The Industrial Internet is changing the world, and people are taking notice. Recently Harvard Business Review published a report on how GE is transforming itself from an industrial hardware manufacturer into an advanced analytics and data science company providing industrial machines loaded with digital sensors that connect to cloud-based software platforms. It’s a transformation that GE is asking its customers to undertake at the same time, even tying revenue to performance improvements like decreased downtime. The “newfound ubiquity of digital connectivity” and cloud computing are powering a revolution in how business is done -- and it’s time to change or be changed.
Digital technology is fundamentally different. Whereas analog technology was prone to variation, digital technology can deliver a clear, consistent signal. And it’s perfectly replicable. The HBR report provides the example of a Facebook page that renders the same in Bangalore as in Palo Alto. Furthermore, with the necessary infrastructure in place, the page can be produced around the world at virtual no incremental cost per instance. The possibility of “exact replication infinite times at zero marginal cost” dramatically improves scalability and generates new opportunities to collect data and turn it into something useful. The key for companies is identifying the trends that matter and creating systems to react in intelligent ways that bring a true competitive advantage.
Beyond a paradigm shift
The startup world loves to talk about disruption, but this is something different. This is about connectivity and recombination. Machines are outfitted with sensors, data is generated in massive sums, and the processing of that data through software is connecting machines, facilities, and people to expand the possibilities. The same machines are capturing the data; it’s the software that’s evolving to become more powerful. What’s more, value is created when machines built by different manufacturers are connected. This is what’s exciting about GE opening up the Predix platform in 2015 so that any machine, any vendor, any vintage can join the Industrial Internet and be a part of that value creation.
Capitalizing on the Industrial Internet may look like just a technological transformation, but it requires real organizational transformation as well. GE tackled this change head on by creating GE Software to guide software development strategy across the company’s different business units. The flagship GE Software Center in San Ramon, California, now has over 1,000 software developers and data scientists working on bringing the platform for the Industrial Internet to life. The offerings bring implications to the business side as well. How GE works with customers is changing, and the organization is aligning around delivering quality outcomes to customers. Joint ventures, such as Taleris, a collaboration between GE Aviation and Accenture, and partnerships with other companies, such as Intel and Cisco, are developing new capabilities that facilitate that process. The potential for any organization is to identify new opportunities and business models by leveraging software and developing new expertise to drive efficiency and better outcomes.
Change is not without risk, but the potential gains of embracing the Industrial Internet are immense. This new way of working involves enhancing what your business currently does by connecting to what other companies do and leveraging their expertise. Think about what you can recombine and tap into. As the report notes, “Your existing capabilities and customer relationships are the foundations for new opportunities.” What can you connect?