EY and GE Digital Industrial Internet Alliance

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1 EY and GE Digital Industrial Internet Alliance

2 EY and GE Digital Industrial Internet Alliance EY and GE Digital have formed a new strategic alliance to develop and deliver Industrial Internet services based on the Industrial Internet of Things (IIoT) that will help industrial companies achieve increased productivity from capital assets and operating processes linked by the cloud. Alliance services are intended to be game changers for industrial companies: designed to help increase a company s operating efficiency, identify entirely new business opportunities or both. This alliance brings EY into GE Digital s partner ecosystem, blending the best of both organizations ongoing commitments to digital innovation on behalf of our mutual industrial clients. The right alliance at the right time takes digital technology designed from the ground up for industrial applications and wraps it in sector-specific knowledge and business transformation experience. Why? The vision and client challenge behind the alliance The EY relationship with GE goes back more than a decade and spans EY member firms in 70 different countries. Recently, both organizations began to foresee the need for significant must-have digital transformation looming for a large number of industrial clients, many of which GE and EY have in common. The need stems from industrial companies large capital asset base of industrial machinery, which collectively totals more than US$4 trillion. Historically, these companies have struggled with massive lost opportunity costs and enterprise-wide crises incurred when that critical equipment goes down. That s why the world s leading industrial companies have developed extensive and expensive business processes designed to avoid equipment downtime at almost any cost. Often, companies replace and repair their most important gear on a schedule, whether they need to or not, because they cannot precisely predict a given machine s maintenance needs and cannot afford the consequences of a failure. Three Industrial Internet opportunities But the IIoT changes that scenario in at least three ways: First, the latest and most advanced sensors, networks and big data analytics make it possible for industrial companies to know when their equipment is running fine and to predict when it is likely to break down. With insights from GE Digital s Predix cloud-based digital twin future modeling capability, preventive maintenance can be directed precisely where and as it s needed. This enables new streamlined and lower-cost operating models for industrial companies, and new business models for the industrial manufacturers who supply them. Second, the same sensor networks and predictive analytics make it possible to enhance the efficiency of industrial capital assets in action. Case in point: adjusting the angle of a turbine generator s blades and the structure s orientation in real time can significantly increase electrical generation over simply pointing the machine into the wind. 2 EY and GE Digital Industrial Internet Alliance

3 The industrial internet is not plug-and-play. On the front end, it requires creative development to actually realize the power of the data coming from millions, or even billions, of sensors. On the back end, it requires changing the way a company thinks about many of its business processes. Jeff Liu Global Executive Sponsor, EY and GE Digital Industrial Internet Alliance and EY Global Technology Sector Leader, Transaction Advisory Services Perhaps most valuable will be the entirely new kinds of business opportunities that deep analysis of large data sets makes possible. Jeff Liu, Global Executive Sponsor, EY and GE Digital Industrial Internet Alliance, explains by simple analogy: Initially, software spreadsheets simply replaced pen and paper, making a process more efficient through automation. But once we had these spreadsheets, which let us create formulas and run sensitivities and what-if analyses, that spawned modeling, which led to major change in many industries. The industrial internet is about to sweep in a similar magnitude of innovation. We call this Outcomes-Based Solutions. Three Industrial Internet challenges Yet implementing IIoT is hard and complex; major challenges stand in the way. The technology needed to collect and manage machine data in real time is very advanced and complex. Harder still is the big data analysis that leads to increased operating optimization or new revenue opportunities. Perhaps hardest of all, though, is the business process change required to take full advantage of emerging IIoT opportunities. Often, that must go against decades of corporate cultural norms. EY and GE Digital s alliance value proposition Enter EY and GE Digital, the right alliance at the right time. As part of GE Digital s partner ecosystem, EY can help industrial companies make the Industrial Internet transition quickly and successfully. Together, GE Digital and EY can help industrial companies overcome IIoT technology obstacles and business process roadblocks to improve machine productivity, streamline operations and maximize the potential of their workforces all of which can lower their costs. Moreover, the alliance can help industrial companies more quickly identify and seize new business opportunities that lead to revenue growth. As stated by Bill Ruh, Senior Vice President and Chief Digital Officer, GE, and CEO, GE Digital: Together, we are codeveloping solutions on Predix that will combine GE s industrial domain expertise with EY s innovative approaches to addressing complex business challenges to uncover creative ways to help our customers increase productivity and efficiency through data and analytics. Opportunities Predictive capabilities Enhanced asset performance New revenue streams Challenges Complex new technology Deep big data analysis Major transformation and business process change EY and GE Digital Industrial Internet Alliance 3

