508 Pan Three Key System Applications for the Digital Age

a list of the sales transactions at OMT for one day. You can find this spreadsheet file at MyLab MIS.
Use Excel's PivotTable to help you answer the following questions:
Where are the average purchases higher? The answer might tell managers where to focus
marketing and sales resources, or pitch different messages to different regions.
What form of payment is the most common? The answer could be used to emphasize in advertising
the most preferred means of payment.
Are there any times of day when purchases are most common? Do people buy more products while
at work (likely during the day) or at home (likely in the evening)?
What's the relationship between region, type of product purchased, and average sales
price? We provide instructions on how to use Excel PivotTables in our Learning fracks.

Improving Decision Making: Using a Web-Based DSS for Retirement Planning

Software skills: Internet-based software
Business skills: Financial planning
12-11 This project will help develop your skills in using web-based DSS for financial planning.
The websites for CNN Money and Kiplinger feature web-based DSS for financial planning and deci-Sion
making. Select either site to plan for retirement. Use your chosen site to determine how much you need to save
to have enough income for your retirement. Assume that you are 50 years old and single and plan to retire in 17
years. You have $100,000 in savings. Your current annual income is $85,000. Your goal is to be able to generate
an annual retirement income of $60,000, including social security benefit payments.
Use the website you have selected to determine how much money you need to save to help you
achieve your retirement goal. If you need to calculate your estimated social security benefit, use the
Quick Calculator at the Social Security Administration website
Critique the site—its ease of use, its clarity, the value of any conclusions reached, and the extent
to which the site helps investors understand their financial needs and the financial markets.

Collaboration and Teamwork Project

Investigating Data-Driven Analytics in Sports
12-12 With three or four of your classmates, select a sport, such as football, baseball, basketball, or soccer. Use the
web to research how the sport uses data and analytics to improve team perforrnance or increase ticket sales
to events. If possible, use Google Docs and Google Drive or Google Sites to brainstorm, organize, and develop
a presentation of your findings for the class.

GE Bets on the Internet of Things and Big Data Analytics

CASE STUDY

General Electric (GE) is one of the world's largest on electric power generators, jet engines, locomo-
industrial companies with products ranging from tives, and oil-refining gear and software to connect
turbines to jet engines to medical equipment, but it these devices to the cloud. Leading software compa-
may not be much longer. Thc company is transition-ing nies such Oracle, SAP, and iMicrosoft have tradition-
to a much more technology-centric business strat-egy ally been focused on providing technology for the
and business rnodel. GE is selling off its division that back office. In contrast, GE is putting its money on the
makes refrigerators and microwave ovens along with technology that controls and monitors industrial
most of GE Capital financial services to focus machines as well as software-powered, cloud-based
 Chapter 12 Enhancing Decision Making 509

