Looking to Industry for the Next Digital Disruption

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SAN RAMON, Calif. -- When Sharoda Paul finished a postdoctoral fellowship last year at the Palo Alto Research Center, she did what most of her peers do -- considered a job at a big Silicon Valley company, in her case, Google. But instead, Ms. Paul, a 31-year-old expert in social computing, went to work for General Electric.

Ms. Paul is one of more than 250 engineers recruited in the last year and a half to G.E.'s new software center here, in the East Bay of San Francisco. The company plans to increase that work force of computer scientists and software developers to 400, and to invest $1 billion in the center by 2015. The buildup is part of G.E's big bet on what it calls the "industrial Internet," bringing digital intelligence to the physical world of industry as never before.

The concept of Internet-connected machines that collect data and communicate, often called the "Internet of Things," has been around for years. Information technology companies, too, are pursuing this emerging field. I.B.M. has its "Smarter Planet" projects, while Cisco champions the "Internet of Everything."

But G.E.'s effort, analysts say, shows that Internet-era technology is ready to sweep through the industrial economy much as the consumer Internet has transformed media, communications and advertising over the last decade.

In recent months, Ms. Paul has donned a hard hat and safety boots to study power plants. She has ridden on a rail locomotive and toured hospital wards. "Here, you get to work with things that touch people in so many ways," she said. "That was a big draw."

G.E. is the nation's largest industrial company, a producer of aircraft engines, power plant turbines, rail locomotives and medical imaging equipment. It makes the heavy-duty machinery that transports people, heats homes and powers factories, and lets doctors diagnose life-threatening diseases.

G.E. resides in a different world from the consumer Internet. But the major technologies that animate Google and Facebook are also vital ingredients in the industrial Internet -- tools from artificial intelligence, like machine-learning software, and vast streams of new data. In industry, the data flood comes mainly from smaller, more powerful and cheaper sensors on the equipment.

Smarter machines, for example, can alert their human handlers when they will need maintenance, before a breakdown. It is the equivalent of preventive and personalized care for equipment, with less downtime and more output.

"These technologies are really there now, in a way that is practical and economic," said Mark M. Little, G.E.'s senior vice president for global research.

G.E.'s embrace of the industrial Internet is a long-term strategy. But if its optimism proves justified, the impact could be felt across the economy.

The outlook for technology-led economic growth is a subject of considerable debate. In a recent research paper, Robert J. Gordon, a prominent economist at Northwestern University, argues that the gains from computing and the Internet have petered out in the last eight years.

Since 2000, Mr. Gordon asserts, invention has focused mainly on consumer and communications technologies, including smartphones and tablet computers. Such devices, he writes, are "smaller, smarter and more capable, but do not fundamentally change labor productivity or the standard of living" in the way that electric lighting or the automobile did.

But others say such pessimism misses the next wave of technology. "The reason I think Bob Gordon is wrong is precisely because of the kind of thing G.E. is doing," said Andrew McAfee, principal research scientist at M.I.T.'s Center for Digital Business.

Today, G.E. is putting sensors on everything, be it a gas turbine or a hospital bed. The mission of the engineers in San Ramon is to design the software for gathering data, and the clever algorithms for sifting through it for cost savings and productivity gains. Across the industries it covers, G.E. estimates such efficiency opportunities at as much as $150 billion.

Some industrial Internet projects are already under way. First Wind, an owner and operator of 16 wind farms in America, is a G.E. customer for wind turbines. It has been experimenting with upgrades that add more sensors, controls and optimization software.

The new sensors measure temperature, wind speeds, location and pitch of the blades. They collect three to five times as much data as the sensors on turbines of a few years ago, said Paul Gaynor, chief executive of First Wind. The data is collected and analyzed by G.E. software, and the operation of each turbine can be tweaked for efficiency. For example, in very high winds, turbines across an entire farm are routinely shut down to prevent damage from rotating too fast. But more refined measurement of wind speeds might mean only a portion of the turbines need to be shut down. In wintry conditions, turbines can detect when they are icing up, and speed up or change pitch to knock off the ice.

Upgrades on 123 turbines on two wind farms have so far delivered a 3 percent increase in energy output, about 120 megawatt hours per turbine a year. That translates to $1.2 million in additional revenue a year from those two farms, Mr. Gaynor said.

"It's not earthshaking, but it is meaningful," he said. "These are real commercial investments for us that make economic sense now."

For the last few years, G.E. and Mount Sinai Medical Center have been working on a project to optimize the operations of the 1,100-bed hospital in New York. Hospitals, in a sense, are factories of health care. The challenge for hospitals, especially as cost pressures tighten, is to treat more patients more efficiently, while improving the quality of care. Technology, said Wayne Keathley, president of Mount Sinai, can play a vital role.

At Mount Sinai, patients get a black plastic wristband with a location sensor and other information. Similar sensors are on beds and medical equipment. An important advantage, Mr. Keathley said, is to be able to see the daily flow of patients, physical assets and treatment as it unfolds.

But he said the real benefit was how the data could be used to automate and streamline operations and then make better decisions. For example, in a typical hospital, getting a patient who shows up in an emergency room into an assigned bed in a hospital ward can take several hours and phone calls.

At Mount Sinai, G.E. has worked on optimization and modeling software that enables admitting officers to see beds and patient movements throughout the hospital, to help them more efficiently match patients and beds. Beyond that, modeling software is beginning to make predictions about likely patient admission and discharge numbers over the next several hours, based on historical patterns at the hospital and other circumstances -- say, in flu season.

The software, which Mount Sinai has been trying out in recent months, acts as an intelligent assistant to admitting officers. "It essentially says, 'Hold off, your instinct is to give this bed to that guy, but there might be a better choice,' " Mr. Keathley explained.

At a hospital like Mount Sinai, G.E. estimates that the optimization and modeling technologies can translate into roughly 10,000 more patients treated a year, and $120 million in savings and additional revenue over several years.

The origins of G.E.'s industrial Internet strategy date back to meetings at the company's headquarters in Fairfield, Conn., in May 2009. In the depths of the financial crisis, Jeffrey R. Immelt, G.E.'s chief executive, met with his senior staff to discuss long-term growth opportunities. The industrial Internet, they decided, built on G.E.'s strength in research and could be leveraged across its varied industrial businesses, adding to the company's revenue in services, which reached $42 billion last year.

Now G.E. is trying to rally support for its vision from industry partners, academics, venture capitalists and start-ups. About 250 of them have been invited to a conference in San Francisco, sponsored by the company, on Thursday.

Mr. Immelt himself becomes involved in recruiting. His message, he says, is that if you want to have an effect on major societal challenges like improving health care, energy and transportation, consider G.E.

An early convert was William Ruh, who joined G.E. from Cisco, to become vice president in charge of the software center in San Ramon. And Mr. Ruh is taking the same message to high-tech recruits like Ms. Paul. "Here, they are working on things they can explain to their parents and grandparents," he said. "It's not a social network," even if the G.E. projects share some of the same technology.

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This article originally appeared in The New York Times.


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