4 The digital operations challenges that EY and GE Digital are working together to solve will be at the top of every industrial company s agenda for the next several years. Jeff Giroux EY Global Client Service Partner for GE What does EY bring to industrial companies through this alliance? EY firms will use their extensive business transformation experience in multiple industrial sectors, along with its IoT, data analytics and cybersecurity experiencebased knowledge, to provide services that can leverage the platforms and technologies offered by GE Digital and its partner ecosystem into innovative end-to-end services for industrial companies. Our role is to help companies access and obtain value from GE Digital s technology. We will architect, design and build services that help drive return on investment, and demonstrate the impact of that return across a client s balance sheet, cash flow and tax efficiencies, explains Paul Brody, Go-to-Market Co-lead and EY Americas Strategy Leader, Technology Sector. Helping industrial companies overcome digital risk Rightfully, any Industrial Internet service must clear a high bar for industrial companies. Lost productivity or missteps in the use of those US$4 trillion in industrial capital assets could be disastrous. However, doing nothing as competitors adopt digital and IoT approaches is an existential risk. Industrial companies face the challenge of redesigning business processes to reflect the fact that, with Predix, they can now have insights that are predictive rather than reactive. Our mission is to help clients use that cloud software to drive change in their operating models, redo business processes and make sure new services are embraced by, and embedded in, their organizations, says Fay Shong, Go-to-Market Co-lead and EY Americas Strategy Leader, Oil & Gas Sector. Says Liu: The alliance takes the power and leading position that GE has as a supplier of equipment and the organization that is closest to the big data, and pairs it with EY, which provides strategic consulting and services with a similar global and sector presence. We can surround GE Digital s capabilities with the front-end and back-end strategic thinking, deployment and integration planning needed to help clients effect true digital transformation and pursue transformation with confidence. What, specifically, will the alliance do? EY will develop customized, client-specific services delivered on and around GE Digital s Predix platform-as-a-service (PaaS) for industrial cloud-based applications, sometimes first working internally with GE business units. Then, EY and GE Digital will jointly bring those services to clients. Leveraging Predix, EY can help clients connect assets and systems using IIoT; support operational and capital asset optimization; and provide key managed services including analytics and cybersecurity. EY also can help industrial companies achieve operational excellence in manufacturing and supply chain. Ultimately, EY can provide companies with an Industrial Internet and overall digital strategy in areas where IIoT is about to fundamentally reshape their businesses. 4 EY and GE Digital Industrial Internet Alliance

5 Our alliance will pursue cyber diagnostics to help industrial companies securely connect industrial machinery to the internet so they can take advantage of IIoT technologies. Paul Brody Go-to-Market Co-lead and EY Americas Strategy Leader, Technology Sector The Engine Room is a dedicated EY team combining GE Digital and EY-provided value into new IIoT service offerings. How will the alliance deliver innovative industrial services? For the alliance, EY has opened an Engine Room tasked to design and deliver client services. Engine Room team leaders will connect EY s in-depth understanding of your industry to GE Digital s industrial equipment, sensors, data access and Predix platform to design client services, and then marshal the resources of both organizations in order to deliver those services. Brody, Shong and Brian Meadows, Go-to-Market Co-lead and Principal and Leader, Digital Operations, Advisory Services, will lead the Engine Room initiative. The Engine Room will leverage EY s experience in industrial sectors such as oil and gas, power and utilities, aviation, health care, industrial manufacturing and automotive; its in-depth knowledge and know-how in the areas of IoT, big data analytics, cyber and cloud computing; and a strong base of strategic and operational skills. All of these will inform a disciplined approach that begins with a series of workshops to gain a full understanding of a client s specific needs. We will then develop a plan to help that client use GE Digital s Predix technologies to make strategic business changes, continuously over time, that deliver successful, measurable performance improvements. First focus: cyber and asset performance Initially, the Engine Room will focus on developing approaches for cyber policy, deployment and asset performance management. The former will help industrial clients securely network their equipment and the latter will help them move from reactive to proactive maintenance, thus reducing unplanned downtime, minimizing maintenance costs and extending asset life. Subsequently, EY and GE Digital plan to codevelop services in three additional general categories: Brilliant Manufacturing, GE Digital s term for leveraging IIoT technologies to improve operational efficiency and effectiveness Workflow and workforce optimization Managed software and digital services Mutual commitments to digital innovation Both EY and GE Digital have expressed long-term commitments to ongoing digital innovation on behalf of their customers and clients. GE is investing billions of dollars annually in GE Digital; it is GE s first newly formed business unit in 75 years and, following its November 2015 announcement, is already staffed with 3,000 people. Though new to the GE Digital partner ecosystem, EY has already assigned a half dozen senior professionals to the alliance, incorporated it as a top-priority driver of Advisory Services growth, is globally launching alliance services in all regions simultaneously and expects it will represent a major practice area of the firm within five years. EY and GE Digital Industrial Internet Alliance 5

