Good OM Reading: GE’s Big Bet on the Industrial Internet
GE has bet big on the Industrial Internet — the convergence of industrial machines, data, and the Internet (also referred to as the Internet of Things) — committing $1 billion to put sensors on gas turbines, jet engines, and other machines; connect them to the cloud; and analyze the resulting flow of data to identify ways to improve machine productivity and reliability.
While many software companies like SAP, Oracle, and Microsoft have been focused on providing technology for the back office, GE is leading the development of a new breed of operational technology (OT) that literally sits on top of industrial machinery. Long known as the technology that controls and monitors machines, OT now goes beyond these functions by connecting machines via the cloud and using data analytics to help predict breakdowns and assess the machines’ overall health. GE executives, writes the MIT Sloan Management Review (Feb. 18, 2016), say they are redefining industrial automation by extracting lessons from the IT revolution and customizing them for rugged heavy-industrial environments. This lengthy MIT case study looks at how the old-line manufacturer is remaking itself into a modern digital business.
GE recently projected its revenue from software products would reach $15 billion by 2020 — 3 times its 2015 bookings. While software sales today are derived largely from traditional measurement and control offerings, GE expects that by 2020, most software revenue will come from its Predix1 software, a cloud-based platform for creating Industrial Internet applications.
GE has long had the ability to collect machine data: Sensors have been riding on GE machines for years. But these pre-Internet of Things (IoT) sensors were used to conduct real-time operational performance monitoring, such as displaying a pressure reading on a machine, not to collect data. Indeed, a technician would often take a reading from a machine to check its performance and then discard the data.