GE Establishes Multilevel Strategy in China

2016/10/24 • Feature • Views: 466

We’re building an operating system that’s going to power the Industrial Internet. That’s our strategy. We want to be the owners of that space.

Denzil Samuels, Global Head of Channels, Alliances, Business Development, and Ventures for General Electric Digital

An ICT Insights Interview

On September 1 at Huawei Connect 2016 in Shanghai, ICT Insights Editor John North interviewed Denzil Samuels, Ph.D., Global Head of Channels, Alliances, Business Development, and Ventures for General Electric (GE) Digital.
Denzil Samuels says we’re in the third wave of the Industrial Revolution. GE Digital is engaged to become a key force in the Industrial Internet for delivering innovations that increase productivity and reliability while lowering the cost of production and maintenance. What’s more, Samuels says we don’t have to wait until the next decade to see these changes — he says society is on the verge of this revolution in just the next two years.

The Industrial Internet combines digital information and communications with manufacturing and production. This allows businesses to make their assets more productive than they could before. Samuels says, “In the digital industrial world, the killer App is asset performance management.” By incorporating digital monitors and data acquisition through the industry chain, businesses will have digital doubles to better understand product and service lifecycles from factory automation to predictive maintenance. Applied across your business, the result will be less downtime, increased productivity, and stronger growth.

ICT Insights: How would you describe the partnership between Huawei and GE Digital?

Dr. Samuels: We’re thrilled with the partnership with Huawei and GE Digital for a number of reasons. One is, Huawei is such a pioneer in the whole world of ICT. And then to have someone that not only knows the local Chinese market — which I think is going to become one of our biggest markets — but also has global capabilities. This is exciting for us, so we’re thrilled about the partnership and to be here today.

ICT Insights: Please share your thoughts on GE as a digital industrial leader, and tell us about your strategy.

Dr. Samuels: The GE Digital strategy is very simple. We think that the world of the cloud has come to a number of areas: the consumer world, which is dominated really by Amazon and Alibaba, and a few others. The enterprise Internet has been dominated these last few years by Salesforce.But when you think about the Industrial Internet, who comes to mind? So we want to own that space. We’re building an operating system that’s going to power the Industrial Internet. And that’s our strategy. We want to be the owners of that space.

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ICT Insights: How can partners like Huawei work with GE to reach their goals and extend your influence?

Dr. Samuels: Huawei’s instrumental in this because they can help us provide the infrastructure we need. Whether it’s the data center infrastructure, the communication layer, or devices to reach this Chinese market — and not just the Chinese market, which I think of as Phase 1, but also extend our reach around the world. Because Huawei has expertise in this, we don’t have to start from scratch. We start with a player that already understands and is already a world leader in the cloud space.

ICT Insights: How is GE changing the face of the Industrial Internet?

Dr. Samuels: In the past, if you bought an engine, what you bought was a jet engine. And maybe you got a maintenance contract on it, right?

ICT Insights: Understood.

Dr. Samuels:Hopefully you got a maintenance contract. When you have an engine that’s digitized and connected, that’s giving you real-time information about how it’s performing. Every single blade on that engine has a sensor, so we know the wear and tear on that blade, whether it’s flying over a desert sky in the Middle East or the cleaner air of the U.S.

So, if you’re going to an airline and you’re selling them an engine, you can actually sell them a business model — an engine that gives them real-time information that can affect crew scheduling, flight operations, cargo, maintenance schedules — everything.

So, if you’re an airline, what are you going to buy? Are you going to buy just an engine? Or an engine that’s talking to you and laying out everything so you can then map it into the other digitized part of your portfolio?

ICT Insights: And I imagine that capability extends across every product line.

Dr. Samuels: That’s exactly right. It doesn’t matter if it’s a jet engine for airlines or it’s in the power, gas and oil, or automotive industry. It extends to everything. The Industrial Internet, we think, is going to be bigger than the Industrial Revolution itself.
Think about the number of devices in the world that need to be connected and yet, today, aren’t. We can’t extract the information and the data that we need to be able to make those devices perform optimally.

