Cloud Services

Cloud Drives Blue-Skies Thinking

Cloud, mobile and big data are forcing digital transformation into every corner of the economy. Cloud business models are turning up in the most unlikely locations.

Take General Electric Co. (NYSE: GE) (GE), for example. The bluest of blue-chip industrials is aiming to reinvent itself as a digital company. And it's about a lot more than just 3D printing.

GE is in pursuit of a strategy set out by CEO Jeff Immelt on the premise that a 1% boost in manufacturing productivity will drive trillions of dollars of value. The company has identified digital technologies as the way to get there.

"We build jet engines, gas turbines and oil platforms and run 425 factories around the world," said Denzil Samuels, global head of channels and alliances. "What we're trying to do right now is digitize the world we live in."

For example, the company can send jet engine data from the actual clouds into GE's digital cloud to create a virtual copy.

Each jet engine blade has a sensor that is continuously sending real-time data, Samuels explains. "That gives us the ability to build a 'digital twin' -- a cyber copy of that engine so we can simulate what that engine is experiencing, whether it is flying over the sandy skies of Saudi Arabia or the less abrasive skies of North America."

How quickly the engine wears down depends on where it is flying and how often it takes to the air.

The result is that engineers get insights into engine wear and tear, creating multiple use cases.

"We can take the pain of major engine maintenance by replacing a single blade that is being worn as soon as we know about it, or, better still, predicting when it will need replacing," says Samuels.

"We can minimize the amount of time that the engine is off the plane, which is minimizing downtime for the airline," he adds. "That is an outcome for the airline. We can give them the digital information in real time. It can help them with flight ops, crew scheduling, cargo handling, and so on. That's taking this digitalization of industrials to a whole new level."

GE and Chinese network equipment maker Huawei Technologies Co. Ltd. are also working with elevator company Schindler. These days that firm sees itself as a transport operator, with 1.5 million elevators in operation carrying 1 billion people daily.

Schindler has begun digitizing its elevators and by doing so is able to build a data profile on passengers.

At a basic level this means convenience. If the elevator at your office or favorite hotel knows who you are as soon as soon as you step in, it will take you go straight to your floor, Samuels says.

But it also has the passenger's attention and customer profile, meaning that the elevator could become yet another marketing channel.

"It's making the passenger journey more productive and efficient and created an advertising revenue stream for itself," says Samuels.

Banking on digitization
Away from manufacturing, traditional financial firms are also feeling the pull of digital.

Banks might be among the heaviest IT spenders but some, like HSBC, are not known for their innovation or responsiveness, concedes Darryl West, CIO of the UK-based firm.

HSBC, the world's seventh largest bank by assets, has embarked on a plan to fully digitize its business and put innovation at the center of operations.

"We are on a mission to take every customer interaction and every process of the bank and digitize it," West said. "No more piles of paper and disjointed processes. It will improve customer experience and costs."

West says driving the bank's transformation is a dramatic change in customer behavior. "There's a tectonic shift from ATMs and branches to mobile banking," he says. "Customers are dragging people like HSBC into the new world of mobile technology. If HSBC doesn't respond we're going to have non-banks like Alibaba and Tencent and others coming in and taking our market share."

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But the rapid emergence of mobile brings new opportunities, such as the ability to use analytics to understand customers' behavior and to guide them in their options.

It has completely changed how they interact with HSBC, West says.

But the change in direction also means some serious re-engineering for the 150-year-old institution. Some of the bank's core systems are 40 to 50 years old.

These platforms are still robust, and it would be deeply disruptive to the bank's operations to shut them down, says West. The solution has been to build an integration layer "that translates into something that can be consumed through cloud infrastructure."

West describes it as an evolutionary process with a lot of complexity, involving 40,000 IT staff and 7,000 applications.

"This is not something you do in a year. The whole thing needs to be automated and instrumented from top to bottom."

The bank is also exploring different cloud models. It is building its own private cloud infrastructure as well as working with public cloud players like Amazon.com Inc. (Nasdaq: AMZN) and Microsoft Corp. (Nasdaq: MSFT) and SaaS firms like Oracle Corp. (Nasdaq: ORCL) and SAP AG (NYSE/Frankfurt: SAP).

"This is a fundamental change to my business," says West. "We are working with partners and regulators in all our jurisdictions to make sure we have a resilient cloud capability."

— Robert Clark, contributing editor, special to Light Reading

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