By Chris Murphy, Editor, InformationWeek
IT leaders trying to apply analytics to run their businesses better should listen to Immelt’s advice, based on his experience leading GE’s Industrial Internet vision.
General Electric CEO and chairman Jeff Immelt has made a big bet on data analytics driving his company’s growth, and on Wednesday he shared some hard lessons he has learned over the past four or five years about using and building analytics software. Immelt didn’t lay those lessons out in a Letterman-style top 10 list; instead, they just sort of trickled out throughout a two-hour customer presentation, where Immelt and GE customers discussed the company’s latest thinking about the Industrial Internet, which is GE lingo for the Internet of things.
Immelt’s observations strike me as relevant for IT leaders thinking about how they’ll apply analytics to run their businesses better. GE is trying to sell software that helps people more efficiently use the jet engines, wind turbines, CAT scans, locomotives and other industrial gear the company makes. You’re implementing analytics software for a variety of different reasons. So here’s my take on what Immelt said and how it applies to you:
Analytics Changes Expectations
A decade ago, GE was in the mode of “the product breaks, we fix it,” Immelt said, acknowledging that such a mentality can lead to “misaligned interests.” Today, GE has more than $100 billion in revenue tied to service contracts, whereby it gets paid based on a product — a power plant turbine, a jet engine, a locomotive — being in service. It needs analytics software to help customers avoid downtime and thus make those contracts profitable. “We don’t see GE being a software company per se. It’s about how we enhance our customer relationships,” Immelt said.
Make no mistake, GE is selling software. This week it announced it has added 14 new industry modules to its Predictivity line of software, adding to the 10 it had to manage and analyze industrial data. It sells Predix, a data management platform (much of it using NoSQL approaches) designed to store and use machine-generated data. It just announced new partnerships with AT&T, Cisco and Intel to advance the networks, sensors and on-machine computing needed for the growth of industrial data. But most of that effort is focused on upselling GE’s huge installed base. To do that, GE must convince customers that its software can help them wring more production out of a piece of GE equipment.
Be Practical About The Value
Last year Immelt’s message was all about the macro impact of the Industrial Internet — predictions of up to $15 trillion in economic gains in the next 20 years from companies making smart use of sensors, networked machines and data analytics. This year he has a micro marketing message: “no unplanned downtime” due to GE equipment failures. Industrial Internet is the big vision, but “no unplanned downtime is what counts for customers,” he said.
Immelt was quick to point out “we’re not there yet” on delivering zero downtime. It’s a goal for the Industrial Internet, just like helping to drive that forecasted $15 trillion in economic growth. But if you’re asking a CEO to envision ultimate success, is it easier to picture $15 trillion in economic growth or an airplane that’s never out of service for a maintenance failure?
Be Humble Enough To Learn
GE execs got to the top of the heap by knowing how to sell products — often highly engineered, highly sophisticated equipment. Software is different, Immelt warned, and GE had to retrain its execs on how to do business unit reviews related to the software and analytics component. READ MORE…