Our physical world is connecting to the internet at an astounding clip. That’s apparent with products we use every day, from phones to thermostats and refrigerators. But it’s also happening with important industrial equipment, from X-ray machines to jet engines and power plants. It’s a modern industrial revolution that is blurring the line between services and products.
GE, the century-old industrial behemoth that got its start selling light bulbs, is leading this trend by connecting its industrial equipment — and, crucially, using the data those connected machines capture. In many ways, the data center is the new factory floor — and the key is Predix, GE’s platform for the industrial Internet of Things.
Predix, and the service revolution that it powers, is transforming field service as we know it — with huge implications for how we use the products that keep our world running. Lubor Ptacek, VP of product marketing at ServiceMax, and Bobby George, VP of GE Digital Thread Services, discussed this connected service trend during a recent webinar hosted by the National Association of Manufacturers. Below are three key takeaways:
Service Is the New MVP — Most Valuable Product
Service is quickly becoming the hottest product for traditional manufacturers. Profit margins are higher on service, and that revenue is growing at a faster clip than product sales (by far). Service revenue is also predictable and largely recession-proof, a hedge against economic volatility. Ptacek cited several research figures to highlight service’s rise:
- Service has a nearly 2X growth rate vs. equipment sales during the past decade (Bain & Co.).
- By 2017 or 2018, service revenues are expected to eclipse product sale revenues.
- Nearly 75 percent of IT and service executives say field service management improves overall business profitability and customer satisfaction (ServiceMax).
The numbers are hard to ignore — and companies are understanding that service is not only an important differentiator, but that it can be a standalone product. And that will certainly continue as companies like GE roll out smart, IoT-enabled products.
GE: A Global Manufacturer Doubles Down on Service
That transformation is playing across GE, which the New York Times recently dubbed a “124-year-old start-up,” an homage to the company’s innovative culture.
Diminishing profitability from product sales made GE leadership realize the company needed to get more out of its assets and technology — and that it needed to sell outcomes, not just products. Service now accounts for about 75 percent of GE’s total revenue.
Connected Services in the Wild: The Digital Wind Farm
One interesting example of this shift is wind farms, which fall under GE’s renewable energy division. Renewables is a big growth opportunity for GE, according to George, and for the field service industry as a whole.
As GE connects wind farms to the internet with Predix, the farms are harvesting more than just energy. They are harvesting terabytes of data. But even the smartest equipment does little good if it’s underutilized (say, when the wind isn’t blowing). It’s a common problem with wind farms, but GE has a solution: rethinking the turbines’ hardware and software so customers can customize every turbine for peak performance. The result? Wind farm managers can change any physical element — blade length, for example — depending on wind conditions for its location. Connecting the turbines to Predix (and to nearby turbines) brings measurement and performance tracking online, giving managers visibility into loads of data.
The next step? George said GE wants to enable companies to combine that turbine data with external data, including weather reports and service records, allowing service teams to develop prescriptive maintenance plans tailored to each turbine’s unique operation conditions, performance and history. Soon, algorithms will crunch that data to dispatch service technicians before a problem occurs.
It’s a radical new approach to product design and use — and it’s playing out all around us, from our kitchens to the power grid.
Listen to the full webinar — Service Transformation at GE: Driving Efficiencies with IoT and Connected Field Service