The Digitalization Industry of General Electric

Osagie, Obazee
R1704D2623249
Strategic Analysis; Tools and Techniques/ST4S38-V1-17254
Amarachi Amaugo
5 July 2020.

Classification: Confidential
 Table of Contents

1. Introduction
2. Strategic Position of General Electric
2.1 The Differentiation Position of GE Digital Industry
2.2 Standard Business Units of GE
3. Resource/Competences
3.1 Physical Resources
3.2 Financial Resources
3.3 Human Resources
3.4 Intangible Resources

4. Value System
4.1 Activities That Enables the Strategic Position of The Company
4.11 Asset Performance
4.12 Operations Optimization
4.13 Business Optimization
4.2 Value Chain Model and Activities
4.3 SWOT Analysis on GE Digitalization Industry
5. Application of McKinsey 7S Model to GE References
5.1 Model Explanation
5.2 Ansoff Product/Market Matrix Model

5.21 Market penetration

5.22 Product Development

5.23 Market Development

5.24 Diversification

6 Recommendation

7 Conclusion

8 References

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 1.0 Introduction

General electric (GE) power creates a third of the world’s electricity, its technology
equips 90% of power transmission utilities worldwide and its software’s manages 40% of the
world’s energy. GE is leading the transformation and co-creating future energy with customers
and is providing safe, clean, efficient, reliable, affordable power in an intelligent and flexible
mode to drive economic growth, curb environmental pollution and in general to raise living
standard globally.
In this paper, we shall be discussing the digital industry of GE, its economic and environmental
impact by is technological innovation especially in this era of the global pandemic COVID-19.
We will also consider how its innovations discovered through aggressive research and
development (R&D) has increased assets performance, improve operations productivities and
unlock new revenue opportunities.

2.0 The Strategic Position of General Electric

GE was the first to see the opportunity in digitalization technology and started investing in it nine
years ago hence has the largest market share. Through R&D, it has innovated diverse software
and applications making use of cloud-based analytics on GE digital platform. Example is the
Assets Performa Management (APM) which improves availability and reduces unplanned
downtime and maintenance cost resulting to huge cost savings. Example of cost saving is the
efficiency the Independent Power producer (IPP) which has a diversified renewable generation
portfolio attained when it contracted GE to use its digital solutions to operate and maintain its
wind farm. GE has also helped Philadelphia and Portsmouth Navy yard among other
establishments achieve efficiency, reliability and flexibility in energy generation and supply. It
helped Engro corporation improve operational reliability at its 217-megawatt (mw) power gen
plant in Pakistan using GE digital power generation solutions APM with expectations of
1600mw. This single digital application represents a US$200billion opportunity for the global
power industry. Recent GE analysis suggest that if digital grid technologies were fully deployed
globally, electricity consumption could be reduced by up to 2billion metric tons by 2030.

2.1 The Differentiation Position of GE Digital Industry

Three trends adopted by GE in shaping our electric future are explained below. These
points have also made it unique. They are decarbonization, decentralization and digitalization.

A. Decarbonization: In a bid to respond to climate change (green house effect) which has
become an imminent and serious threat to our environment, GE at a Paris climate conference
joined forces with politicians, business leaders and the public to cut carbon dioxide emissions
and review progress every five years. To encourage industries to embrace this policy of
decarbonization in energy generation process, policies like potpourri of other subsidies, feed-
tariffs in Europe and tax incentives for low carbon generation sources have been instituted
globally. Just as policies are used to make a hard push, digital innovations on existing assets such
as wind power, solar power and hydro power are also creating a pull (ensuring decarbonation
process are more lucrative).

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 B. Digitalization: Here, the basic idea is to fix sensors to common objects in other to connect
them to the internet. This was led by the concept of internet of things (IOT) developed in 1994.
Improvement in IOT further led to industrial internet of things (IIOT) in 2010 enabling the
application of IOT on industrial machinery. This gave rise to sensor-based lightening, smart
controls and a wide variety of new software technologies making our environment smarter and
more intelligent. The IIOT as a digital solution can now integrate an entire power plant and
energy system to maximize their overall efficiency and increase economical value.

C. Decentralization: GE knows that a wider part of the society especially the poor masses
and those living in the rural areas, countries in the sub-Saharan Africa and developing Asia have
limited or no access to constant supply of modern electricity. Hence the need to decentralize
power system into smaller and affordable technology so it can be taken easily to remote areas in
the most affordable price. This smaller, decentralized power system meets on-site electricity
needs in contrast to the traditional, centrally-located power plants that distribute electricity to
consumers through vast transmission and distribution networks (T&D). Their small size and
dependability make them globally the generator of choice. Decentralized systems make use of
small batteries to store up energy and make use of the energy when it is needed.

2.2 Standard Business Units of GE

Below are the products and services of GE that ensures it maximizes profit with reduced
unplanned downtime.

A. Consulting Services: It offers technical and economic feasibility studies with full business
case development. Offering an innovative contractual and transactional commercial model
enabling outcomes that increases assets owner’s revenue and reduce cost.