6 Anatomy of an early EY and GE Digital Industrial Internet Alliance engagement GE Digital and EY each have a long history with a large industrial energy company. We approached the company s upstream and logistics executives with novel digital ideas for improving operating efficiency and freeing up cash. Today, the client schedules maintenance for 135 offshore platforms, employing several thousand workers and a large helicopter fleet that transports maintenance teams and all the spare parts and tools they might possibly need to each platform. It s done according to a maintenance schedule whether anything needs maintenance or not. GE Digital and EY proposed using GE Digital s Asset Performance Management and Brilliant Manufacturing solutions to predictively determine when specific elements of the company s industrial machinery require maintenance. With a custom-developed application running on those GE Digital platforms, the company can choose when, who and what to send out by helicopter, and to which platforms more or less just-in-time. The operating and cash impact of such a transformation on maintenance workflow is significant. The approach would not work without GE Digital, because EY does not have the digital source of predictive insights on the capital equipment involved. Nor would it work without EY, which provides the insights about people, inventory and process changes needed to realize the operating and cash benefits. Together, EY and GE Digital built the service, convinced the industrial energy company of its reliability and its value, and are in the process of helping the client deploy it. 6 EY and GE Digital Industrial Internet Alliance

7 Conclusion Ultimately, the EY and GE Digital Industrial Internet Alliance will build competitive advantage for both organizations in the global digital marketplace by helping our industrial clients increase shareholder value through both the technology and the know-how they need to transform operating efficiency, identify entirely new revenue opportunities or both. We re working with GE business units on key projects deploying GE Digital s technology, and public versions of their solutions will be among the services our alliance brings to industrial clients. Brian Meadows Go-to-Market Co-lead and Principal and Leader, Digital Operations, Advisory Services I m most excited about this alliance because combining EY s and GE Digital s capabilities can accelerate our clients digital agendas and our own! Fay Shong Go-to-Market Co-lead and EY Americas Strategy Leader, Oil & Gas Sector EY and GE Digital Industrial For Internal Internet Use Alliance Only 7

8 EY and GE Digital Industrial Internet Alliance EY Executive team Jeff Liu Global Executive Sponsor, EY and GE Digital Industrial Internet Alliance and EY Global Technology Sector Leader, Transaction Advisory Services Jeff Giroux EY Global Client Service Partner, GE Hank Prybylski EY Americas Performance Improvement Advisory Leader Loredana Sandu-Vieil EY Global Advisory Leader, GE Morgan Ortagus Global Industries EY Engine Room team Paul Brody Go-to-Market Co-lead and EY Americas Strategy Leader, Technology Sector Brian Meadows Go-to-Market Co-lead and Principal and Leader, Digital Operations, Advisory Services Fay Shong Go-to-Market Co-lead and EY Americas Strategy Leader, Oil & Gas Sector Jonathan Shipman Engine Room Diagnostic Offering Development Girish Rama Krishna Engine Room Solution Architect Winston Chung EY and GE Digital Industrial Internet Alliance Manager Scott Streacker Engine Room Brian Myung Engine Room EY Assurance Tax Transactions Advisory About EY EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities. EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com EYGM Limited. All Rights Reserved. EYG no: GBL EY-GTC ED None This material has been prepared for general informational purposes only and is not intended to be relied upon as accounting, tax or other professional advice. Please refer to your advisors for specific advice.