Publication | Closed Access
Digital Ubiquity: How Connections, Sensors, and Data Are Revolutionizing Business
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2014
Year
A A ServiceDigital BusinessEngineeringBusiness IntelligenceBig Data AnalyticsPrescriptive AnalyticsData-driven InnovationDigital DivideBusiness AnalyticsDigital TransformationData ScienceManagementWhy Nest MattersDigital EconomyE-business ModelInformation ManagementDigital ThermostatsIndustrial DeviceDigitalizationBusinessDigital UbiquityTechnologyBig Data
Digital transformation is spreading into traditional industries, exemplified by Google’s $3.2 billion acquisition of Nest and GE’s threat of losing customers to data‑intensive competitors. GE’s industrial‑internet initiative adds digital sensors, connects machines to a cloud platform, builds software and analytics capabilities, and adopts crowd‑based development to tie jet‑engine revenue to reduced downtime and flight miles. Within three years, GE has generated over $1.5 billion in incremental income from digitally enabled outcome‑based models, with projections to double in 2014 and again in 2015. The article includes inset sections titled “What Makes Digital Technology Transformational?”, “Idea in Brief”, “Why Nest Matters”, and “What SmartWool Learned from Its Digital Customers.”.
When Google bought Nest, a maker of digital thermostats, for $3.2 billion just a few months ago, it was a clear indication that digital transformation and connection are spreading across even the most traditional industrial segments and creating a staggering array of business opportunities and threats. The digitization of tasks and processes has become essential to competition. General Electric, for example, was at risk of losing many of its top customers to nontraditional competitors--IBM and SAP on the one hand, big data start-ups on the other--offering data-intensive, analytics-based services that could connect to any industrial device. So GE launched a multibillion-dollar initiative focused on what it calls the industrial internet: adding digital sensors to its machines; connecting them to a common, cloud-based software platform; investing in software development capabilities; building advanced analytics capabilities; and embracing crowd-based product development. With all this, GE is evolving its business model. Now, for example, revenue from its jet engines is tied to reduced downtime and miles flown over the course of a year. After just three years, GE is generating more than $1.5 billion in incremental income with digitally enabled, outcomes based business models. The company expects that number to double in 2014 and again in 2015. INSETS: WHAT MAKES DIGITAL TECHNOLOGY TRANSFORMATIONAL?;Idea in Brief;WHY NEST MATTERS;WHAT SMARTWOOL LEARNED FROM ITS DIGITAL CUSTOMERS