services for analyzing and deriving value from the applications for the Predix platform. GE is also
data. GE hopes this strategy will turn it into a build-ing a developer community to create apps
major software company. that can be hosted on Predix. Predix is not limited
GE is using sensor-generated data from industrial to indus-trial applications. It could be used for
machines to help customers monitor equipment analyzing data in healthcare systems. for example.
performance, prevent breakdowns, and assess the GE now has a Health Cloud running on Predix. Data
machines' overall health. This new technology is security is embedded at all platform application
opening new opportunities for GE customers while layers, and this is essential for companies linking
also helping to transform GE from a traditional man- their operations to the Internet.
ufacturer to a modern digital business. GE has com- GE currently uses Predix to monitor and maintain
mitted $1 billion to installing sensors on gas turbines. its own industrial products, such as wind turbines, jet
jet engines, and other machines; connecting them to engines, and hydroelectric turbine systems. Predix is
the cloud; and analyzing the resulting data to identify able to provide GE corporate customers' machine
ways to improve machine productivity and reliability. operators and maintenance engineers with real-time
In other words, GE is betting its future on software and information to schedule maintenance checks, improve
the Internet of Things (IoT). machine efficiency, and reduce downtime. Helping
In a number of industries, improving the produc- customers collect and use this operational data
tivity of existing assets by even a single percentage proactively would lower costs in GE service
point can generate significant benefits. This is true of agreements. When GE agrees to provide service for a
the oil and gas sector, where average recovery rate of customer's machine, it often comes with a
an oil well is 35 percent. ' I hat means 65 percent ofa performance guaran tee. Proactive identification of
well's potential is left in the earth because available potential issues that also takes the cost out of shop
technology makes it too expensive to extract. If tech- visits helps the customer and helps GE.
nology can help oil extraction companies raise the In early 2013. GE began co use Predix to analyze
recovery rate from 35 to 36 percent, the world's out-put data across its fleet of machines. By identifying
will increase by 80 billion barrels—the equivalent of what made one machine more efficient or down-
three years of global supply. time-prone than another. GE could more tightly
The oil and gas industry is also deeply affected by manage its operations. For example, by using high-
unplanned downtime, when equipment cannot operate performance analytics. GE learned that some of its
because of a malfunction. A single unproduc-tive day jet aircraft engines were beginning to require more
on a platform can cost a liquified natural gas (LNG) frequent unscheduled maintenance. A single
facility as much as $25 million, and an average engine's operating data will only tell you there's a
midsized LNG facility experiences about five down problem with that engine. But by collecting mas-
days a year. That's $125 to $150 million lost. Minimizing Sive amounts of data and analyzing the data across
downtime is critical, especially consider-ing declining its entire fleet of machines, GE was able to cluster
revenues from lower enew prices. GE sees a $1 billion engine data by operating environment. 'lloe com-
opportunity for its IoT software. pany found that the hot and harsh environments in
The foundation for all of GE's Industrial Internet the Middle East and China caused engines to clog,
(10'[) applications is Predix, a software platform heat up, and lose efficiency, so they required more
launched in 2015 to collect data from industrial sen- maintenance. GE found that engines had far fewer
sors and analyze the information in the cloud. Predix of these problems if they were washed more fre-
can run on any cloud infrastructure. ' I he, platform has quently. Fleet analytics helped GE increase engine
open standards and protocols that allow cus-tomers to lifetime and reduce engine maintenance. The com-
more easily and quickly connect their machines to the pany thinks it can save its customers an average of
Industrial Internet. 'l he, platform can accommodate the $7 million of jet airplane fuel annually because their
size and scale of industrial data for every customer at engines will be more efficient. Predix's robust data
current levels of use, but it also has been designed to and analytics platform made it possible for GE to
scale up as demand grows. Predix can offer apps use data across every GE engine all over the world
developed by other companies as well as GE, is and cluster fleet data.
available for on-premises or cloud-based deployment, Predix is starting to provide solu tions for GE
and can be extended by customers with their own data customers. [rish Power is an early Predix user. Elhe
sources, algorithms, and code. Customers may company adopted GE's predictive analytics tool suite
develop their os•vn custom Reliability Excellence based on the Predix platform.
510 Part Three Key System Applications for the Digital Age

Irish Power started out by using operational data about where field service crews should be deployed
analytics to improve the efficiency of its Whitegate along the pipeline. The risk assessment tool visual-
plant, a 445-megawatt gas combined-cycle power ization and analytics capabilities run on Predix.
plant located 25 miles east of the city of Cork, Ire-land. GE is also pulling data from weather systems and
Irish Power plans to roll out a module for process dig-reporting services to provide a more compre-
optimization and will connect plant perfor-mance to hensive view of a pipeline network. Weather has a
the real-time energy marketplace. These analytics help sizable impact on risk for pipelines in areas prone to
Irish Power and customers identify ways of lowering seismic activity, waterways, and washouts. Check-ing
production costs, increasing plant capability, and weather patterns along thousands of miles of pipe for
improving system reliability. Apply-ing analytics built rain or flood zones, and integrating those data with
on the Predix platform can enable GE to offer other complex pipeline data sets is very difficult to
customers like Irish Power anomaly detection or perform manually. But by bringing all relevant together
enable cost savings by reducing the need for data in one place, GE gives pipeline operators easier
preventative maintenance thanks to the vis-ibility of access to information to help them address areas with
the operational data GE can now provide. the greatest potential impact.
British oil and gas company BP plc had been using GE expects customers to benefit immediately
its own software to monitor conditions in its oil wells. from having all of their data integrated. But it wants
Recently, however, BP management decided to get out them to be able to do more. In addition to being able
of the software business and became a GE customer. By to examine all current risk, pipeline operators would
the end of 2015, BP equipped 650 of its thousands of oil benefit from a "what-if" calculation tool to model
wells with GE sensors linked to Predix. Each well was hypothetical scenarios, such as assessing the
outfitted with 20 to 30 sensors to measure pressure and impact of adjusting operating pressures or
temperature, transmitting 500,000 data points to the addressing par-ticular areas of corrosive pipe. GE
Predix cloud every 15 seconds. BP hopes to use the would give them the tools for a color-coded view of
data to predict well flows and the useful life of each well how those actions affect pipeline risk.
and ultimately to obtain an enterprise-wide view of its oil In addition, GE wants to go beyond helping its
fields' performance. customers manage the performance of their GE
GE identified pipeline risk management as a machines to managing the data on all of the
major challenge for the oil and gas industry. There machines in their entire operations. Many custom-
are 2 million miles of transmission pipe throughout ers use GE equipment alongside of equipment from
the globe, moving liquid oil or gas from its point of competitors. fie customer cares about running the
extraction to refining, processing, or market. About whole plant, not just GE turbines, for example, and
55 percent of transmission pipeline in the United 80 percent of the equipment in these facilities is not
States was installed before 1970. Pipeline spills are from GE. If, for example, if an oil and gas cus-tomer
not frequent, but when they occur, they cause seri- has a problem with a turbo compressor, a heat
ous economic and environmental damage as well as exchanger upstream from that compressor may be
bad publicity for pipeline operators and energy the source of the problem, so analyzing data from
companies. Pipeline operators are always anxious the turbo compressor will only tell part of the story.
to know where their next rupture will be, but they Customers therefore want GE to analyze non-GE
typically lacked the data to measure pipeline fitness. equipment and help them keep their entire plant
Operators had no way of integrating multiple running. GE is in discussions with some customers
sources of data into one place so they could see about managing sensor data from all of the machine
and under-stand the risk in their pipelines. assets in their operation.
GE developed a pipeline-management software suite If a customer purchases a piece of GE equip-ment
for accessing, managing, and integrating critical data such as a gas turbine or aircraft engine, GE often
for the safe management of pipelines, including a risk enters into a 10- to 1 5-year contractual services
assessment tool to monitor aging infrastruc-ture. GE's agreement that allows GE to connect to and monitor
risk-assessment solution combines internal and that machine, perform basic maintenance and diag-
external factors (such as flooding) to provide an nostics, and provide scheduled repairs. GE receives
accurate, up-to-the minute visual representation of a bonus payment for keeping the equipment run-
where risk exists in a pipeline. 'I his risk assessment ning at a specified threshold. GE may now be able
tool enables pipeline operators to see how recent to apply such outcome-based pricing to coverage
events affect their risk and make real-time decisions of non-GE machines.
 Chapter 12 Enhancing Decision Making 511

