John Paczkowski

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GE CEO Jeff Immelt’s Big Data Bet

Immelt_1The name General Electric today calls to mind locomotives, jet engines and electrical grids, so-called “big iron.” But a decade from now it will call to mind something very different: Big data.

Onstage at D11 Wednesday, GE CEO Jeff Immelt explained why software innovation is so crucial to the company’s future and predicted that the age of the “consumer Internet” is giving way to the age of the industrial Internet, a decade that will see foundational changes to how we do things like fly airplanes.

“There is a massive business opportunity in using software to anticipate industrial equipment maintenance needs,” Immelt said. “Take the jet engine. It has about 20 sensors that capture real-time continuous data — temperature, engine performance, etc. If I can take that data and use it to model a consumer outcome — say, more time on the wing or less fuel burn — that’s worth an awful lot of money to my customers. A 1 percent change in fuel burn for an airline is worth hundreds of millions of dollars.”

And that’s where the industrial Internet comes in: Using big data analytics to track such changes and provide what Immelt describes as “guaranteed outcomes.” In the world of big iron, that’s things like less unplanned downtime and better fuel performance. It’s productivity. It’s smarter machines and more lucrative services.

And that’s big business for GE. As Immelt quipped, “tell an oil guy you can use software to save him one percent on something, and that guy will be your friend for life.”
Immelt_2
But as I noted earlier, GE isn’t exactly known for its software prowess. So after years of largely ignoring the Internet, what makes it think it can suddenly turn around and build and brand an “industrial” version of it?

A massive financial commitment. As Immelt explained onstage, GE has been pushing hundreds of millions of dollars into this effort and hiring all manner of mathematicians and data scientists to drive it.

“People have told companies like GE for years that they can’t be in the software business,” Immelt said. “We’re too slow. We’re big and dopey. But, you know what? We are extremely dedicated to winning in the markets we’re in. And this is a to-the-death fight to remain relevant to our customers.”

In other words, to Immelt, the industrial Internet is the future engine of GE’s services business.

“We’re betting on the industrial Internet,” he said. “We know that there will be partnerships between the industrial world and the Internet world. And we cannot afford to concede how the data gathered in our industry is used by other companies. We have to be part of that conversation.”

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