Kate Johnson becomes the CEO of GE Intelligent Platforms Software just as the Internet of Things is altering the landscape for industrial software. GE sells about $4 billion worth of software a year, but since that software is spread across its industrial businesses, the business has been fairly low-profile.
GE expects that profile -- and revenue -- to rise as industrial companies see the chance to collect more data from networked equipment, and analyze that data better to improve their operations, such as predictive analytics that can spot a looming breakdown so workers can prevent it. "You're starting to see a GE software footprint," Johnson said.
As more companies become digital businesses, and embed some kind of technology in their product or customer experience, they're going to face the decision GE did: Do we sell software as its own product, or do we bundle in software as part of the product? Whether you're selling a car, annuity, or amusement park ticket, software will become an increasingly important part of the experience.
GE does sell software as its own product, thought it does so largely to its installed base of customers in power, water, aircraft, locomotives, and other mostly industrial products.
"What 'good' looks like is when Power & Water sells more software to their installed base, to drive more value out of those assets," Johnson said. GE sells a portfolio of industry-specific software for managing and analyzing industrial data, much of it built on its Predix development platform.
Johnson wears two hats -- CEO of GE Intelligent Platforms, and Chief Commercial Officer, reporting to CMO Beth Comstock, where she's been working to improve GE's ability to commercialize software. Johnson comes from tech, most recently as a senior VP for Oracle's North American consulting business. Here are some insights from our recent interview with Johnson as she takes the CEO role:
Why now for GE to push its software business more?
Two reasons, one external and one internal, Johnson said. Externally, would-be customers are ready to embrace analytics in a much bigger way to wring more value out of their industrial equipment.
Internally, GE is farther along on its own transformation, better integrating the role of analytics and a digital experience in the design and operation of industrial gear. Johnson has been focused since joining GE on helping the company hone its software selling.
"Selling industrial equipment and selling software is different. … Software is about selling an outcome -- there's nothing the customer can hold," Johnson said.
Are CIOs leading this digital industrial push, or getting pushed aside?
GE Intelligent Platforms is targeting CIOs directly with this message of analytics and digital business, Johnson said, "so you can be the hero."
Companies across industries face the same problem -- keep assets running, get more productivity from existing infrastructure. But digital business could get companies -- and IT -- out of pure cost-cutting mode. CIOs can be the person to bridge the information technology and operational technology worlds, since CIOs understand the data and how to drive cross-company projects.
"There's a digital revolution out there, and we have to figure out how to take advantage of that, not just by driving efficiencies but by finding new revenue opportunities," Johnson said.
So what's holding companies back from embracing the industrial Internet?
Complexity, Johnson said, and in particular knowing where to start. That's another area CIO experience helps -- knowing how to take an incremental approach to a potentially big project. Johnson recommends starting by getting one key asset networked, and running some time series analysis against it to start getting insight into its operations.
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"If you start with connecting one asset, it's addictive," she said.
Is the software group a spin-off play down the road for GE, like American Airlines' Sabre reservation tech business became many years ago?
Johnson says no: "We see our software as inextricably tied to our equipment." GE's competitive advantage in software comes from its knowledge of the industrial gear itself, combined with its new and growing software talent that includes a major software center in San Ramon, Calif.
"That's why we've been successful so far -- no one knows that pump as well as us," Johnson said.
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