GE Aviation: Soaring Apart From Competition with Data Analytics
GE Aviation's digital efforts enable strategic partnerships that generate value across the supply chain
Supply chains operating today need to be concerned about digitization. 鈥淭he confluence of connectivity, big data and leaps in computing and software capabilities are disrupting old business models and enabling听digital-savvy startups and other competitors to push into new markets”.1 听GE Aviation is specifically concerned about digitization as a means to differentiate themselves from competitors by creating new value for their customers, especially in a climate of rising fuel costs and high fixed costs associated with aging fleets. 鈥淪mart, connected products dramatically expand opportunities for product differentiation, moving competition away from price alone. Knowing how customers actually use the products enhances a company鈥檚 ability to segment customers, customize products, set prices to better capture value, and extend value-added services鈥�.2
Along with differentiation from competitors, the insights generated from the new wave of data coming from GE鈥檚 engines can increase their power within the aviation ecosystem, especially relative to their customers. 鈥淕E鈥檚 analysis of fuel-use data, for example, allowed the Italian airline Alitalia to identify changes to its flight procedures, such as the position of wing flaps during landing, that reduced fuel use. GE鈥檚 deep relationship with the airlines serves to improve differentiation with them while improving its clout with airframe manufacturers鈥�.2 Moving forward, GE can work with airlines as a partner, in an effort to reduce overall cost and deliver value to the end customers. 听鈥淚n technology intensive and global competitive markets like aviation and aerospace adaptation of the coopetition strategy is often only one, possible way of survival and development.鈥�3
In the short-term GE Aviation has focused on acquiring the talent necessary to support expanded digital capabilities. In 2012, at the start off their digital journey, GE acquired Austin Digital, a company with a 鈥減roprietary suite of tools to analyze digital flight data and other operational data to improve safety and efficiency for operators.鈥�4 This move acted as an accelerator for GE鈥檚 digital development. John Gough, leader of听GE听Aviation’s Fuel and Carbon Solutions believes that 鈥淎ustin听Digital’s data frames and analytical capabilities will help his team find answers in minutes to hours, as opposed to a “longer” time previously鈥�.5
Looking forward, GE has focused on forming strategic partnerships with airlines. One of the first partners GE formed was with Qantas Airlines. 鈥淒ata scientists, engineers and software designers from Qantas and听GE听will analyze some of the 10 billion data points produced by the听aviation sector annually to help the carrier cut fuel costs and carbon emissions鈥�.6 This partnership has moved beyond data sharing, pilots from Qantas have collaborated with GE Aviation to develop an application called FlightPulse. 鈥淔lightPulse is the first fully commercialized product to be developed with mobile services from GE鈥檚 Predix platform and uses recorded aircraft data and analytics to enable pilots to securely access their individual operational efficiency metrics and trends. Information accessible on this platform helps them understand the operational efficiency of their flight鈥�.7 The insights from applications such as FlightPulse have the potential to drastically reduce costs and emissions across the entire aviation ecosystem. 鈥淕E’s ‘Power of One Percent’ report estimated that the global commercial airline industry is spending about $179 billion annually on jet fuel. A one per cent cost reduction would save the global听aviation听sector around $30 billion over the next 15 years鈥�.6
I believe one of the largest challenges facing GE is data security. In the short term, I think ensuring data collected is secure, and managing customer concerns around this issue will be imperative to continuing to form new strategic partnerships and harness the scale of available data from all GE鈥檚 engines. 鈥淎s airline systems become more interconnected, the more vulnerable they become to a cyber-attack. 鈥楢irplanes themselves have never been more complex, never been more reliant on technology,鈥� says Jeff Schmidt, a pilot and CEO of JAS Global Advisors, a security consultancy for government and critical infrastructure firms. 鈥楥omplexity is the enemy of security鈥欌��.8
GE Aviation must anticipate new regulations that will continue to solidify as the aviation industry becomes increasingly vulnerable to cyber-attacks. 鈥淔AA is working on standards for cyber-security, but for now they are using a process called 鈥榮pecial conditions鈥� as the substitute until those requirements are formalized and complete鈥�.8 GE Aviation should be actively engaging in discussion with the government as well as collaborators in the industry to ensure future regulations create security while leaving space for innovation.
