GE Digital's transformation rocky but ongoing

GE created GE Digital to provide software and services for digital transformation. However, GE's digital transformation has been rocky, as the company struggles to shift from its traditional industrial base to a more software-focused entity.

GE developed Predix as an industrial internet of things platform for the digital transformation of its businesses in 2013, and launched this for customers and partners a few years after.

In 2018, amid a backdrop of corporate turbulence, GE announced that it would spin off GE Digital. The sell-off didn't happen and GE Digital currently remains a subsidiary business of GE where it has concentrated its focus on four vertical markets: applications for discrete and process manufacturing businesses; electric grid and telecommunications utilities; oil, gas and related industries; and power generation, including gas, steam, wind, hydro and renewables.

GE Digital is now positioned to backbone digital transformation efforts and provide the systems that can manage the massive data and process requirements of those verticals, according to GE Digital CEO Patrick Byrne.

In this interview, Byrne, who became CEO in 2019 and has more than 30 years of experience in industrial technology, discusses the current state of the company, some of the lessons learned from GE Digital's transformation and how the COVID-19 pandemic has changed manufacturing businesses.

Patrick Byrne

What's the relationship between GE Digital and GE now?

Patrick Byrne: In late 2018, there was a press release that said our plan was to make it a wholly owned subsidiary of GE. But we decided not to do that. So, about nine months ago, we announced that this is going to be a division of GE. GE Digital is now one of the seven businesses that report to the chairman of GE.

What's going on with the Predix platform that was launched a few years ago with a lot of fanfare?

Byrne: What we've done with Predix is that it is an important part of supporting our customers. We have pivoted from trying to be a general-purpose platform to focusing on the vertical markets we concentrate on. We have hundreds of customers using Predix now. It's a principal platform in supporting our APM [asset performance management] customers. The functionality, for example, for the large industrial data sets that are required to run large gas turbines and manage balance of plant operations is critical to how Predix is built. We're committed to the platform, especially in support of our key industry applications.

GE's digital transformation has had rocky moments and it's still ongoing. What are some of the lessons that are continuing to be learned?

Byrne: The digital initiatives within GE go across every one of the businesses. One lesson is that it isn't just about a digital transformation, it's about a business process transformation. This means being able to look at that whole end-to-end value stream. We use Lean tools to create value stream maps that help you figure out where there's waste in business processes. The real lesson learned is to take stock of that value stream and try to see where the best business outcomes for digital transformation are. Five years ago, people did digital transformation pilots to see if they work, but almost nobody does that anymore. Most companies are looking for a hard ROI in a business outcome, and they're looking for something that could pay back in nine to 12 months.

What are some of the biggest challenges to overcome in a digital transformation?

Byrne: Oftentimes organizations are siloed. The service organization doesn't talk to the procurement organization; the procurement organization is responsible for buying parts for the repair team, but really buys those parts for the manufacturing team. So, there's change management around how you align those key business outcomes and build cross-functional teams. You have to build a business case, you have to build a guiding coalition, you have to have quick wins, you have to be able to consolidate the gains. We've seen all those challenges, but it isn't just GE, we've worked with hundreds of customers on digital transformation [projects], and they have the same challenges. You have to establish cross-functional teams with an aligned set of objectives to transform the business process. If it gets left in silos with its own metrics and its own tools, you rarely get it solved.

What are some of the ways that COVID is changing that manufacturing industry now?

Byrne: Speaking broadly not just about GE Digital in manufacturing, there are two sets of changes. One, in the COVID world, there's real turbulence in customer and supplier dynamics. For example, in April the demand for toilet paper was through the roof, but eventually it has to return to normal toilet paper usage and demand. So, the customer demand signals that manufacturers are dealing with are far more dynamic right now. But their supply base also has got a lot of dynamics, and if you're PepsiCo, Kimberly-Clark, or Procter & Gamble, how do you forecast? How long is COVID going to last? The smartest people in the world don't know that; therefore, managing suppliers and demand when you're in manufacturing is a real challenge now.

The other [effect] is inside the factories where everybody's working remotely. These companies have tens of thousands of workers, and they now have to have more touchless support of those business processes, they have to have authentication technologies and security technologies that allow people to do more remote work. We've provided all our critical software in a work-from-home remote mode, and hundreds of customers are using those now for their workforces to be able to still operate as if they were in the building, but in a highly secure mode.

COVID was a sudden dramatic change, but were manufacturers moving in that digital direction anyway?

Byrne: It varies and different companies have different levels of digital readiness. The digital readiness gap really has to do with the governance of their data, the skill sets of their workers, how their operations technology and IT technologies are integrated, and how they govern and manage cross-functional business processes at the process level and the data level. So digital readiness is all over the map. For some companies, that gap is very small; for some companies, it's a real issue. Everybody's accelerating the digital future, but the starting points are different.

Where does GE Digital stand in the enterprise industrial software market right now? Who's the competition and what differentiates GE Digital's offerings?

Byrne: There's a range of companies that we compete against, like Siemens or PTC. Our primary focus is being able to solve some of these adaptability issues, so we have a big focus on resilience and flexibility. For example, some of our products have the ability to rapidly adapt production to meet significant changes in volumes or mix of products, and we believe that's real differentiation. One of the other key things we've got is a recent product we've introduced called Proficy Operations Hub, which allows our customers to have user interfaces that fit specific user profiles. But our ability to integrate everything from automation technology, to human machine interface, to MES [manufacturing execution systems] solutions, to data in the cloud, and to the analytics that sits on top of that data in the cloud, this is a key part of what really allows us to be able to compete in manufacturing in a superior way.

What about partnerships or integrations with other enterprise software vendors?

Byrne: The enterprise software world with the ERP systems, warehouse management systems, the automation systems, are all platforms that we integrate with daily with our software. It's very rare to run into a greenfield factory; it's almost always a brownfield factory. So, we really do have to integrate with automation systems, with their financial planning and ERP systems. A lot of our systems integrators do that for us; we have a set of systems integrators that have principal responsibility for integration with other enterprise software systems.