GE and the Industrial

Internet

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 GE and the Industrial Internet

1. How would you assess GE’s Industrial Internet initiative? Necessary? Proactive? Valuable?
GE’s Industrial Internet Initiative came just at the right time. As given in the case “Analysts estimated
the Industrial Internet would create $14.4 trillion in economic value between 2013 and 2022. By that
time, they projected that Industrial Internet–related technology spending would exceed $514 billion”i
Being an incumbent, they could have also steered away from the new technologies and focused on
enhancing their existing offering, but instead they recognized the potential of Industrial internet
related technology and proactively invested in the future- GE Software, Global research. They
understood the value and future benefits as well as cost savings that could be achieved from
investing now-for example, they “projected that efficiency gains as small as 1% could have huge
benefits over time when scaled up across the economic system” ii
The opportunity and the timing was ripe and the top management recognized that as well. The case
quotes the Global Innovation Executive Director Liguori talking about how new non-traditional
‘competitors’ (IBM, SAP and big data start-ups) were starting to approach GE’s long-standing
customers with the proposition of providing the required analytics and services, on GE assets iii. It thus
became necessary for GE to develop a proper strategy for Industrial Internet to ensure its
relevance in the changing times. They were able to leverage their scale and installed base and to
invested heavily in software and agreements to drive towards their vision of building a valuable
Industrial Internet ecosystem to stay competitive.
Thus, GE’s Industrial Internet Initiative was a proactive move on their part after understanding where
the market was heading, it was necessary to stay competitive and highly valuable as it provided high
potential cost saving and operational optimization benefits.

2. What are the next steps? What capabilities must GE invest in or develop over the next five years to
accelerate Industrial Internet efforts.
Though GE had invested over $1 billion to its “outcome based predictive service” its share was only
800 million of a total revenue of $146 billion. Clearly GE had to move fast to outpace its competitor
who were also competing in this market. GE had developed common software platform Predix and was
expecting to open this to third party developers. This is a good move by GE as it would enable its
platform to grow organically.
GE needs to develop its sales team as they had to convince customers about their offerings that would
deliver on performance. Also, going forward GE needs to partner with its customers as most deals

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 would require access to internal data and operational parameters of the customers. So, GE’s sales team
should be trained to explain their value proposition and advantages of Industrial Internet to the
customers.
GE would also have to develop its internal software development process and add all its business unit
to the common platform especially GE Healthcare. It needs to bring all its units on board to provide
outcome based predictive solutions. GE needs to engage more with its customers and offer them
complete solution-based service and showcase them about how their risks can be reduced based on their
CSA offerings. More investments should flow in its software analytics development and GE needs to
develop integration of customer data with its platform.
Also, they would need to develop their capabilities to work with external partners like Joint-ventures
and start-ups as these can speed up the development process of Industrial Internet.
Another major aspect to work will be pricing system as their customers would be looking for a good
proposition which Industrial internet can provide. Pricing their offers will determine their future
revenue growth.

3.Who will be GE’s most feared competitor in the next five years? Why?
Although GE has many competitors in Industrial Internet such as IBM, Siemens, Philips, Toshiba and
Google, its most feared competitor in the next five years is going to be IBM.
IBM is the world’s largest IT company having capability in big data, cloud computing and smart
computing services which GE is trying to build. Before GE entered IBM was seen as the Industry
leader in Industrial Internet application.
IBM had deeper analytics expertise and big-data capabilities than GE and provided services in the
aerospace, banking, electronics, healthcare, life sciences where GE had considerable presence in the
form of its assets thereby threatening its business. IBM was also telling the customers that it could
provide its capability in data analytics on GE assets which was a direct threat to GE’s business model.
Also, with IBM Watson supercomputer program IBM had developed machine learning capabilities and
it had been applied to healthcare business. IBM announced a $1 billion project to establish Watson
Group to develop cloud capabilities for commercial application which was also a part of GEs value
proposition to its customers through GE software. IBM was building an ecosystem around Watson to
support machine learning, big-data to cater to the emerging Predictive solution.
IBM had an added advantage of not worrying about the hardware part and could concentrate on
software solution giving it more flexibility and leverage against GE.
In the coming 5 years as GE looks to expand its Predictive Solution business through GE Software it
needs to prepare a strategy to counter IBM which is a behemoth in data analytics and computing since

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 IBM has realized that Industrial Internet is the next thing and it is turning to be IBM bright spot and it
is investing heavily to develop its capabilities.

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 i As quoted in the case
ii As quoted in the case
iii As quoted in the case

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