Given the pace of digital evolution, it is hardly surprising that executive teams across the globe are scrambling to prepare their organisations for what can be complex and difficult transformations.
While people’s lives have become increasingly digitised, many companies have struggled to bring as much innovation into their operational structures, leaving some with an uphill task to introduce what could become vital changes to their infrastructure.
An Appian/YouGov survey last year found that only 14 per cent of the 400 billion-dollar companies they spoke to had fully migrated to all intended areas. Some 48 per cent had managed to migrate partially, leaving 38 per cent having made no migration at all.
A Progress Global Survey report in 2016 highlighted the urgency of digitisation, stating in its key findings: “Organisations have one or two years at best to make significant inroads with digital transformation before they suffer financially and competitively. Many are worried they are already too late.”
That being said, more and more companies are digitising, or at least recognising the importance of digital advances, with a 2016 Forrester study recording that 71 per cent of chief executives saw the improvement of the digital customer experience as being among their key objectives for 2017.
One global company that has taken the lead in digital transformation is General Electric. The development and launch of its cloud-based industrial operating system Predix has helped the company dramatically improve its performance, its efficiency, and its value to clients across the world.
Ganesh Bell, who has helped oversee one of the biggest upheavals in the conglomerate’s 125-year history, is leading this digital drive as GE’s first chief digital officer.
During a visit to the Middle East, Bell tells Gulf Business that the company looked at its operations across various industries and resolved to improve their flagging productivity levels.
He says: “We are in aviation, we’re in healthcare, we’re largely in the energy sector through power generation, transmission distribution, and end consumption with efficiency with our new business called current, and we the have oil and gas business and a locomotives business.
“We looked at all these industries, and industrial productivity had slowed down. Almost a decade of implementing regular software hadn’t yielded a whole lot of productivity in the industries and it had gone from about 4 per cent in the 1990s to almost 1 per cent productivity – almost flat.
“So we needed to do something.”
The solution for machinery-dependent industries, explains Bell, was to harness the power of technological advances.
“About five or six years ago we hit a point where all the technologies you need to transform all the industries was finally there. Mark Andreessen wrote ‘software eats the world’, where he argued that all software needed to transform any business was available – we felt that in the industrial world we were hitting that point.
“That’s when we started this effort to build our industrial operating system, Predix.
“Just like Facebook understands your social graph, or LinkedIn understands your professional network, Predix helps you understand all of your asset graph. If you go into a power plans, it can help you understand not just the giant assets like the turbines, but everything – all the way to a valve or a pump.”
By adding a suite of applications on top of the platform, GE was able to drive productivity and eventually share the product with its customers, resulting in GE Digital – the business the company takes to its customers, facilitating their own digital transformation agenda.
Bell points to figures presented by the World Economic Forum to highlight the impact of the digital transformation GE and others are pushing forward.
“This year at WEF they unveiled what the impact of digital transformation is in every single industry. And in just the electricity industry it’s pretty huge – $1.3 trillion over the next 10 years. Simply by deploying digital technologies.
“There’s also a societal value of more than $2 trillion, with about 3 million new jobs to be created at the intersection of energy and software.
“This region [the GCC] being a very energy-centric region probably has a bigger share of that pie as an opportunity – economically, socially, and in creating new jobs.”
Jobs in particular has been a concern connected to digital transformation, despite WEF’s figures suggesting otherwise.
Gartner’s senior vice president and analyst Dale Kutnick, for example, warned last year that automation would lead to massive job losses around the world, while Dutch bank ING announced in October that it plans to reduce its 52,000 workforce by around 5,800 to pave the way for an $892m digital transformation. It also said that a further 1,200 jobs will be affected by the transformation in the coming years.
And while WEF was positive about opportunities in sectors such as electricity, the organisation was much less confident about the overall job market.
In its report about the challenges of the ‘fourth industrial revolution’, released in January 2016, the WEF suggested that “as many as 7.1 million jobs could be lost through redundancy, automation or disintermediation, with the greatest losses in white-collar office and administrative roles”.
The report does, however, give a ‘positive’ rating for the GCC region when considering the ‘expected impact on employment’, with most job families expected to either grow or remain stable in the coming years.
Bell certainly shares these positive sentiments, using a sporting analogy to explain why digital transformation should not mean job losses.
“If you were to go to a Formula 1 race in the 1990s, the team was pretty small. You had a suspension engineer, a couple of data engineers maybe – mainly looking after suspension, engine and tyres. And that’s about it.
“If you go to a Formula 1 race today you’ll see an army of people in the team. There’s tons of data, tons of sensors, and experts for every detail of the car. Software entering Formula 1 didn’t take away jobs – it created more.
“We believe it’s the same in energy, and there are interesting opportunities for regions like the Gulf which can create a number of new jobs.
“Previously there was a lot of belief that automation would destroy a lot of jobs. But just look at where we are now – we have more jobs than ever before. Yes, drivers won’t be there when autonomous cars hit, but there will be new kinds of jobs.”
Another widespread concern over digital transformation is security.
The Appian/YouGov survey found that data security was executives’ primary concern, with 62 per cent of respondents highlighting it as a major fear.
And while Bell is far from blasé about the dangers associated with cyber threats, he explains that there must be a sense of perspective when it comes to outcomes.
Recounting a regional example concerning Qatar-based liquefied natural gas producer RasGas, he says: “RasGas is one of our biggest clients in the region, and when we started with them we spent a lot of time initially talking about security.
“They’d had an incident in the past and they were very concerned about it. So we brought our people in and spent a lot of time talking about getting past their education complexity of why the cloud is secure – why a connected asset is secure.
“Once we’d got past that we could actually ask ‘what is the real outcome that you want?’ We got to the point that they need to have security, but the outcomes were more important to them.”
Linking this experience to the wider business community, he adds: “We can all be safe if we never get out of the house – we wouldn’t need airbags in our car. But we need to go and travel, so it becomes a different conversation where security is not the leading conversation. People want to know that things are secure, but I think there is some education that needs to be done.
“For example, our phones are always connected, but they are more secure than our computers are because they were designed for a connected world. They’re actually more secure because they’re always connected. So just re-educating customers about those ideas will help us get past that.”
Having already taken a lead in digital transformation, GE is understandably keen to stay ahead of the pack – something Bell is confident the company can do through incremental change.
“We’ve kind of crossed the chasm in software to be able to continuously evolve things,” he says.
“That’s the beauty of software – it’s soft, so you can do that. And as our machines are getting softer we can actually evolve the machines in a continuous way as well.
“The way we have designed the architecture is no different to the way Google or Amazon have designed theirs, and a lot of the technologies we use are open source. So when the latest and greatest technologies are there, we will be able to adopt them. A big part of this is making sure that getting these technologies through Predix is easier for our customers. We’re really simplifying things for them.”
Having already made a successful digital transformation, and providing the framework for others to do the same, there is little doubt GE will continue to be at the forefront of innovation in industry.
With the GCC being a major hub for energy – one of GE’s core sectors – the region and the company look likely to evolve together in this increasingly digital era.