John Flannery, General Electric’s new CEO, recently acknowledged plans to refocus the company’s cloud computing and data analytics efforts on a handful of key industries.
Flannery started his new gig atop one of the world’s biggest companies on Aug. 1, replacing former CEO Jeff Immelt, who had spent five years staking out an ambitious plan for GE to build its own cloud computing data centers and services. Those were supposed to be the foundation for Immelt’s plan to transform the century-old industrial giant into a digital power that would be known as much for its software and data crunching as for the jet engines and medical devices.
In a recent post on LinkedIn Flannery talked—broadly—about how that vision has shifted so that GE can make use of its existing expertise. “We will leverage what we do best in energy, oil and gas, aviation, healthcare, rail, and mining, and draw on our core assets and equipment to deliver the best value and execution,” he wrote.
Flannery’s post confirmed a Reuters report from August about the narrowing of GE’s digital focus, centered on its Predix cloud software, as mentioned above..
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Another big change is that GE (GE) now plans to operate the software and services it’s building in Amazon Web Services and Microsoft Azure public cloud data centers to save money. Originally, Immelt had pushed for GE to build its own data center facilities worldwide— a massive and costly undertaking.
A few weeks ago, GE Digital CEO William Ruh told Fortune, that given the infrastructure that Amazon (AMZN) and Microsoft (MSFT) have already built, at a cost of billions of dollars annually it made more sense to leverage what they’ve done rather than duplicate their efforts.
Two large GE customers in the energy sector told Fortune that whatever the underlying cloud is doesn’t matter much to them. Brian Hoff, director of corporate innovation for Exelon (EXC), a large Chicago-based utility holding company, said as long as promised services are delivered and Exelon (EXC) benefits from price savings, he’s fine with whatever cloud runs Predix as long as it meets his needs.
“We told GE in the contract we don’t care which cloud, we just want the lowest cost and we want that lower cost passed on to us,” Hoff told Fortune.
The one exception to the “any cloud will do” rule is that Exelon’s nuclear energy business must meet certain government security and other guidelines. But even there, since both Amazon and Microsoft now run “government cloud” data centers that meet those requirements, their current setups should be fine.
Nuclear energy work in the U.S. is subject to International Traffic in Arm (ITAR) regulations, for example, that mandate that all data center employees be U.S. citizens or permanent residents. These “gov clouds” are also segregated from other cloud data centers and can only be used by a limited number of government agencies.
Gil Quiniones, president and CEO of the New York Power Authority, a state-owned utility provider, was equally unruffled by the cloud shift.
“AWS and Microsoft are pouring money into this while GE’s sweet spot is they know machines and they know bits,” he said. “We’ll leave it up to them to pick the cloud but we will demand performance standards that must be met.”