Caterpillar: Where brains meet brawn

  @FortuneMagazine October 17, 2013: 3:46 PM ET
FIV28 caterpillar
(Fortune)

Fortune 500 rank: 42
Headquarters: Peoria
Employees: 125,341
Revenue: $65.9 billion
Category: Construction and farm machinery

Big data is coming to bulldozers.

Like much of the Fortune 500, construction and mining equipment maker Caterpillar (CAT, Fortune 500) is digging into the trend of collecting, storing, and dissecting huge volumes of digital information, also known as big data. For the Peoria-based company, that means outfitting its machinery with sensors, radios, GPS receivers, and software, and developing a global technology platform that lets equipment owners, dealers, and, crucially, Cat itself peer at all the information emanating from those trucks, backhoes, and other gear. The upshot: A rugged work environment such as a construction site could be as high-tech as a corporate office.

Heavy-equipment makers have been tricking out their gear with high-tech tools for years. A Cat excavator might have digital systems to aid and monitor grade control, payload, and machine health. GPS and laser technology allow a driver to program his machine to dig dirt at precise depths and slopes. "We have a lot of software engineers that are new in the last 20 years to our business," Caterpillar CEO Douglas Oberhelman said at a 2012 Fortune tech conference. "It's a tremendous opportunity to really use technology in something you can see move, and either push dirt or pull a freight train or sexy stuff like that."

MORE: Fortune 500 'lifers'

What's new, says John Carpenter, construction technology and solutions manager for Caterpillar's construction industries unit, is a companywide push to have its equipment -- and, increasingly, non-Cat machinery -- connect to an intelligent network that can monitor the gear and provide useful reports on equipment repairs, operator usage patterns, and the like. A dealer could use the information to keep an eye out for upcoming repairs and stock inventories accordingly. And site managers could monitor a fleet to determine if, say, operators are needlessly idling equipment.

For Caterpillar, connected machinery is a new selling opportunity. In addition to preloading equipment with its technology, it also offers kits that enable older gear (or rivals' machines) to connect to the Cat network. Then there's recurring revenue from ongoing data-access and software subscriptions. "It's a huge opportunity to upsell," Carpenter says.

And of course, Caterpillar can sort through this collected body of knowledge for clues to help the company build better products, predict customer needs, and more -- the very promise of big data. "It's the holy grail," says Mike Rosenbaum, an executive vice president at Salesforce.com, which is powering part of Caterpillar's network. But for a company that knows a thing or two about excavation, data mining shouldn't be much of a stretch.

This story is from the October 28, 2013 issue of Fortune. To top of page



Join the Conversation
CNNMoney Sponsors
Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer LIBOR Warning: Neither BBA Enterprises Limited, nor the BBA LIBOR Contributor Banks, nor Reuters, can be held liable for any irregularity or inaccuracy of BBA LIBOR. Disclaimer. Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.