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Will Software and Analytics Drive Industrial Productivity?

Posted By Jeff Moad, December 04, 2012 at 11:42 AM, in Category: Transformative Technologies

Last week, GE Chairman and CEO Jeffrey Immelt told a San Francisco audience that, over the next 30 years, the most important enhancements to his company's complex manufactured products such as aircraft engines and locomotives will come from the application of software--specifically real time analytics--to these products. Immelt predicted that GE and other manufacturers will add to their existing products software-based tools and services that can be used to optimize performance, enable predictive maintenance, and significantly improve service quality. Last week, for example, GE rolled out nine new analytics-based industrial service technologies and joint ventures. One new joint venture with Accenture, dubbed Taleris, will collect and analyze data collected from sensors embedded in aircraft parts, components, and systems, allowing airlines to make predictive decisions to optimize aircraft maintenance and flight operations.

GE said it plans to apply the same idea--collecting massive amounts of sensor-based operational data and using analytics to optimize system performance, often in real time--to many of its complex product lines, including medical and railway equipment.

The potential financial payoff could be staggering. If, for example, airlines running GE's jet engines could use software and analytics to squeeze an additional 1% of fuel efficiency out of their fleets, collectively they would save $2 billion.

In the past, said Immelt, GE would have relied on third party service providers to create the analytics software and services to take advantage of what the company is calling the Industrial Internet. Today, however, the company sees the potential benefits as so compelling that it is investing in developing the software and services itself. GE, for example, recently opened a software development center in San Ramon, California, where it is seeking to attract 400 software developers, data scientists, and analytics experts from nearby Silicon Valley companies and institutions.

"If you're an industrial company, avoid software at your own peril," Immelt warned."If we don't find a way to deliver, a software company could disintermediate GE. We're better being paranoid about that than lackadaisical," he added.

GE certainly isn't the only large manufacturer focused on gaining productivity and adding more customer value through software and analytics. Nalco, a maker of chemicals for the petroleum industry was named last year's Manufacturing Leadership 100 Large Manufacturer of the Year for its efforts to create new service-based products by analyzing the massive amounts of data it collects from customers.

But GE and others will need to resolve some nagging technical problems before they can fully deliver on the promise of a software-based productivity boom. For one thing, they will need to be able to satisfy customers that the security challenges inherent in doing things like transmitting mountains of real time data from in-flight aircraft have been addressed.

At the same time, I believe that GE, its partners, and its competitors will need to come up with some significant breakthroughs in how real time analytical data is presented to and visualized by industrial users. Decision makers in industrial settings will need very simple yet powerful ways of consuming analytical data that are different from, say, back office workers crunching financial numbers.

But if GE and other like-minded manufacturers can solve these technical challenges, they have a good chance to drive real productivity improvements using software and analytics.

Written by Jeff Moad

Jeff Moad is Research Director and Executive Editor with the Manufacturing Leadership Community. He also directs the Manufacturing Leadership Awards Program. Follow our LinkedIn Groups: Manufacturing Leadership Council and Manufacturing Leadership Summit


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