B. System Design: It has a comprehensive system analysis and design including grid
interconnection and controls. It has a deep understanding of the physics, engineering and
design parameters of energy generating assets like the wind turbine. Its Remote monitoring
and diagnostic abilities recommend actionable O & M task due to its years of wind power
domain expertise.

C. Generation technology: It has a proven reliable generation solution like the OEM-agnostic
applications which analyze, operationalize and monetize assets.

D. System Controls: With remote micro energy management system controls and grid
interface, it has a proven analytic platform for reliable anomaly detection.

E. Operations and Maintenance (O and M): Flexible O & M scopes delivering customized
solutions for each asset owners using unique operating strategy like the improved digital
technology, Proven capabilities and continuing investment in up-tower repairs, expansive
network of parts and field service supply chain and return to service time frames that
optimize cost by reducing downtime and increasing reliability.

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 3.0 Resource/Competences
It is important that managers understand the ways in which their organizations are different from
rivals, especially as a basis to achieve competitive advantage leading to superior performance
(Johnson et al, 2014). Below are the main resources within GE digitalization industry and their
relevance.

3.1 Physical Resources

These include software’s/digital energy applications, digital/robotic inspection tools (that can
measure surface damage precisely using laser scan, provides automatic disposition, clean and
repair with accurate blending without any manual intervention saving up to 40 hours on turbine
major inspection), Bluetooth gauges, Asset Performance and Health, Annual Energy Production
optimization (which reduces operational cost, increases efficiency in operation, increase plants
reliability by avoiding unplanned downtime) and computerized work instructions that works with
artificial intelligence.

3.2 Financial Resources

This involves consultancy/contractual fee, resultant saving as a result of innovations, cash flow,
KPI on operations cost savings through efficiency emanating from her innovation that can be
monetized.

3.3 Human Resources

These includes personnel’s that can transform organizations activities to realize organizational
objectives and they include; senior managers, employees, partners and suppliers.

3.4 Intangible Resources

It has a recognized and highly rated brand, its well experience in what it does, has good
relationship with other industries hence they seek its solutions to their challenges and its
innovation are beneficial to both the rich and the poor and on a long run, its decentralization
trend produces job creation.

4.0 Value System

According to Davies (2017), Value systems are simply ways in which activities may enable the
value to be realized. Also, according to Thompson et al, (2017), “A company’s value chain
identifies the primary activities and related support activities that creates customer value”.

4.1 Activities That Enables the Strategic Position of The Company

The implementation of digital solutions in energy generation assets has led to a significant
reduction in global fossils fuel consumption and environmental emission production. Basically,
the three aspect of digital energy applications that add value to the digitalization industry of GE
according to GE Power (air pp26) are listed below.

4.11 Asset Performance

This is an advanced predictive analytic which improves plant reliability, allowing plants to
diagnose root causes and corrective actions in time.

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 4.12 Operations Optimization
This visualizes start up details, including fuel consumption, emissions and start cost;
aligning operating profiles with market place dispatch needs and diagnosing thermal system
performance and reducing cycle losses allowing for beneficial operations optimization.

4.13 Business Optimization

Weather forecasting and tuned plant models can be used to respond to market place price
signals.

Figure 4.2. The Value Chain Model (Porter, 1985)

 Primary Activities- Creates value by transforming inputs into output.

- Inbound Logistics: These involves GE’s internal activities of solving every

encountered challenge, ensured shared values are upheld at all levels, as well as
constantly improving at all levels.
- Operations: From the point of energy generation to distribution, GE ensures
maximization of every input.
- Outbound Logistics: GE takes data privacy very seriously. As such it encodes
certain data in the technologies it sells.
- Marketing and Sales: Benefits of GE’s technology are published to increase her
consultancy and purchase patronage.
- Services: It renders consultancy services to industries requiring significant
improvement in operations. It also renders services like operating and maintain plants
for other industries.

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 * Support Activities- These are activities that facilitates and influences the processes
whereby primary activities are performed, but can also create value

- Procurement: GE continuously acquire resource inputs to its primary activities.

- Technology Development: These explains GE’s research and development strides

that has produced diverse energy generation and assets maintenance and control
technologies in the likes of artificial intelligence and machine learning which
teaches computers how to mimic human decision-making of data-driven
workflows. This has revolutionized both the demand and supply side of the whole
energy economy. Technologies such as the APM (asset performance
management) which optimizes assets strategies by improving machine and
equipment health/reliability through performance, OPM(operations Performance
management)which increases power plant capacity, flexibility and efficiency
through improvement in operations performance, and FSM (field service
management) which has the ability of reducing operations and maintenance cost
by up to 10% through better demand and technical planning.

- Human Resource Management: GE continuously engages in recruiting intelligent

staff, train them, develop them and reward their capabilities. In the words of John
Bartler, a gas turbine combustion product manager, “I work with brilliant people
everyday that together, make incredible solutions for our customers.

