At Mobile World Congress 2016, GE outlined some fundamental insights about the digital transformation efforts of industrial businesses. William Ruh, CEO for GE Digital, a US$6 billion business of General Electric, shared valuable insights about the digital transformation process that industrial businesses need to tackle.
Businesses must focus on those activities that they can transform into digital business models. Not every industrial activity can become a digital business, but it will be impossible to succeed in digital transformation by developing a digital business and an industrial business and then operating them side by side indefinitely. GE sold 40% of its business activities because it felt that it could not transform them into digital businesses. For those industrial activities that can become digital businesses, executives need to be aware that:
- Every industrial worker has to develop digital DNA. Industrial workers and mechanical engineers have to be comfortable interacting with digital systems. At GE, mechanical engineers have to design a locomotive in such a way that they can place a local data center inside it. Every industrial worker will have to have analytics skills, whether that’s the ability to create sensible and reliable data sets or to analyze and interpret these data sets.
- Skill management is one of the most pressing issues for industrial companies. Finding that combination of mechanical expertise, big data, and customer experience skills is rare, and it’s difficult to generate it through simple retraining programs. However, industrial companies that fail to create the right combination of skill sets and remain unable to stimulate interdisciplinary cooperation will be unable to compete in a few years.
- Data sharing has big implications for the design of cloud-based solutions. Privacy in the industrial context differs from privacy in the consumer space. Machines don’t have privacy concerns per se, but they are concerned about who is allowed to program, operate, and control them. There are great benefits to sharing data from machines: GE can look at the data from many train engines to compare their performance, allowing the firm to improve performance over time through analytics.
- They need to rethink the idea of what constitutes an application in the industrial context. In the industrial context, an application generates a reliable data set to produce analytics-based insights to generate outcomes that positively affect business processes. Predix is GE’s cloud-based platform powering innovative Industrial Internet apps that turns real-time operational data into insight for better and faster decision-making.
- Enterprises need a different security approach than in the consumer environment. Enterprises have to ensure that connected machines are safe from digital attacks that result in data theft or the loss of control over machine functionality. Moreover, most countries have data sovereignty legislation, which often requires enterprises to ensure that certain data will reside in the country in which it is generated and is not sent across national borders. GE is developing country-specific clouds in those countries where regulations require it to do so.
- They must give their customers a helping hand to experiment with digital dynamics. Change in the industrial world is profound. To help its customers during the transformation process, GE is setting up “foundries” internationally so that industrial customers can learn, co-create, incubate, and experiment with GE’s industrial solutions.