GE Digital to Play Scaled Back Role in Split

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The tech venture was once at the forefront of GE’s strategy, but will now be incorporated into a combined power and energy business as the group splits into three companies.

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“Their digital business had the most potential, but they went sideways,” said strategic advisor Tim Crawford, chief information officer at Los Angeles-based consulting firm Avoa. “I think a lot of it can be tied to being part of a larger company culture that GE Digital was trying and needed to break free from,” Crawford said.

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Many chief information officers and other corporate information-technology majors were reluctant to invest in GE Digital, said Ray Wang, founder and principal analyst at IT consulting firm Constellation Research Inc. Initially, he said, many enterprise technology majors found the company’s new digital services focused heavily on hardware rather than software applications. “As they tried to build cloud data centers, they didn’t understand the power of building platforms,” ​​Mr. Wang said.

The company did not respond to requests for comment.

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GE Digital on Tuesday announced the opening of a new microgrid research lab at the University of Central Florida in partnership with Florida Power & Light Company, a power-utility firm.

Here’s a look at how GE Digital has evolved over the years.

2013: An Industrial Internet. GE launched Predix, calling it “the first industrial strength platform of its kind that provides a standard and secure way to connect machines, industrial big data and people.” The platform is designed to capture and analyze large amounts of data from industrial machines, using predictive analytics to improve efficiency.

2015: “What’s the matter with Owen.” The company launched GE Digital, pulling together its software center, global IT and commercial software teams, and the Wurldtech industrial-security unit. Mr Immelt, who was CEO at the time, predicts GE will be a “top 10 software company” by 2020.

Chasing millennials, the company runs a fictional new-ge hire ad named Owen, who tells troubled friends and family that he is “writing a new language for machines.” “So you’re going to work on the train?” A friend asks in an ad. Spots encourages visitors to visit GE’s jobs website.

A digital locomotive. Mr. Immelt says the company’s focus on the digital business strengthened the case for organic growth on large acquisitions. “We were largely outsourced,” says Mr. Immelt. “And then you wake up one day and realize that the locomotive you used to sell is a data center and you have to replace,” he says.

2016: Digital twins everywhere. Core to GE Digital is the concept of a digital twin, which is a software model of a physical entity, such as a wind turbine. Bill Ruh, corporate chief digital officer and CEO of GE Digital, says he also envisions a time when people can have their own digital twin to help track health, predict disease and other benefits . “I believe we will end up with healthcare being the ultimate digital twin,” he says.

Shoutout to the CIO. “The CIO should be the hero of the story,” Mr. Ruh told the audience at the 2016 Gartner Symposium/ITXPO in Orlando, Fla. “The model for the future is that the IT organization is going to be digital enabled for every industry,” says Mr. Rooh.

Enter Microsoft’s Cloud Expert. Steven Martin, former general manager and chief data scientist at Microsoft of the corporation

Cloud & Enterprise Group has been tapped to lead digital transformation for GE’s $11 billion electrification, grid and control business. He reports to Mr. Rooh and Russell Stokes, head of GE Energy Connections.

Getting smarter. GE has partnered with Wise.io Inc., a machine learning firm in Berkeley, Calif. and acquired Bit Stu Systems Inc., which enables the “integration” of data for industrial applications. Mr. Rooh says the acquisition is helping the company build Predix. “It’s really about transforming the service business,” says Mr. Rooh. GE aims to generate $15 billion in software sales by 2020, with about half of that revenue coming from the sale of Predix applications to the power industry, the company says.

2017: Customer number one. “The goal is to make GE the poster child of using Predix and digital technology to make industrial companies more productive,” says Jim Fowler, GE’s chief information officer.

The focus is changing.

John Flannery, who replaced Immelt as CEO after the company’s stock plunged several years, announced that GE Digital will be more focused and operate only in industries where GE already exists.

2018: Selling. Private-equity firm Silver Lake, known for its investments in technology and media companies, has agreed to buy a majority stake in ServiceMax, a GE Digital entity whose software helps with inventory management and scheduling service technicians. GE says it will create a new company focused on industrial Internet of Things software that will be wholly owned by GE but will run as an independent business. As part of the changes, Mr. Rooh says he will step down as chief executive of GE Digital.

2020: Running at a loss.

Larry Culp replaced Mr Flannery as GE CEO, saying the company’s digital business is “approaching break-even.”

2021: Spinoff. GE said Tuesday it would split into three public companies, turning GE Digital into a combined energy and electricity business.

Angus Loten at [email protected]

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