Earlier in January, GE’s Oil & Gas business signed a $180 million agreement with Transocean, one of the world’s largest offshore drilling companies, to service the massive six-story machines called blowout preventers (BOPs) the driller carries on its ships. In the past, this would have been a routine maintenance contract, but this deal is different. GE will deploy software, data analytics and machine learning systems on the BOPs to help Transocean squeeze out every last ounce of efficiency, especially in the current oil market.
The Transocean transaction is just one example of the way software is transforming heavy industry, a trend GE is leading as the “world’s largest digital-industrial company.” Every GE business — from Oil & Gas to Healthcare — now works on apps and software. The company also launched GE Digital to supply them with the right tools and build out Predix, GE’s software platform for the Industrial Internet.
Matthias Heilmann, chief digital officer of GE Oil & Gas, is attending the GE unit’s annual meeting this week in Florence, Italy. Before he joined GE a year ago, Heilmann ran ABB’s enterprise software unit. He also spent time in private equity and at SAP, the German software giant. We sat down with him and asked him about energy’s digital future. Here’s the edited version of our conversation.
GE Reports: The energy industry isn’t the first thing that comes to mind when people talk about the connected future. What would you tell them?
Matthias Heilmann: One of the big myths is that the oil and gas industry has been slow to embrace new technologies. The industry has been at the forefront of technology innovation and high-performance computing since the 1980s, especially when it comes to reservoir accumulation modeling and control solutions. However, all that software and technology was typically meant for a very small group of users. Today, when it comes to GE’s digital strategy, Predix and the cloud will allow us to drive adoption to a very large user community.
GER: Can you give us an example?
MH: Instead of building a solution that is only being utilized by 10 users, the premise of Predix and the applications we are building is to open up the well of data analytics to a broad spectrum of data consumers. That is where I see the biggest opportunity.
GER: Does the industry see it too?
MH: The oil and gas industry is at the forefront of adoption. They have no other choice. It’s a tough industry; currently prices are still in the recovery mode. You have to get to oil and do everything you can possibly imagine to drive incremental improvements in productivity and profitability.
GER: How fast can you implement this digital change?
MH: The promise of Predix is that you can do it in two to three years instead of a decade. It’s not dependent on whether you’re going to build up servers for software. It’s purely a function of people jumping on the train. A digital strategy is as much of a software play as it is a cultural transformation. The company has to change, adopt cloud-based applications, open up data analytics and make it broadly available to create productivity.
GER: What are some of the specific outcomes?
MH: It’s not gimmicks. It’s about driving profitability and productivity. They impact your bottom line. This can come in better reliability, which is a very clear and measurable outcome. This can come in risk mitigation or better safety. That’s more difficult to quantify, but it’s certainly an important driver in oil and gas. Or it can come in improved output, yield management and production output optimization. If you are doing it just for fun and it doesn’t really serve an economic purpose, it tends not to stick.
GER: What does the digital transformation look like at Oil & Gas?
MH: There is a digital business, which is a startup in its own sense. It is small today in the grand scheme of things, but it has big plans. Then there are digital solutions, which is a $2.5 billion business. It’s a sensors business. These are products that help you to assess the condition of a piece of equipment, to measure the performance, protect it from malfunction, and inspect it. The sensors include X-ray inspection systems and flow gas, moisture, pressure and other probes. It’s purely a technology play. The data these device produce bring the two sides together.