As GE Aviation faces the task of ensuring data security, I鈥檓 left wondering how closed off should GE鈥檚 system be towards talking with other digital systems? A closed system reduces the risk of security breaches as well as acting as a forcing function to create long term customer loyalty with GE. However, is GE and their customers sacrificing future functionality and benefits by not considering a more hybrid approach?
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References
- Goldberg, M. (2016, September 19). Getting Positioned For Digital Disruption. Aviation Week & Space Technology, p. 15.
- Porter, M. E. (2014, November). How Smart, Connected Products Are Transforming Competition. 性视界 Business Review, 64鈥�88.
- Klimas, P. (2014). MULTIFACETED NATURE OF COOPETITION INSIDE AN AVIATION SUPPLY CHAIN 鈥� THE CASE OF THE AVIATION VALLEY. Journal of Economics and Management, 96-119.
- Drake, T. (2012, August 1). GE Aviation Acquires Austin Digital. Retrieved from Avionics : http://www.aviationtoday.com/2012/08/01/ge-aviation-acquires-austin-digital/
- Tegtmeier, L. A. (2012, December 17). GE, Boeing At Work On Next-Gen Digital Data Getting Smarter. Aviation Week & Space Technology, 174(45), 1. Retrieved from Aviation Week & Space Technology.
- Connolly, B. (2016, October 7). Qantas tapping data to improve flight efficiency. CIO (13284045), 1.
- Driskill, M. (2017, October). QANTAS, GE AVIATION DEVELOP NEW FLIGHT DATA APP. Asian Aviation Magazine, 12.
- Jaeger, J. (2015, November). Managing Cyber-Risk in the Aviation Industry. ERM & INTERNAL CONTROLS, 44-45.
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- Aviator. (2017, October 17). GE Aviation and Teradata Form Strategic Partnership to Bridge the Gap Between Aviation Operations and Business. Retrieved from Aviator: http://newsroom.aviator.aero/ge-aviation-and-teradata-form-strategic-partnership-to-bridge-the-gap-between-aviation-operations-and-business/
Thanks for the great post! You raise a very valid concern surrounding the tradeoff between future functionality and benefits when considering a closed off digitalized communication system. The reality is though, that in the current digital age, companies must proactively consider potential cybersecurity threats. As indicated by a PWC study, cybersecurity attacks have been increasing over the last few years and there is little indication that attempts to hack into our highly-utilized information systems (including airline controls) will cease. [1] As a result, I would argue that GE should lean more towards closed-off (and ideally end-to-end encrypted) systems. If GE shows in good faith that it is trying to adjust to the realities of digitalization and protect its consumers, customers may actually feel more inclined towards loyalty and partnership with GE.
[1] PWC. 鈥淭he Global State of Information Security Survey 2018.鈥� PwC, 18 Oct. 2017, .
Great post! I tend to agree with you and HeidiRozensUncleHoward. In most cases, I believe that a closed loop system is better. Data can always be aggregated and submitted to the appropriate parties. Similar discussions are taking place with regards to cyber security and the oil and gas industry. As with aviation, the oil and gas industry is also seeking to optimize its processes through digitization. However, the industry faces similar threats as it moves in this direction. See the article below that raises some great points on this.
In my previous role, we ultimately came to the conclusion that some data was harmless and could either be aggregated or transmitted directly to collaborators. Data like pressures, temperatures, vibration, etc. are relatively harmless. As long as these systems are separate from the controls to the actual operation (as is described in the article above), I believe the benefits exceed the risks. In conclusion, I think asking what data are we sharing and is the system truly isolated from other critical controls is key.
Fascinating article鈥擨 had not considered that there was an ability to leverage engine data in such a way to capture additional revenue opportunities with airline partners through such ongoing engagement! A key question that strikes me is which organization actually owns and receives the data on an ongoing basis, given that the engines are presumably purchased outright by the airline. It would be interesting to understand how GE would therefore be affected by marketing / pricing their data analytics services to the airline.
Cybersecurity is certainly a huge concern and one that should be carefully thought through as there are significant reputation risks on both sides. I believe that a closed, modular system is absolutely necessary in the event of an in-flight cyber attack so as not to compromise other flight operations in an emergency situation. Segregation of key systems and processes in any organization is always a good consideration.