November 30, 2012

GE Says New 'Industrial Internet' Could Eliminate $150 Billion in Waste


The term “Industrial Internet” is one being positioned to become an important part of industry jargon if General Electric has its way. And, based on the words of its CEO Jeff Immelt at GE’s Mind + Machines conference in San Francisco, the company intends this to be a reality and not a promise, and sooner rather than later. Even if this was not coming from GE it would be interesting. Because it is from GE, attention should and must be paid.

Immelt told the audience that, the Internet “can give consumers nearly anything with just a click, but global economies remain challenged.” He added that the Internet’s real opportunity for change is a new global network connecting not just people and data, but also “intelligent” machines. “It is what we call the Industrial Internet…It is revolutionizing the services we provide our customers, helping them become efficient and productive.”

GE chose the occasion to announce that it is investing $1 billion in Industrial Internet applications and the effort is already delivering results. Immelt announced nine new “intelligent” service technologies that combine machine diagnostics software and analytics.

The new products have the potential to cut $150 billion in waste across major industries like aviation, rail, energy, and healthcare which happen to all be areas where GE is a dominant vendor of products and services. GE also formed Taleris, a joint-venture between GE Aviation and the consulting firm Accenture (News - Alert), which will harness aircraft performance data and build prognostics and planning tools for airlines and cargo carriers to improve their operations.

The nine new services will help customers optimize plants and networks, boost productivity and save millions by reducing fuel costs and flight delays, and improving train scheduling and maintenance, electricity distribution, hospital and factory management, and other areas.

The announcement was buttressed with the release of a new report from GE, “Pushing the Boundaries of Minds and Machines,” which found that major industries can save more than $270 billion over the next 15 years by improving their efficiency by just one percent.

“By connecting intelligent machines to each other and ultimately to people, and by combining software and big data analytics, we can push the boundaries of physical and material sciences to change the way the world works,” Immelt noted.

This is just the beginning. Immelt he added, “It is GE’s intent to use the size of its $150 billion services backlog “to develop technologies that improve the performance of our industrial products and grow our dollars per installed base 4 to 5 percent annually.”

How serious is this effort? Those billions are going to start manifesting themselves soon. GE plans to launch 20 new Industrial Internet service technologies in 2013.

The full report is a page-turner. It covers not just the history of waves of innovation and how big the opportunity is for the Industrial Internet to profoundly impact the global economy, energy consumption and how we deploy physical assets and people, but also delves into:

  • Industrial sector benefits
  • Economy-wide productivity gain
  • Enablers, catalysts and conditions (with sections on innovation, infrastructure and cyber security management)
  • Talent development

The executive summary puts this in a lofty context. “The deeper meshing of the digital world with the world of machines holds the potential to bring about profound transformation to global industry, and in turn to many aspects of daily life, including the way many of us do our jobs…It holds the promise of stronger economic growth, better and more jobs and rising living standards, whether in the US or in China, in a megacity in Africa or in a rural area in Kazakhstan.”

While visionary, and self-serving since after all this is about GE selling more products and services, the foundational steps of what I will characterize as the “sensoring” of things is already underway. To the companies who gain the high-ground by developing comprehensive approaches and effective eco-systems that leverage ubiquitous sensoring and network-awareness to drive innovation, improve customer care and enrich risk management will go the spoils.

GE has planted a large stake in the ground. If nothing else, they are certainly committed to assuring that the world will not suffer from “sensory deprivation.” Whether they will be the ones who ultimately dominate what others have called “The Internet of Things” remains to be played out in the market. However, the formulation of the Industrial Internet is a powerful banner for them to fly. The traction the term gets from a pure marketing perspective may be a good omen as to who is winning the thought leadership game, which often is a leading indicator of market leadership.

This is an important broadside that has been fired. How other respond, particularly information and communications technology (ICT) companies answer will be fascinating. Competition is a wonderful thing.




Edited by Brooke Neuman



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