6 Questions Partners Have About GE Digital's Spin-Off

The End Of Uncertainty Raises New Questions

General Electric made waves in the industrial Internet of Things market Thursday with the news that it plans to sell a majority stake in ServiceMax and spin off GE Digital into a standalone company.

The Boston-based company said GE Digital would remain under GE's ownership and operate independently, with its own equity structure and board of directors. Bill Ruh, who has been GE Digital's CEO since its inception in 2015, said he is stepping down. Steven Martin, chief digital officer of GE power, will serve as GE Digital's acting CEO, according to a GE spokesperson.

The news ended months of speculation about the future of GE Digital, which began in June when a report stated that GE was looking to sell key digital assets. However, partners still have big questions about what this latest development means for their relationships with GE Digital going forward.

Who Will Be GE Digital's Next CEO?

Chief among questions for partners is who will succeed Bill Ruh (pictured) as GE Digital's CEO. In GE's announcement this morning, the company said it has begun a search for Ruh's successor and that it would consider external and internal candidates.

Jim Gillespie, CEO of GrayMatter, a Warrendale, Pa.-based GE Digital partner, said he hopes GE Digital's next CEO will lay out the roadmap for use cases, as well as auxiliary ones.

"That customer focus and use case focus will be good," he said.

Barry Lynch, CEO of Factora, a Trois-Rivières, Quebec-based system integrator, said GE Digital will need its next CEO to have a solid understanding of the market and how the company's industrial IoT platform Predix can differentiate from the hundreds of competitors on the market.

"They're going to need to have an entrepreneurial business leader," he said.

Will GE Digital Remain A Part Of GE Long-Term?

The news that GE Digital would remain under GE's ownership as it spins off into a standalone company will create stability for customers and partners, Lynch, a former GE Digital employee, said.

However, Lynch added, the restructuring will make it easier for GE to sell the digital business if the company doesn't meet expectations over the next few years — after all, The Wall Street Journal reported in June that GE was looking to sell key parts of the digital business. He pointed to Current as an example of GE creating a wholly-owned standalone company and then selling it off a few years later.

"It gives them options, and it addresses the customer's concerns about future investments they make in the software," Lynch said.

Al Velosa, an IoT analyst at Gartner, said partners should feel comfortable about continuing to work with GE Digital, but they should have a backup plan just in case.

"I think at the moment [GE Digital] continues to be a partner they want to work with — but with a clear risk mitigation strategy in place," he said.

A GE spokesperson declined to comment.

How Will The Sale Of ServiceMax Impact GE Digital's Portfolio?

With the majority sale of GE Digital's ServiceMax solution, the company will no longer fully own what is considered a major aspect of industrial IoT platforms, according to Velosa.

"It's the crux of low-hanging fruit to justify for IoT projects," he said.

ServiceMax provides field service management software, which helps companies manage their service technician workforce in conjunction with the predictive maintenance capabilities of IoT deployments. In Thursday's announcement, GE said it would continue to provide advanced integration between GE Digital's Predix asset performance management software and ServiceMax.

However, Velosa said, the majority sale of ServiceMax could open the possibility for partners to work with other field service management software providers, which includes Microsoft, Salesforce and SAP.

"It does require or merit a conversation about technology stack, alignment and strategy," he said.

A GE spokesperson said ServiceMax will be a strategic, preferred GE partner and that both companies have entered into a reseller agreement.

"With Silver Lake, ServiceMax will be better positioned for continued growth through more focused product development and go-to-market plans," the spokesperson said. "ServiceMax will benefit from greater flexibility to advance in markets beyond GE’s customer base."

How Will The Spin-Off Impact GE Digital's Overall Focus?

With GE Digital becoming an independently operated company, partners are wondering how it will differ from its current iteration as a business that is tied more closely into GE.

Gillespie said he expects the spin-off of GE Digital will allow the company to increase its investments — which he has already seen signs of this year — and have a clearer focus on the broader market.

"With a standalone [company] culture and standalone board, you think about all clients in a clearer, more focused way," he said.

Lynch said he hopes the new structure will give GE Digital more flexibility.

"Hopefully loosening the reins from GE helps them get untethered from internal restrictions," he said.

When Will Minds + Machines Return?

After GE named Larry Culp as its new CEO in early October, the company indefinitely delayed its eighth annual Minds + Machines conference for customers and partners weeks before it was supposed to happen. GE had said at the time that it would revisit the event's timing at a later date.

Now with the news of GE Digital being spun out into a standalone company, the firm is not yet saying when Minds + Machines will return. The company is holding a sales kickoff meeting in January for partners, according to Lynch and Gillespie, but that is not supposed to be a replacement.

"I would expect a customer-facing event in the next 12 months," Lynch said.

What Will Be GE Digital's New Name?

In GE's Thursday announcement, the company said GE Digital will get a new identity and brand, indicating that the days of the company running under the name "GE Digital" are numbered.

Lynch said he expects the company will attempt to differentiate itself from the GE brand, though it could potentially use GE's name somewhere in its branding — similar to what GE did with Current, the connected lighting business that is branded as "Current by GE."

With GE's financial problems and GE Digital's struggles to lead the industrial IoT market, there may be a benefit in the company trying to distance itself, Lynch said. At the same time, GE remains to be a strong brand, despite the company's current issues.

"Hopefully they will position themselves as the new kid on the block," he said. "I think they want to get away from the GE Digital brand. It's a fine balance. You don’t want to carry the baggage with you, but you want the brand weight behind it."

The company said it would share more details about the GE Digital spin-off in the first quarter of next year, which is when we may learn about the new brand identity.