The digital operations centers that CEO Jeffrey Immelt is adding in Providence, R.I., and Atlanta, and expanding in Miami, are among the more visible benchmarks of the Fairfield, Conn.-based company's progress toward that goal. They're slated to house the portion of the company's 28,000-strong digital workforce that focuses on information technology products primarily for internal use.
"We were looking for the sweet spot of the market," Chris Drumgoole, the chief technology officer for General Electric IT, said in a telephone interview. "We were looking for places where we could move in, have really good access to up-and-coming, early-career talent and where we'd also be able to be the dominant fish in town."
By locating in a developing technology market, GE avoids the competition inherent in more established areas like northern California. That way, a company better known for making refrigerators and locomotives can more easily pitch jobs developing apps with real-world outcomes like providing electricity to tech graduates who might be more familiar with coding for the next Pokemon Go.
GE's Predix software platform, designed to do for factories what Apple's iOS did for smartphones, allows companies to write compatible programs that can optimize equipment in businesses from railroads to wind-turbine farms. Among its innovations is a "digital twin," a software model of a client's equipment or processes that lets manufacturers monitor performance as well as diagnose, and ultimately predict, problems.
Immelt plans to generate $15 billion in sales of such digital servicse by 2020 as he refocuses the conglomerate on core industrial operations after moving away from peripheral businesses such as TV broadcasting and consumer lending.
The company's stock has climbed 26% to $32.38 since Immelt began selling most of GE Capital's loan portfolio in April 2015, more than eight times the gains of the S&P 500 and Dow Jones Industrial Average, and TheStreet's Jim Cramer says the the digital endeavor may push the shares up further.
"We are bullish on the post-financial business model," Cramer, who holds the stock in his Action Alerts PLUS charitable trust, said in a note to clients last week. "We remain confident in the business's direction, especially as it begins to focus on the digital aspects of the industrial business."
Earlier this week, GE announced a partnership with Microsoft (MSFT - Get Report) that would make Predix available on the Redmond, Wash.-based company's Azure cloud for manufacturing businesses, the largest of its kind. The companies plan to integrate Predix with the Azure Internet of Things and Cortana Intelligence product packages as well as business applications like Office 365.
GE's digital push has required recruiting about 5,500 new employees since 2012, and GE expects to add 2,000 more by the end of this year, Jen Waldo, the senior human resources manager for GE Digital, said in a June presentation in San Ramon, Calif.
The three operations centers under development this year help GE to bring such workers together, unifying a tech labor force that was once heavily outsourced and scattered throughout the company's global operations, Drumgoole explained. All will be in operation before March 31.
GE realized that "if software and technology are so critical to what our customers are doing, we need to rebuild that muscle internally," Drumgoole said. "We've been starting to do that, and as you start to rebuild, you can't in-source thousands of jobs and put 10 people here and 20 people there. It just doesn't make sense. You're not going to get the kind of culture you want, and you're not going to get the work done."
The locations of the three operations centers under development this year each offer something to GE, a 124-year-old company that traces its roots to Thomas Edison's invention of a commercial viable light bulb.
Atlanta schools such as Georgia Tech and the University of Georgia award degrees to large numbers of engineering students every year,and the area has a reputation as a burgeoning tech hub. Miami is expanding in the field, and its Spanish-speaking IT workforce will facilitate digital inroads in Latin America, Drumgoole noted.
"The audience that we're attracting, it's cliche, but they really are interested in having an impact and changing the world, and our job is to do it." Drumgoole said. "We wanted places where we're going to be able to tell that story loudly and have it be heard."
Providence provides that as well as other advantages: It's close to GE's new corporate headquarters in Boston and gives the company access to Brown University -- whose researches are already collaborating with GE on a brain-mapping project -- and the University of Rhode Island.
"Some of the work we're putting there is around our design and end-user software space and some of the high-performance community," Drumgoole said.
Convincing GE to put a technology center in Rhode Island was a coup for the state, which had vied unsuccessfully to become the company's headquarters when Immelt decided to leave Connecticut, Secretary of Commerce Stefan Pryor said in a telephone interview.
GE, which has 300,000 employees worldwide, plans to locate about 100 workers at the Providence site initially and expand afterward, Gov. Gina Raimondo said in a statement.
Information technology is one of five advanced industries that Brookings Institution identified as areas where Rhode Island, the smallest U.S. state, has competitive strength and the opportunity to grow further, Pryor said. Adding GE Digital's 100 jobs is expected to expand the state's economy by $300 million over the next 12 years.
"This is a critically important area for us," he said. "This is Rhode Island's future, and GE Digital is helping to shape and strengthen that future."