GE has completed the acquisition of services company ServiceMax, in a deal worth almost $1bn.
The acquisition is at the heart of the industrial company’s software strategy, run from the GE Digital division.
With this acquisition, GE plans to add analytics and insights into ServiceMax logistics, workforce optimisation and deployment models.
GE has been steadily building out its Predix software business to provide predictive maintenance around its industrial machines such as aircraft engines, wind turbines and power generation equipment.
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“This transaction, along with our previous acquisitions of Wurldtech and Meridium, is directly aligned with our strategy to drive growth, both inorganically and organically, by building the capabilities to support the digital industrial transformation through Predix, APM and the Digital Thread,” he added.
At the company’s annual Minds + Machines conference in San Francisco in November 2016, GE CEO Jeff Immelt said: “We have never seen the power of an industrial-to-industrial world, a network to share ideas for the future. It is a transformation, an all-encompassing change. Our job is to create more productivity through a combination of analytics and physics.”
GE estimates there is a market-wide opportunity to improve service productivity by $25bn through the use of analytical tools.
Speaking to Computer Weekly, ServiceMax CEO Dave Yarnold said: “Our business is oriented around a platform to help industrial companies run their services businesses.”
According to Yarnold, combining the ServiceMax platform, which enables services businesses to track their assets, improve productivity and increase revenues, with Predix, is a good fit.
“The acquisition is a good marriage of what GE has with its platform and what we have done within the GE businesses through ServiceMax,” he said.
Predix ingests industrial data, makes sense of this data and takes actions based on data analysis, such as optimising maintenance, which is where ServiceMax fits.
Yarnold said services presents a big opportunity as companies start developing more digital product strategies: “Every CEO and CFO needs to recognise the opportunity to drive productivity by focusing on service management.”
A Bain & Company study from 2014 found that services businesses in industrial companies can become a significant part of the company’s revenue.
The Bain & Company Services Benchmark study of industrial companies found that services contributed 22% of total revenues and had an average gross margin of 39% –significantly higher than margins on most manufactured products. On average, the service business of these companies grew by 9% annually between 2010 and 2013 – almost double that of new equipment sales.
Yarnold predicted that industrial companies would start to offer their products on a pay-per-use basis, such that their customers pay for industrial equipment as a service.
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