This post originally appeared in Manufacturing Operations Technology Viewpoints by ARC Advisory Group
General Electric today has a singular focus. This is to use the Industrial Internet as a conduit to help manufacturers increase production efficiency, improve execution, and optimize their respective businesses through advanced analytics. The company’s primary target appears to be to help industrial organizations solve two of the biggest challenges they face: improving overall asset performance and preventing or minimizing unscheduled downtime. GE feels that the proof is in the success it has experienced in its own factories, where the company has applied advanced, real-time analytics to maximize manufacturing production performance. This involves leveraging the Industrial Internet of Things (IIoT) to collect, aggregate, and integrate data from design to service and leveraging analytics to support real-time decisions and actions. This is the basis behind GE’s Predix platform for secure edge-to-cloud connectivity and manufacturing analytics. However, can Predix also be applied to help new companies that form as a result of partnerships achieve synergies to reduce costs and increase capabilities? GE feels that its reinvention as a digital industrial company, along with its technologies, such as Predix, will ensure that it can.
GE and Baker Hughes announced that the companies have entered into an agreement to combine GE’s oil and gas business with Baker Hughes to create a global oilfield technology provider. The “New” Baker Hughes will be a major equipment, technology and services provider in the oil and gas industry with $32 billion of combined revenue and operations in over 120 countries. Baker Hughes shareholders will receive a special one-time cash dividend of $17.50 per share and 37.5 percent of the new company. GE will own 62.5 percent of the company, which will be a new NYSE listed corporation. The transaction is expected to close in mid-2017.
This new company will combine GE’s digital industrial technology and Baker Hughes’ capabilities in oilfield services. The new company will provide physical and digital technology solutions, much of which will be based on Predix.
The new company will combine the digital solutions, manufacturing experience and technology from the GE Store and the deep experience Baker Hughes has in the oilfield services sector. The combined product portfolio of GE Oil & Gas and Baker Hughes in drilling, completions, production and midstream/downstream equipment and services will create the second- largest player in the oilfield equipment and services industry.
From GE’s fullstream oil and gas manufacturing and technology solutions spanning across subsea & drilling, rotating equipment, imaging and sensing; to the Baker Hughes portfolio in drilling & evaluation and completion & production, the combined company will be moving beyond oilfield services and into oil and gas productivity solutions, all powered by Predix.
The primary components of the Predix architecture include Predix Machine, a software layer that enables communication with the industrial asset, and the Predix Cloud. This also includes local applications, such as edge analytics, sensors, and industrial controllers that can be installed on factory gateways. Also, Predix Connectivity, a service that allows machines to talk to the Predix Cloud via a virtual network comprised of cellular, fixed line, and satellite technologies. This service is for situations where a direct Internet connection is not readily available. In addition, Predix Cloud, a secure global cloud infrastructure is optimized for industrial workloads and meets regulatory requirements. Finally, developers can use Predix Services to build, test, and run industrial Internet applications. It also provides a micro-services marketplace in which developers can publish their own services and developers and end users can consume services from third-party providers. GE Digital has established a developer community for Predix which includes over 2200 developers and over 25 early adopter projects with various customers, systems integrators, and OEMs.
For new companies that form as a result of partnerships to succeed, it is important to have appropriate platform and products to help leverage each and every asset that the origin companies bring to the table. However, to succeed in this, the origin companies must be “on the same page,” from top to bottom, and have the tools to achieve this objective. GE and Baker Hughes are on a mission to prove it can succeed here. We’ll surely learn more about this new company at the upcoming GE Minds and Machines Event. Through strategic acquisitions, such as Meridium, and organic growth, GE has reinvented itself as a predominantly digital industrial company by developing these IIoT-based solutions, the Predix platform, its Brilliant Manufacturing Suite, and an ecosystem of partnerships.
The company has re-invented many of its own factories with these solutions and seen the impact on its own bottom line results. GE plans to deploy these types of solutions for other manufacturers and we anticipate that the company will demonstrate and showcase many of them at Minds and Machines.