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GE shifts strategy, financial targets for digital business after missteps

29 August 2017
General Interest
Energynomics

General Electric Co wants its industrial software business to cut costs and lift profits next year under new chief executive John Flannery, and is considering expanded partnerships and the possible sale of some equity in the unit, according to people familiar with the business.

Former chief executive Jeffrey Immelt spent six years and more than $4 billion transforming 125-year-old GE into a “digital industrial” company. But GE has had technical problems and delays with its software platform, known as Predix, which connects equipment like turbines and elevators to computers that can predict failures and reduce operating costs, according to Reuters.

This spring, GE called an unusual, two month “time-out” to tackle the Predix problems, which have not been previously reported. With fixes in place, GE will now emphasize sales to existing customers in its energy, aviation and oil-and-gas businesses, and scale back efforts to sell to new customers in other sectors, three senior GE executives told Reuters. “Our resources will go to our fastest-selling markets,” GE Digital Chief Executive Officer Bill Ruh said in an interview.

To help investors better understand Predix, GE also has redefined digital revenue to exclude $3 billion in hardware related to its gas-fueled power plants, providing a clearer picture of the “pure” software business and avoiding double-counting, Chief Financial Officer Jeff Bornstein said. The company now expects $12 billion in digital revenue in 2020, compared with $15 billion under the old definition. GE’s total revenue hit nearly $124 billion last year.

Autor: Energynomics

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