Case Analysis of General Electric (GE) Business Model in Industrial Analytics

 

[Group Assignment] Case Analysis

Syndicate : 9

Members : 

Chiesa Octavianus Manoppo (29121313)

Faldi Irham Pratama (29121158)

Kun Rinaldi Pramana (29121035)

Reggy Aldynov Alamsyah (29121074)

Rifqi Tyaga Wisista (29121292)

 

1. Why is GE pursuing industrial analytics?

Imlet (CEO at the time) saw that there were scientists telling stories about the development of sensor technology and kept thinking about how much information could be used from these sensors.

GE is pursuing industrial analytics because it is aiming for business expansion and industrial analytics provide a promising profitability. Industry 4.0 also creates an opening for GA to enter the analytics software through cloud platforms.

At first they made products, right, then there were many products and made a CSA (contract service agreement. Then from a complicated process they made software because for efficiency, the CEO looked at this as the future. The optimization using analytics software will impact in :

1. Bring revenue

2. Increase equipment output

3. Reduce costs

4. Increase equipment useful life

GE customers are mostly high fixed cost, optimization using analytics tools will increase the output of the equipment and it will lead to a cost reduction and generate more revenue.

2. Do you believe that GE is better positioned than its software rivals such as SAP?

GE has a better product and optimization of their own goods. Moreover, their own products will greatly improve customer relationships. 

Based on our opinion, Overall GE is better positioned, compared with software firms, not only providing the analytical software for optimization but they also create the equipment so they can optimize their own equipment as well as the other components of the customer’s value chain. On the other hand, software firm such as IBM and SAP has their own opinion :

• SAP has a wider reach, so the solution is not limited to a product field

• SAP and other rivals of GE are using a top down approach due to which it can optimize the whole system of the entire process and value chain which was not in GE as it only focuses on pieces not the entire process.

• SAP software can be used in any equipment which is made by rivals rather than limited or biased equipment made by GE.

GE’s Initiation in entering the analytics business line also has a drawback since the development of their Prexis platform eventually needs more investment due to the high level encryption and security issue, it already exceeded its early investment commitment of over $1 billion.

 

 

3. What have been the key actions that GE has taken thus far?

• Entering the software industry and providing solutions to the industry

• Providing a Customer Service Agreement (CSA) and retaining good customers base

• Take advantage of immediate opportunities for predictive maintenance and output optimization

• Changing old sales mechanics to be able to maintain hardware and analytics successfully

• Better understand customer demand by understanding customer strategy

• Developed the Predix platform which is open to all developers and also collaborates with many company

• Hiring many experts and training them

 

4. How bright or dim do you believe the prospects are for GE Digital?

We believe GE has bright prospects because if you look at their data they got $15 billion by 2020 and it earned $6 billion initially which illustrates that the graph of GE an upward trend.

Moreover, as seen on the trend chart on exhibit 4, there's a significant growth vs Peer Industrials stock performance. There are many fluctuations in the stock prices of GE I the last couple of years.

If GE continues to adapt the changes, it will achieve its goal.Still future is uncertain so it is difficult to say what will happen in the future. 

5. What key actions does GE Digital need to take to grow its analytics business?

So according to our discussion, there are some steps that GE can take to expand their business.

First is they need to work on their pattern and probably make GE analytics work on the other hardware, because the main issue with GE analytics is that they just worked with their own hardware.

Second is cannibalization can be avoided by researching possible market demand, identifying the favored feature of each product and service, and appraising the competition.

Third is regularly adding specialists and maintaining existing workers through good training and motivation will assist the firm in expanding its software business, as the company will not be able to grow its analytics business without competent staff.

The last one is assessing client demands on a regular basis and has a favorable impact on the company's business.

 

Additional Questions

1. Combine your experience and reference to develop new business model based on analytic

Figure 1. SAP Business Model

Figure 2. GE Predix Business Model

Figure 3. Oracle Business Model

 

As years go by, the fast progression of Internet technology, many business industries try to capitalize on cloud computing. Businesses can scale efficiently using the cloud. Cloud computing is network computing on a large scale. It relies on servers distributed across the internet, running a cloud-based application software. Its interface runs on browsers in local workstations, laptops, tablets and smartphones. Software applications designed for “the cloud” are installed and administered on third-party internet-based servers and can be accessed at will. From the examples above by SAP, GE, and Oracle, they all tried to utilize cloud mainly to achieve three things;

 

• Faster Communication

Cloud technology providers are capitalizing on this trend by offering dependable and cost-effective IP-based connections, making it easy for managers to communicate in a variety of ways with employees all over the world. Thanks to the increased speed and dependability of the cloud, employees can work using tablets and smartphones without fear of losing data.

• Ease of Access

Cloud computing can also provide easy access to data, projects and vital business software from any location in the world that provides a fast Internet connection. 

• Secure Collaboration

Cloud computing places the responsibility of upgrades on the cloud software vendor, which can help make technical support more efficient. The task of training and supporting a full IT department dedicated to network infrastructure, security patches, operating system upgrades and crewing user help desks is fast becoming a thing of the past.

Figure 4. Recommendation Business Model

In our opinion, we can see that many business industries try to obtain the usefulness of cloud and implemented it in their own business, i.e. figure above.

We also created a business model canva based on the SAP reference used and can be seen below

Figure 5. Business model canvas recommendation

2. How to implement that business model in Indonesia

• Need a lot of training and socialization

• Companies/institutions that use it must consider the advantages and disadvantages of using the business model

• What influences and adjustments the company needs to make

 

3. What is the implication to existing human resource and how to solve it

Figure 6. Human Resource Information System

HR professionals must analyze social, economic, political-legal, and technological environment opportunities to redesign HRM processes and practices that are key success factors to the organization mission and objectives.

In this context, information systems have increased the efficiency of HRM through more effective recruitment methods, organizational communication, employee involvement, and increased skills of HR managers. From there, human resource management areas must relate

human capital strategies to the most appropriate technological solutions. It means creating an eHR organization focused on interconnecting people with business strategy to achieve rapid adaptation to changing needs common to people and business. These same needs begin to make eHR necessary.

Some of the human resource problems that we analyze and the solutions are as follows

1. Because the current system is more advanced in the use of technology, the sales force must understand more about the product and also the problems that the customer has. So the company must evaluate their sales competencies, and make sure that the sales understand their new requirements.

2. In the case of GE we can learn that the company must determine how many workers are needed and also what recruitment is needed; Software expert also must be a concern

3. The employee's habit also needs to be considered, because there has been a culture that has been practiced for a long time by workers so that changes cannot be made instantly. Our solution is to find or hire workers who are more open to technology or younger generations of workers