Navigant Research Blog

Defining Companies in the Digital Age

Tom Machinchick — December 15, 2016

Intelligent BuildingAs I mentioned in a previous blog, a company that does not have some form of automation or intelligence in its commercial building efficiency product or service will have little chance to compete in the changing market landscape. That’s a pretty strong statement, and maybe one that not everyone agrees with. It seems to be the direction that macro market trends are moving, however, and there are plenty of examples to back it up.

One of the most compelling observations about the changing face of automation and intelligence was made in a keynote address by Jeffrey Immelt, Chairman and CEO of General Electric (GE), at the Intelligent Platforms User Summit back in 2014. The comment he used to frame his speech was, “If you went to bed last night as an industrial company, you’re going to wake up this morning as a software and analytics company.”

Long Road to Change

This is easier said than done, and GE knows it. The company has been working on this strategy for over 5 years and through $1 billion in investment, and it is still not yet fully transformed. But this shift is the company’s goal. GE’s software business is growing 20% per year with a goal of $15 billion in revenue by 2020, a benchmark which would make the company a top 10 software player.

Not every participant in the field will end up as a software company; each must follow their own strengths and strategy. But it is imperative to build some form of internal capabilities to meet the demands of a new digital world. Each company has intellectual property (IP) that can only be completely understood and translated by internal resources that have boots on the ground. The job won’t get done with a software supplier or a software integrator alone. And who would trust this critical strategy solely to outsiders anyway?

The main point of my previous blog was that developing these types of intelligence and automation capabilities will not happen overnight, even by acquisition. Companies that did not have the foresight to start assessing the digital transformation years ago will be in serious catch-up mode in the years to come.

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