020 it plans to be a top 10 software house and deliver $15 billion in revenue. “And we are on target to do that,” she said.
At the heart is Predix, which is scalable software platform that uses open APIs and a single reference architecture deployed across the entire business. The apps run on top of the platform and physical items the company makes (from jet engines to turbines and cars) have ‘digital twins’ or mirror images in the cloud, which monitor each individual item through sensors. In this way, GE Digital is saving customers billions and opening new business models.
Sherry gave an example in action: Jet engines generate a terabyte of data per engine per flight. When you consider multiple engines per plane and the fact that a jet engine takes off ever two seconds, that’s petabytes of data per second. Using digital twins – “you can only analyze that much data in the cloud” – GE Digital is able to model and predict maintenance on each individual jet engine, flag likely breakdowns and simulate repairs.
She said, “We used to just sell jet engines, now we also sell time on wing”. GE Digital is able to replicate many of these services in other industries too: it has connected 650 oil wells, for example. Sherry commented, “We have so much to offer because we know how to map physical machines to every kind of data model.”
The CEO of Schindler commented, “If you can do it for jet engines you can do it for Schindler elevators.” Schindler is building millions of elevators and escalators and using Predix to understand exactly what is happening in every piece of equipment in real-time, saving the company money on engineers and enabling new business models for them through new data streams – for example, data on retail footfall which could be sold to malls.
Following the examples of how a platform approach has been deployed, Sherry said “It’s about the ecosystem and how you partner and deploy together.”
GE Digital is also partnering with the communications industry. For example its SmallWorld platform is deployed by over 150 telcos around the world to help maintain their networks and improve productivity and up-time. Sherry said GE Digital is also looking to partner with carriers, “not displace them”, to deliver LTE networks for specific communications needs such as in ports, mines and oil rigs. It has a test environment running now with Qualcomm and Nokia. GE Healthcare also works with Vodafone to deliver wireless healthcare monitors to hospitals, for example.
Sherry’s message for the communications industry gathered in Nice for TM Forum Live! was this: “Many of you here are working on digitalization projects But I would urge you to think bigger. You need to think about business model change – with existing customers or into whole new sectors. It isn’t just about product innovation; it’s about company innovation. It’s not just about the technology, it’s about the culture.”
“We need to work together to drive productivity gains.”