General Electric is looking to auction off parts of its GE Digital unit with the help of an investment bank, though which parts will be sold off is unclear, sources privy to the matter told The Wall Street Journal. Potential buyers include industrial and software companies looking to make inroads in the digital space, though the auctioning process is still early.

After the sale, GE Digital will continue providing aviation and power customers with software and services, reports the Journal.

Not many experts were surprised by the report given GE's well-documented struggles over recent months and GE Digital's business development challenges.

Since taking over last fall, CEO John Flannery has been cutting costs and restructuring the company to prioritize business verticals to boost profitability. In November, the company consolidated GE Digital following layoffs with plans to cut costs to Predix by $400 million throughout the year and boost its revenue over $1 billion.

Even as the company spun off its healthcare unit and sold a stake in Baker Hughes in June, Flannery said that the digital unit would have "no cost drag" by 2020, according to the New York Times. The unit did post year-over-year growth in 2017, with $4 billion in revenue overall, though the company does not post revenues and profits for GE Digital like it does for its other units, including Power and Aviation.

While GE Digital declined to comment, there are two likely paths for how a sale would play out — sell in pieces or sell as a block — and who likely buyers will be. For customers and technology leaders using GE Digital products, the news underscores the importance of having a multivendor architecture and the growing tide of digitization.

What it could look like?

GE could tease out and auction off vertical-specific capabilities or package a core platform like Predix and sell it to a company focusing on industrial internet, according to Chip Childers, CTO of Cloud Foundry Foundation, in an interview with CIO Dive.

The main pieces of GE Digital's portfolio, according to Alfonso Velosa, research VP for IoT, Digital Business Transformation at Gartner, are:

• Predix​

• Asset Performance Management (APM) software

• ServiceMax, a field service solution

• Manufacturing Execution Systems (MES) software

While the long-term potential is the IoT platform, Predix, short-term opportunity is greater in the ServiceMax, APM and MES offerings, Velosa said, adding that it is unlikely that GE would sell these assets as individual items rather than as a chunk.

The best indication right now is that GE will sell these parts to private equity companies, which would give GE more flexibility in how it considers the asset — though nothing is definitive, according to Velosa.

"They could spin it out as a partially owned subsidiary, with a [private equity] firm owning part of it and that way they don't have to do a joint venture — its a subsidiary that's partially owned by somebody else," he said. "[GE] could have a longer term strategy of completely disposing of the asset." For private equity companies, GE Digital assets would bring software and industrial competencies that align with interests in building business to be more competitive.

On the other hand, technology companies or vendors could also go after the assets. The Predix platform could hold appeal to other industrial companies like Siemens and Bosch with similar initiatives underway, and vertical-specific segments could be taken up by companies in respective industries, according to Childers.

Hard cloud providers such as Amazon, Microsoft and Google could also have a natural interest, he said. GE Digital already has partnerships with Microsoft Azure and Amazon Web Services.

What does it mean for tech leadership?

There's a good chance GE would try to sell the digital assets in the remainder of 2018, according to Velosa. Actions taken in June to let go of the healthcare, Baker Hughes and other divisions indicate a preference for quick disposal once the decision is made.

With the technology space moving so fast, CIOs and other technology leaders benefit from being nimble when changes to software and services vendors take place.

But CIOs in heavy industry or manufacturing won't see a great effect on their trajectory to digitize operations and product, according to Childers. This is an "industry inside baseball-type movement," and the trend of digitization will only continue to accelerate around the world and across heavy industry segments, with companies continuing to demand more from vendors to meet those goals.

In the short-term, core software like APM and ServiceMax should continue with regular operations, while for Predix and the industrial IoT, leadership should expect to continue seeing some tumult in the market as it gives indication of what customers are buying and how the vendor ecosystem locks in, said Velosa.

In the longer-term, the GE Digital news reaffirms the importance of having a multivendor architecture for CIO and reassessing the vendor and product ecosystem every two to three years, he said. If a key partner sells off an asset, a Plan B needs to be in place.

In the larger market, CIOs will continue to see IoT investments by nontraditional IT companies such as Siemens and ABB Group and by building infrastructure companies such as Honeywell that continue to build out IT capabilities, according to Velosa. These nontraditional companies will become more important for CIO's IT ecosystem.