Friday, December 07, 2012

Industrial Internet - GE's Grand Renewal?

Recently, GE announced its new strategy called 'Industrial Internet'. Its based on well-known trend 'Internet of Things'.

By using Industrial Internet, GE intends to offer smart software services over their existing hardware product lines across various sectors - healthcare, aerospace, energy. They intend to do this by gathering massive amounts of data from those devices and then utilize the data for further analysis and subsequently towards the optimization of GE's own product configurations as well as the processes involved in those products. GE projects that a mere 1% of productivity achieved out of this initiative could lead to billions of savings. That's astonishing!. 
For example, a General Electric power could transmit valuable data about electricity usage that can then be optimized in isolation or along with other parameters/interrelated devices!.
Couple of aspects in this initiative are really interesting!.

- A Company articulates a strong conviction for future. In today's volatile times, by all means, this is a brave attempt by GE!.
- GE being a industrial conglomerate, articulates its strategies in terms of cutting-edge technologies - Big Data, Analytics, Data Visualization using Natural User Interfaces. The whole Industrial Internet idea is driven by GE's R&D
- At times when leading social/online startups are struggling to find their business value, GE articulates a compelling business value proposition of its new idea
- GE takes a architectural-approach to the solution. In one of the sections in the recently released report, it says traditional ERP products encourage only local optimization - optimization at product level or transaction level. Taking a industrial internet approach that gathers data from a variety of sensors and devices will have the ability to integrate and encourage a systemic approach to problem solving!. To me, that's profound value that was not possible before!.
- Declining cost of sensors and computing infrastructure, affordability of communication networks, increasing capabilities of statistics and algorithms all have been put to form a cohesive story that delivers a business value.

GE is going to rally around a large ecosystem of technology and service provides to pursue this vision in coming years.  To me, it sounded like GE's vision has lot of similarity with SAP, when it pursued Enterprise Service Oriented Architecture along with its partners as its Grand Vision a few years ago. Not that, GE could potentially reverse this direction or fail, but there are certainly significant challenges to overcome in its journey:

- All GE's products may not have the capability to emit data as required by the new ecosystem. Some products may need to be re-engineered / redesigned altogether to support this vision. Customers need to upgrade to new products if they need to avail smart services!. 
- Once hardware devices support emitting data, the next challenge is Quality of Data. All downstream activities such as analytics, visualization will be of value only when the underlying data is useful.
- GE's taking an architecture approach which is extremely difficult to implement. We know why - it is very similar to the challenges that I articulated in the post Why Enterprise Architecture is fundamentally failing. Though GE's vision is no where related to Enterprise Architecture, both are similar in terms of applying systemic thinking. And systemic thinking is hard, especially when it comes to siloed organization models.
- Is it GE's Grand Renewal?. Is GE attempting this whole thing only because it reached a saturation in its traditional businesses?. Is GE trying to move up in the value chain further?. Is GE moving into Services business?. Of course, its not trying to become a IBM global services or a SAP product vendor?. Of course, Not.  It pursues this vision purely an organic growth strategy, that builds on its own products/services targeted to their existing/new customers. 

In one of the interviews, a GE executive said - When it comes to devices, We are reaching the end of Physics. The next phase is to integrate digital information technologies to those devices to offer smart services to the client.

The future possibilities look very interesting!. And its all hybrid and versatile - mechanical with electronics, electronics with information technologies, information technologies with physical spaces/natural user interfaces.