This is a summary of the report “GE Smart Grid: Ecomagination in Action”. For information on how to obtain the entire report, email the author, Tom Kucharvy, at TomK@Beyond-IT-Inc.com
General Electric (GE) launched its ecomagination initiative five years ago. Although GE certainly intended ecomagination to promote the company’s social consciousness, the initiative’s primary goal was much deeper—to recast GE’s overarching value proposition and establish it as the leader in what CEO Jeff Immelt saw as some of the biggest growth markets of the 21st century, including those around alternative energy generation and energy efficiency. While ecomagination efforts are spread across every division of the company whose products range “from turbines to toasters”, nowhere are the company’s efforts more focused and concentrated than in GE Digital Energy Services, the group that is responsible for General Electric’s Smart Grid program.
Smart grids promise to redefine how electricity is generated, transmitted, used and managed. They will create a new, much more flexible energy infrastructure that:
- Enables the integration and optimization of more renewable energy (such as wind and solar) and plug-in electric vehicles into the grid;
- Drives significant increases in the efficiency and reliability of the network; and
- Empowers consumers to make smarter decisions in managing their energy usage and saving money without compromising their lifestyles.
General Electric pretty much encircles most of the major components of, and a range of devices that will be powered by tomorrow’s smart grids, all the way from the power plants that generate the electricity, through the batteries that store it and the appliances and light bulbs (not to speak of the MRI and wastewater treatment equipment) that consume it. It is also writing software that will be required to manage these grids, and is creating services that will be necessary to design, install, manage and finance these grids.
Although GE certainly has a broad line of smart grid hardware, software and services, it has no intention of providing all the tools required for a comprehensive solution. It does not and will not, for example, provide the ERP, data management or analytics software that utilities will need to manage their businesses, or most of the services that will be required to integrate energy management and distribution systems into their business systems. Rather than build such products and services itself, it is actively building an ecosystem of partners to address these needs.
GE’s ecosystem began with companies that designed software, and sometimes hardware and services, for utilities and other power generators. It is now expanding its smart grid ecosystem to incorporate more commercial and consumer-based software, including ERP, analytics and home electricity management. But while ISVs account for the largest number of GE’s smart grid partners, the companies relationships with systems integrators are rapidly emerging as among its most strategic. These partners, after all, can provide the:
- Connections to and credibility with the type of C-level and business executives who will drive large-scale transformation projects within their organizations, but with whom GE does not typically engage;
- Strategic consulting to construct the business cases and provide the change management guidance these customers will require in migrating to smart grids;
- Integration services to link third-party IT components and other non-GE products into these solutions; and
- Outsourcing and managed services for grid/back office integration and for the type of complex, multivendor grids that GE cannot itself support.
This, of course, is not to suggest that benefits of such partnerships are uni-directional.
SIs, for example, gain from access to GE’s hardware and software, its deep domain knowledge, its ability to finance huge implementations and from its strong credibility and deep relationships with power generation and distribution executives and managers. Moreover, while GE hopes that SIs will increasingly provide it with access to new customers and to additional decision influencers in current customers, GE claims that as of now, it is more likely to pull its partners into deals, than partners are to pull in GE.
Although all of the parties recognize the potential benefits of working together, effective partnering is never easy. Partners face particular risks in dealing with huge partners, such as GE. The closer the partnership, the greater the risk that smaller partners’ value add and customer relationships may be subsumed by or eventually subjugated to those of the giant., There is also always a potential that big, multi-faceted vendors may decide that software and services for which they initially relied on partners, are too strategic or too profitable for them to cede to partners.
Moreover, GE Energy has far more experience in working with customers and suppliers, than it does with go-to-market partners. It lacks a deep partnering culture and is still in the early stages of building a formal partner organization and program.
Such limitations, however, have the potential of working in General Electric’s favor. Its current lack of a partnering philosophy and structure gives it the flexibility to strategically think through its software and services objectives, to communicate these objectives to its partners and to develop a partnering program, in conjunction with these partners, from scratch. Just as importantly, since the group does not currently have large or comprehensive software or services businesses to protect and feed, it has more flexibility to strategically align its visions with those of its partners.
GE Digital Energy does appear to have a genuine desire to partner and to learn from the experiences of other industries (especially the IT industry) that have already gone through the trials and errors of creating synergistic partnering models. It must, however, decide exactly which forms of value—hardware and especially software and services—it wishes to retain for itself, and which will remain the province of partners.