GE Goes All-in on IIoT Analytics Platform Predix with ServiceMax, Bit Stew, and Wise.io Acquisition

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By Ryan Martin | 4Q 2016 | IN-4357

GE is getting a jump on the holiday shopping season. The Boston-based IIoT powerhouse recently agreed to buy ServiceMax, a cloud-based provider of field service management solutions, for US$915 million. Less than 24 hours later at its annual Minds + Machines conference in San Francisco, GE announced the acquisition of not one, but two more companies: Bit Stew Systems ($153 million) and Wise.io (undisclosed).

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GE’s IIoT Shopping Spree

NEWS


GE is getting a jump on the holiday shopping season. The Boston-based IIoT powerhouse recently agreed to buy ServiceMax, a cloud-based provider of field service management solutions, for US$915 million. Less than 24 hours later at its annual Minds + Machines conference in San Francisco, GE announced the acquisition of not one, but two more companies: Bit Stew Systems (US$153 million) and Wise.io (undisclosed).

Buy to Build

IMPACT


The trio of acquisitions will be leveraged to extend the efficacy and operating footprint of GE’s Predix platform: ServiceMax for digital service transformation (esp. when paired with GE’s acquisition of APM provider Meridium for US$495 million in 3Q 2016); Bit Stew will be utilized for IIoT data ingestion, integration, and management at both the edge and cloud levels; Wise.io will be leveraged to enhanced machine learning and data science capabilities as well as to accelerate Digital Twin development.

The business value GE intends to deliver as a result of these recent efforts can be distilled into three broad categories:

  • Efficiency and cost savings: Making it easier to optimize assets and processes by modeling and understanding the physical world
  • Net-new opportunities: The use of data and subsequent insights to enable new services and business models
  • Risk diversification: Improving visibility and asset/process control to proactively address environmental, health, and human safety issues

The company’s quest to transform the service business resulted in a 20% YoY revenue increase, a two-fold increase in the number of developers working on software designed for Predix (from 10,000 to about 20,000 developers in the six-month period leading up to year-end), and software solution bookings on track to grow 25%+ in 2016.

Greater than the Sum of its Parts

COMMENTARY

 


GE projects the Industrial IoT market at about US$225 billion by 2020 (US$125 billion applications + US$100 billion platform revenues); enterprise (IT) at US$206 billion (US$131 billion apps + US$75 billion platform); consumer at US$170 billion (US$82 billion apps + US$88 billion platform). These projections put the combined share of IT (enterprise) and OT (industrial) technologies north of 70% of total revenues across the consumer, enterprise, and industrial segments over the next few years.

For GE, Predix—and the broader platform play it represents—is at the heart of a defense strategy designed to limit the likelihood of being disintermediated. Ideally, this means creating a single software platform for the Industrial Internet (Predix) that has the resource, flexibility, and scale to serve many solutions, in many industries.

The first wave focuses on internal OPEX improvements, where a 1% productivity savings, for example, could yield a US$500 million cost advantage for GE. But the multiplier effect doesn’t stop there; the company’s 2016 “workforce of the future” study found that each job in advanced manufacturing supports another 3.5 jobs throughout the supply chain (compared to a ratio of 1-to-2.2 for non-advanced manufacturing jobs). For GE’s industrial and enterprise customers (the next area of focus), the value of leaner systems, processes, and procedures is similarly compelling: a 1% reduction in healthcare system inefficiencies, for instance, is estimated to return a savings of about US$4.2 billion/year; for commercial aviation, a 1% fuel savings translates to about US$2 billion/year; for freight rail, a 1% reduction in system efficiency puts the corresponding figure at about US$1.8 billion/year.

The latest string of acquisitions, coupled with competitive pressures—e.g., Cisco’s acquisition of Jasper and ParStream; IBM’s acquisition of The Weather Company’s digital properties; Greenwave Systems’s acquisition of Predixion; PTC’s acquisition of ThingWorx, Axeda, ColdLight, Kepware, Vuforia, etc.—and the pending rise in software and services-oriented business models is only the tip of the iceberg.

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