GE Software: A Massive Startup In The Bay Area
Betting big on software is a key business strategy for GE. The business group's annual revenues were more than $142 billion in 2012. In 2008 they were nearly $180 billion. Software businesses have high profit margins especially if they can be applied across a large user base.
Software is a far more scalable business than services, which are constrained by staff numbers. And software can be used to help scale some types of services and save on staff costs, all great reasons for GE to invest in software.
Its goal is to create a unique asset, a cutting edge software group capable of supporting the many varied business groups that make up GE's industrial conglomerate. From monitoring jet engines to building sustainable energy projects, the breadth of GE's software needs cross a wide spectrum of applications.
It will require common software platforms that can integrate many different applications, plus development of cutting edge user interfaces, and the integration of hundreds of tools and third party technologies.
It's a massive undertaking that's being led by William Ruh, vice president and director of the Software group. He was formerly vice president at Cisco Systems, where he headed global development of services and solutions.
I visited GE Software at it's headquarters in San Ramon (above), a place that locals like to describe as being half-way between San Francisco and Silicon Valley, (if you head 30 miles east of both).
Here are some notes from my meeting with Mr Ruh (photo top).
- GE realized that more than $2.5 billion a year in revenues was due to software licensing. It decided it needed a new business group to make its software development more efficient, and more useable across divisions, with better user interfaces, and development of new types of mobile applications.
- GE believes that software is its most vital technology, and it has the potential to transform every one of its industry sectors.
- The goal is not to become another Oracle, or any other software company but to pursue common technologies and analytics for some very important areas.
- Key areas of focus are sensors, data analytics, predictive analytics, energy efficiency, user interfaces, mobile technologies, and transportation logistics.
- A year ago the division consisted of just two people now there are almost 400 engineers and researchers, with a goal of more than 800. GE has more than 9,000 software engineers across the globe.
- Key problems to tackle: predicting when and where a jet engine will fail; technologies for repairing equipment remotely; making devices more intelligent and self-monitoring; integration of consumer technologies; improving and standardizing user interfaces, developing networks of sensors, and best use of cloud technologies.
- Healthcare is another important sector, how to improve hospital efficiencies, reduce infections, and predict healthcare needs in individuals based on sensor data such as monitoring how people walk. Improving imaging technologies is key and it's also where GE already has an important expertise.
- GE Software is not competing for the same talent as Silicon Valley web startups. It is able to attract software engineers with eight to ten years experience. These people are usually settled in young families, which makes San Ramon a highly attractive location because of good schools and abundant, reasonable priced housing. For engineers in San Francisco or Silicon Valley, San Ramon is an easy 30 minute reverse commute. (When I visited from San Francisco in mid-summer it was 50 degrees Fahrenheit hotter, at 110 degrees.)
- The projects are important and difficult - this attracts top software engineers.
- GE makes investments in startups and makes small and medium sized acquisitions all the time, mostly related to specific industry sectors, not necessarily Silicon Valley startups but from all over the US.
- Cybersecurity is also very important and this is where there is potential of cooperation with other sections of GE.
- Advise for new engineers: If you focus on mobility, cloud, analytics, or cybersecurity — you will have a great career.
I also spoke with Veeru Ramaswamy (below), Technology Leader for Digital Industries at GE Software.
- Mr Ramaswamy runs a research group of about 25 people, with a goal of expanding to around 50 people.
- GE is trying to digitize as much of its business and services as it can, this generates a lot of data that can be used to improve efficiencies across all operations.
- With all the different software projects across its operations, the company is keen to choose common platforms.
- Developing predictive analytics is important, algorithms that can analyze big data and make predications. Analysis of image data is another important subject, in healthcare and other studies such as jet engine monitoring.
- How to apply existing technologies to solve important problems in GE sectors.
- Investigate collaboration technologies and how to utilize the knowledge of GE experts across remote geographies. This can help repair wind turbines, for example, by having the right parts already on hand along with the right instructions to local workers. This can cut repair turnaround time dramatically.
- The opportunity, and the challenge, is to create a new research group from scratch, to investigate the application of powerful new technologies, some of which are sourced from consumer technologies such as Microsoft's Kinect.