GE smart cities: Why a 'burning platform' will help ignite success

Mon, 2013-06-03 11:36 -- Jesse Berst

Q&A with Mike Carlson, General Manager, Software Solutions, GE's Digital Energy business

I first met Mike Carlson in the mid-2000s when he would often show up on smart grid panel discussions. As the Vice President and Chief Information Officer of Xcel Energy, he was a key player in the utility’s groundbreaking, $100 million SmartGridCity project in Boulder, Colorado, the country's first full-scale smart grid deployment. That put him in high demand for lessons learned.

Mike always stood out for his perceptive comments. Later I discovered why. He had previously spent a stint with Arthur Andersen, the global consulting firm. And he spent part of his career outside the utility industry and outside information technology, including a stint as the CEO of a large medical practice and as the CFO of a laboratory services group.

I think it was that inside/outside combination that helped Mike become one of the smart grid's true change agents and standout pioneers. From his position inside a utility, he had a clear understanding of the working realities. But thanks to his background outside that industry, he brought fresh thinking just when it was most needed.

Today, he leads an important part of GE's smart grid and smart city effort. GE has a wide range of technology offerings, from transmission and distribution gear to SCADA to mapping to asset management to outage management and much more.  Mike is leading the charge to pull this smorgasbord into integrated, "total" solutions. Increasingly, GE is delivering those solutions via the cloud. No longer are they restricted to large organizations with the budgets for big ICT staffs. Now they are available to small utilities and small cities too under a pay-by-the-month program.

When he's not out on the road for GE, Mike spends time on his "hobby farm" (his words). He freely admits that, for him, it's more about the toys -- the tools and the equipment -- than about a serious intent to be a farmer. But he did plant his first "serious" crops this year, soybeans and corn.

When we talked at length about smart cities in May, 2013, I was particularly interested to hear that:

  • It may be five years or more before the market goes mainstream

  • GE is working hard to go from a product company to a services company

  • One of the most important things a city needs for success is a "burning platform" -- an urgent issue that needs to be solved

  • Smaller cities don't have to settle for inferior solutions

You can read about these and other aspects of GE's smart cities strategies in the Q&A below. - Jesse Berst, Smart Cities Council Chairman

Why the increasing attention to smart cities?

We are starting to see an alignment of smart technologies that can be used to the benefit of society – for the environment, for cost efficiency, for security or just for quality of life. All over the globe, city leaders are seeing demand for these benefits. As technology is maturing, a few cities are raising the profile. And other cities are saying "we need to be part of this trend, not just victims."

Cities have to figure out how to sustain growth with declining financial resources. They must figure out new models. You need to extract more from the existing asset base. Once you maximize the return on assets, then you can make additional investments to augment the return.

Demand management is the key to everything, whether it's traffic, water, electricity. When capacity is constrained, you must find ways to manage the demand and you can't always do that just by increasing price.

And there is a growing segment of the population that is demanding more. They want city services delivered to match what they can get elsewhere on their iPhones.

What's the relationship between smart grids and smart cities?

Right now, smart grids are predominately a utility investment. But some cities operate their own utilities. As smart cities come online, there is a recognition that the grid is one important component. At a minimum, you can manage it using the same strategies. Optimally, if the smart grid and other things are interdependent then efficiencies arrive.

What stands in the way of rapid adoption of smart cities technologies? Cost is one of the bigger things. Cities have to deal with the here and now of potholes and subdivision expansion, and at the same time aging infrastructure, and at the same time, being asked to invest in these new capabilities.

Second, what is the business case? How can we have confidence that this is not just an experiment?

Third, long-term city planning has never been applied to the smart component.

Is technology one gating factor? Do we have a lot more to invent? Or are the building blocks in place?

We've got the basics, but the integration and the cost and the management are not where they need to be. It may be five or more years before it becomes mainstream.

Can you cite any governments doing a particularly good job with policy to promote smarter, more sustainable cities? There is Britain's leadership with its low-carbon network fund and investments. They just announced Glasgow as a second smart city with mass deployment of sensors.

In the U.S., Florida is doing a really good job of driving the next wave of technology in cities such as Jacksonville and Miami.

How important is the smart cities market to GE?

We don't have a smart cities group per se. But we are focused on the integration of GE technology across groups. For instance, we are currently working with transportation to expand synergies. But it is an important strategic focus. We want to lead in the market. We think storage, generation, transportation, even medical will be connected to the grid. We are hoping that our strategic investments in these areas match up with market demands.

What is GE's role in the smart cities ecosystem?

We don't have a turnkey answer. We are looking for progressive cities that want the partner to determine the governmental and societal priorities and where to spend their resources. Then we have the technology and the research and the roadmaps that can align with a city that wants to be smart.

What does GE do better than any other company?

You can't challenge our research and development. We are second to none. Historically, working out where things will go next is one of our strengths.

We come at it in a very engineering-centric way. We bring a combination of devices, conductivity, software and analytics. We've recently started talking about the industrial Internet, the conductivity of machines and minds. Many are talking about it but others are not as advanced.

Are there any common misperceptions about GE and its capabilities?

That we are products only instead of solutions. We also have services and support afterwards. We are in the solutions business. In fact, our focus is on "services 2.0" – once a product is delivered, how do you make sure the customer gets the most out of it?

What are some favorite smart city pilots or projects?

San Diego and Miami stand out. I'm impressed by the alignment between residents, political leaders and industry. Portland is doing some interesting stuff about integrating all the different components. And London, which tied it into the Olympics, but is now going far beyond just a showcase.

I believe smaller cities are where the next wave of innovation will be at. They have the ability to quickly adopt and execute. Big cities often attract money and partnerships, but those opportunities require more management and time.

For instance, the town of Needles is only about 4,000 homes but they're looking at ways to drive additional value to residents and to improve their green footprint. I also laud Boulder's objectives. And at GE, we are working with Leesburg, Florida to help them take things to the next level.

What is the single most important thing a city leader should do today to position his city for leadership and success?

Communication and education. There is still such a gap and misunderstanding about what is needed and what is possible. Without a collective, consensus understanding a smart city initiative won't be as successful. Every city has its own dynamics. For instance, Boulder operates on town hall meetings. Norcross, Georgia is more about communications outreach, in their case by email. Figure out how your constituents want to receive information, then reach out.

What's the right way for a city to get started?

Find the burning platform – the big problem to motivate change. What that starting point will be depends on your particular situation. For instance, it may be unreliable infrastructure.

What do you want city leaders to know about General Electric?

Thanks to our smart grid solutions as a service -- our cloud offerings -- we are providing mature, feature-rich, wide technology capabilities to an audience that previously didn't have access. Smaller cities and utilities don't have to have a subpar, "dummied down" solution.

For instance, our client Norcross is a city of 5,000 near Atlanta. The residents want everything from their municipal utility that customers of Southern Company get. [Editor's note: Southern Company is an electric power utility serving roughly 4.3 million customers in the American southeast.] Just because you don't have a large budget or deep expertise doesn't mean your customers want anything less. And GE is offering the deepest, richest, broadest solution out there.

Don't miss: Building Sustainable Cities – a GE white paper


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