Is the customised system integration business model under attack?
GE recently introduced a new control system product to the market. It is specifically target at the operators of small scale wastewater utilities in North America.
It is notable because it has clearly been through a proper product development process.
First of all they have identified a customer segment. In most industries this would not justify being put in bold, but it is not a normal approach in water.
They have clearly looked at the needs of that particular customer segment. Small scale wastewater utilities do not have much by way of money, staff or technical capabilities.
So GE produced a robust, low-cost control appliance that can be installed and commissioned by any electrician and operated through an intuitive interface on any PC or mobile device.
The product is highly standardised, and because it is tightly targeted at a particular customer segment it has limited features it is cheap and easy to sell. In fact you can buy it online!
The product has been enabled by a new cloud based industrial control technology owned by GE, the PACSystems® RXi platform, but the underpinning technology gets minimal coverage in the marketing material. The marketing rather focuses on translating the features into specific benefits for the customer segment.
GE was struggling with the prevailing business model in water, which is to provide extensive customised application engineering around a core technology. This model does not play to GEs strengths, and in fact its rigid system of management controls meant GE didn’t have the flexibility to provide customised solutions. No doubt they were not enamoured with the dismal profit/risk ratio either.
However GE have the corporate muscle to redefine how the water sector operates. They have the product development capability to generate highly standardised (and therefore highly profitable) products and sell them directly to targeted end-user customer segments.
GE’s Pump Station Appliance is part of a wave of Productisation in the water industry, which will unlock a great deal of value, but be the undoing of a number of industry players along the way.
More on this later, but contact us at H2Otalent if you want to get the talent that can get you ahead of the wave.