GE CEO Jeffrey Immelt wants GE to become a CloudFoundry.org, May II, 201 6; Kurt N'Jarko, "AMTS TOT
Platform Connects Devices to Cloud Services," techtarget.com,
top 10 software company by 2020. In order to do accessed N'Jay 24, 201 6; Cliff Saran,
this, GE needs to sell vast amounts of applications u GE Predictive Analytics Optimises Irish
and Predix-based analytics. Although few Power Electricity Production," Computer Weekly, July 13, 2015;
Charles Babcock, "GE Predix Cloud: Industrial Support for
businesses have the capital or infrastructure to NJachine Data" Infonnation Week, August 6, 2015; and "GE: JOT
operate a plat-form for integrating and analyzing WJakes Power Plants $50M More Valuable, " Information Week,
Sep-tember 29, 2015.
their [dl' data, GE faces competition from many
sources. Amazon, Google, IBM, and Microsoft are
all getting into Inter-net of'lhings platforms, and CASE STUDY QUESTIONS
dozens of start-ups have similar ambitions. The 12-13 How is GE changing its business strategy
biggest question is whether other large industrial and business model? What is the role of
companies will turn to GE or to another cloud informa-tion technology in GE's business?
platform to manage their informa-tion. And if you're 12-14 On what business functions and level of
a manufacturer of some size and sophistication, will deci-Sion making is GE focusing?
you allow GE to "own" the data on your business, 12-15 Describe, three kinds of decisions that can be
or will you manage and analyze the data yourself? supported using Predix. What is the value to
Sources: Laura Winig, "GE's Big Bet on Data and Analytics," MIT Sloan the, firrn of each of those decisions? Explain.
Management Review, February 201 6; Devin Leonard and Rick Clough, 12-16 '1b what extent is GE becoming a
'IT Tow GE Exorcised the Ghost of Jack Welch to Become
software company? Explain your answer.
a 124-Year-Old Startup, " Bloomberg Businessweek, March 21, 201 6;
www ge.com, accessed May 19, 201 6; T lolly Lugassy,"GE Leverages 12-17 Do you think GE will become one of the, top
Pivotal Cloud Foundry to Build Predix, First Cloud for Industry," 10 U.S. software cornpanies? Why or why not?

MyLab MIS
Go to the Assignments section of MyLab MIS to complete these writing exercises.

12-18 Identify and describe three factors that prevent managers from making good decisions.

12-19 Give three examples of data used in location analytics and explain how each can
help businesses.