Why GE Digital Failed

#News(General) [ via IoTForIndiaGroup ]

There were a few factors behind the scenes that meant the public picture GE was painting around its digital transformation didn’t match the internal reality.

Despite its grand aims, in practice GE Software was created as an internal development shop. GE has a series of business units, such as GE Aviation (jet engines), GE Transportation (railroads), GE Power (wind turbines), and others. These business units all had IT development needs. So they used the resources from GE Software to implement “innovation.” The innovation that was invested in was technology and IT for each business unit, as primarily determined by the CEO and executives of those units. It was less about digital transformation and more like digital enablement. Much of the revenue GE Software was generating came from billing other GE business units, not external customers.
GE Digital was created as a separate business unit in an effort to give GE Software more autonomy. The goal was to make the new business unit less of an internal development shop and to be able to invest more in building out its intellectual property like Predix.
Yet at the same time, GE Digital was given a P&L and had to make quarterly commitments on performance. The revenue was tied to the work it was doing with internal GE business units and one-off partnerships with outside software companies. So when Predix integrated with a new partner, the focus was usually on generating short-term revenue and not long-term value to GE’s end customers. GE talked of making Predix a true development platform for third-party developers. But in practice almost all the software being built around Predix was from GE’s own business units or paid partners.
GE Digital started selling its services to outside industrial companies, offering to help them on their own digital transformation journeys. GE Digital also became a consulting firm. Returns on these efforts were reportedly mixed.
Unfortunately, this set of circumstances is inimical to bringing about true digital transformation, especially in a company the size of GE. There are definitely some significant improvements that were created out of GE Software and GE Digital. However, there were no game-changing, multibillion-dollar innovations. These were incremental improvements making GE slightly more competitive or innovative in its industry.

GE Software and Digital were set up for failure.

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