- Infrastructure: With its Digitalized Energy applications, Digital Gas and Steam
Power Plants, Digital Wind Farms, Digital Hydro Power Plant, Digital grid,
distributed Energy Resources, GE power creates the energy technologies of the
future and improves the power networks that we depend on today.

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 4.3 SWOT Analysis on GE Digitalization Industry

SWOT stands for Strength, Weakness, Opportunities, and Threat as such, it’s a technique
for assessing these four aspects of business.

Figure…4.3 SWOT Analysis Model

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 5.0 Application of McKinsey 7S Model to GE Digitalization industry

The McKinsey 7-S framework was developed to assess how well these elements fit together to
support each other effectively (Johnson et al, 2014). In line with its SBU as Modified by Higgins
in 2005 is below figure

Figure 5.1

5.11 Model Explanation

1. Strategy: It provides digital and physical technology solution and services across the
entire electricity value chain from the point of generation to final consumption.
Matter of development: Strong

2. Resources: The intangible and tangible capabilities of GE continuously drive innovation

along the part of her shared values.
Matter of development: Strong

3. Structure: The consultancy services, system design, technology advancement, system

control and operations/maintenance sections are synchronized in activities to achieve
GE’s digital main objectives.
Matter of development: Strong

4. Staff: It has collection of brilliant staff who keeps making incredible solutions that
attracts prospective customers.
Matter of development:

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 5. System: Through telecommunications, email, banking and consultations, information
flows through the organization and its partners.
Matter of development: Strong

6. Style: In the words of Christine Cardoso, a gas turbine combustion product manager at
GE, “we have one goal in mind – to make sure our customers are satisfied. These values
are driven from top to bottom.
Matter of development: Strong

7. Shared Values: The vision of GE remains “being a world energy innovation leader by
providing digital and physical technology, solutions and services across the entire
electricity value chain from the point of generation to final consumption”.
Matter of development: Strong

8. Strategic Performance: The adoption of GE technology by other industries has helped

these industries reduce operational cost, increased flexibility and increased their
equipment reliability; hence boosting stakeholders confidence on their investment.
Matter of development: Strong

5.2 Ansoff Product/Market Matrix Model

This application will help marketers and leaders understand the risk of growing their
business. The arrows indicate direction of increasing risk as products are being introduced into
different market.

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 Figure 5.2 (Ansoff Product/Market Matrix Model)

INCREASING RISK

EXISTING PRODUCT NEW PRODUCTS

E Market Penetration Product development
X
- Gas and steam power plant - Distributed solar PV
I
S - Wind Farms systems
T - Hydro Power Plant - Intelligent sub stations I
I - The Grid - Batteries with stored plant N
N - Digital Inspection tools C
G - IIOT R
- Digital energy E
M
applications such as APM,
A
A OPM and FSM
- S
R
I
K
N
E
T G

Market development Diversification

N
E R
- Digital Grid - Edge distributed control
W I
- Digital hydro power plant - Cloud computing
- Digital wind farms application and services S
M
- Digital gas and steam power plant - Artificial intelligence and K
A
R machine learning
K - Electric vehicles
- Blockchain
E
T

5.21 Market Penetration

This tells us GE digitalization existing market and existing product. The aim is to
increase market share, sell more existing products to same target customers, get existing
customers to buy more and widen the range of existing products. This can be achieved by
widening the range of the product service portfolio.

5.22 Product Development

The new product GE introduced to her existing market is with the aim of better satisfying
her customers by introducing flexibility of use. However, lots of awareness of attached benefits
needs to be done.

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 5.23 Market Development
It involves selling existing product into new market. Due to customers desire for change,
improvement must be associated to attract the new market. As such, GE introduced digitalization
into its existing products to gain increased market share. The improvement will be adopted easily
because its an improvement on existing design.

5.24 Diversification
As a result of its R&D, numerous innovations requiring new market are invented to
further increase her market share. Here it must do more marketing to secure market share.

6.0 Recommendation

Sustainment of the energy digitalization technology of GE will require assurance of cyber

security and data privacy from policy makers of countries globally through standardization
policy, cultivation of talents across tertiary institutions by Government and companies. Also,
Government must put in place policies on job security because as artificial intelligence and
machine learning progresses, human intervention in the daily grid operations is expected to
decrease, giving way to fully-automated or autonomous management of the grid. Instead of
laying off staff, organizations should integrate these staff that have become redundant (as a result
of their jobs being handles by technology) into other decentralized and diversified opportunities
created by same technology.
Most importantly, with the global pandemic COVID-19, organizations are encouraged to utilize
its numerous technologies/applications which has the ability of reviving fallen economies and
has other measures to reduce the spread such as remote controlling and virtual power operation.

7.0 Conclusion

The world is transitioning from an electricity system that is anchored in traditional

technologies to one that embraces emerging distributed and digitally-enhanced and decarbonized
technology, evolving towards an integrated and hybridized network containing element of old
and new technology working synergistically to provide reliable, affordable clean and more
intelligent energy technology for communities, businesses and industries globally. This is
occurring against the backdrop of the long-standing need for electric utilities to provide
affordable, reliable, and sustainable power options.

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