Supply chains operating today need to be concerned about digitization. “The confluence of connectivity, big data and leaps in computing and software capabilities are disrupting old business models and enabling digital-savvy startups and other competitors to push into new markets”.1 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. “Smart, connected products dramatically expand opportunities for product differentiation, moving competition away from price alone. Knowing how customers actually use the products enhances a company’s ability to segment customers, customize products, set prices to better capture value, and extend value-added services”.2
Along with differentiation from competitors, the insights generated from the new wave of data coming from GE’s engines can increase their power within the aviation ecosystem, especially relative to their customers. “GE’s 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’s deep relationship with the airlines serves to improve differentiation with them while improving its clout with airframe manufacturers”.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. “In 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.”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 “proprietary suite of tools to analyze digital flight data and other operational data to improve safety and efficiency for operators.”4 This move acted as an accelerator for GE’s digital development. John Gough, leader of GE Aviation’s Fuel and Carbon Solutions believes that “Austin Digital’s data frames and analytical capabilities will help his team find answers in minutes to hours, as opposed to a “longer” time previously”.5
Looking forward, GE has focused on forming strategic partnerships with airlines. One of the first partners GE formed was with Qantas Airlines. “Data scientists, engineers and software designers from Qantas and GE will analyze some of the 10 billion data points produced by the aviation sector annually to help the carrier cut fuel costs and carbon emissions”.6 This partnership has moved beyond data sharing, pilots from Qantas have collaborated with GE Aviation to develop an application called FlightPulse. “FlightPulse is the first fully commercialized product to be developed with mobile services from GE’s 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”.7 The insights from applications such as FlightPulse have the potential to drastically reduce costs and emissions across the entire aviation ecosystem. “GE’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 aviation sector around $30 billion over the next 15 years”.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’s engines. “As airline systems become more interconnected, the more vulnerable they become to a cyber-attack. ‘Airplanes themselves have never been more complex, never been more reliant on technology,’ says Jeff Schmidt, a pilot and CEO of JAS Global Advisors, a security consultancy for government and critical infrastructure firms. ‘Complexity is the enemy of security’”.8
GE Aviation must anticipate new regulations that will continue to solidify as the aviation industry becomes increasingly vulnerable to cyber-attacks. “FAA is working on standards for cyber-security, but for now they are using a process called ‘special conditions’ as the substitute until those requirements are formalized and complete”.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’m left wondering how closed off should GE’s 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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- 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. Harvard Business Review, 64–88.
- Klimas, P. (2014). MULTIFACETED NATURE OF COOPETITION INSIDE AN AVIATION SUPPLY CHAIN – 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.
- 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/