ICT Insights: What’s the expected impact of technologies like AI (Artificial Intelligence) and Big Data on the IoT ecosystem?

Dr. Samuels: I think we’ve already seen huge advancements in AI, and Big Data’s been with us for a long time. In fact, if you look at the engine example I gave you earlier, one engine throws off a terabyte of data although we weren’t thinking that way in the past. So, the way we have to think about AI, and the way it comes to Big Data is in three steps. First, you have to connect the devices. Then, from those devices you have to extract information and insights that you didn’t have before. And then, based upon that information and those insights, you derive and drive actions that produce outcomes. So, really at the end of the day, what you are selling to a customer is outcomes.

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ICT Insights: Right.

Dr. Samuels: Lower fuel consumption. Minimization of costs. Minimization of risks. 100 percent productivity, uptime. That’s what we’re selling. In fact, in the digital world, one percent of productivity gains could be worth trillions of dollars, so it’s an incredible opportunity.

ICT Insights: How do you see this progressing over the next five years? Where are we now, and when is the inflection point in that five-year period?

Dr. Samuels: I think that big companies are doing this today. If you think again back to the Salesforce example I used, the killer App that Salesforce sold was CRM — customer relationship management. In the digital industrial world, the killer App is asset performance management.

It’s taking an asset and making it a darned sight more productive than it was before you digitized it. I think big companies get that — they’re doing it today.

I believe the message that we’re giving is, “if you don’t figure out how to digitize your assets, someone else will, and they’re going to make those assets more productive than you are.” And so, I think we’re going to see an acceleration of this within the next twenty-four months, not just over the next five years.

ICT Insights: What is GE Digital’s strategy in China?

Dr. Samuels: We have a multi-level strategy in China. First and foremost, China is important to us. Why? When you think about the world’s manufacturing, the largest number of manufacturers is right here in China. So, a lot of what we’re doing is helping improve asset performance management in factories. You can’t do that without building competencies locally. And you can’t do that without a local ecosystem. So that’s why we have great partnerships with China Telecom and Huawei. In addition to that, we’re spending money. We’ve spent USD 11 million to build a foundry. And that foundry is going to spur incubators.

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It’s going to create development companies that will develop on our platform — Predix — and our operating system. And it’s also going to allow us to bring customers in so they can develop along with partner-systems integrators, local and global, who can develop solutions for us and the Industrial Internet.

So, when thinking about China, our thoughts are: Establish a foundry, an ecosystem of partners, and a core competency of engineering and research and development talent that are ours to help fulfill all parts of this world that we’re now moving towards.

ICT Insights: Impressive goals.

Dr. Samuels: Yes. Impressive goals and impressive investment. We’re spending a lot of money, and we will continue: We’re going to spend another USD 20 million in the next twelve months to really take us to Phase 2. This is in addition to the investments we’re making with our partners for all the technology of theirs that we need to leverage.

ICT Insights: What are the most interesting challenges that you’re currently facing, and what solutions are you considering?

Dr. Samuels: I will tell you the biggest challenge we face is the old way of thinking. We don’t see any other competitors in this space. We have been doing this for the last five years. There’s a big cost of entry in doing this. GE’s invested billions in this space, so we don’t see anyone really trying to duplicate what we’ve done. We have too much of a head start.

It is the old way of thinking we hear from our customers. “Why do I need to move to the cloud right now? Do I trust my assets with a third party? Do I worry about data in the cloud?” That’s really the challenge, and we have to break down those barriers. I think we’re getting a lot of help from our partners, who understand that world, as well as from a lot of the regulatory authorities, who also understand that world — in fact, in some cases better than our customers.

So, I think those are the obstacles we face. We just have to establish trust. And, as people see the gains, it will help us propel this in the right direction, certainly in this local market.