How to create a 15 trillion dollar industry

With predictions of an $8.9trn market by 2020 and up to $15trn of value creation by 2030, it is no surprise that the Industrial Internet has been attracting fevered interest of late.

Creating this market will take time and effort. “The idea that this will be pervasive in every factory and home is reasonable, but we’re at the beginning,” says Geoffrey Fox, professor of computer science and informatics at Indiana University.Most executives, for example, are still unclear about the long-term implications of the Industrial Internet for their industry. Limited information on the return realised from investment in the Internet of Things has also limited financing from the industrial economy as a whole. While 46% of executives polled by the Economist Intelligence Unit associated increased productivity with the Internet of Things, only 27% had made concrete investments in the sector.

Demonstration projects that can quantify the benefits of an Industrial Internet approach will be key to having demand increase, as will showcasing the ability of different platforms and solutions to work together. Both are crucial if an ecosystem of services and solutions is ever to appear. Bosch, Cisco and Tech Mahindrato, for example are currently testing how their respective tools, network solutions and operating systems can work together to optimize the geographical distribution of power tools in airplane factories. Launched in February as part of the industrial internet consortium, the project will also explore how wireless machine-to-machine communication can help increase reduce the cost of complying with regulations that set specific torques based on where the bolt is located on the airplane.

Utilities are also piloting the Industrial Internet through projects as varied as smart grids, vehicle-to-grid technology and smart water management. Starting from scratch can help in this regard. Fox points to South Korea’s development of the smart city concept, where sensors monitor everything from energy use to traffic flow. “They started this before others,” he says. “They had advantages of size and the fact that they didn’t have a lot of legacy infrastructure.”

The UK and US, where production is again being on-shored, have similar advantages. “A lot of manufacturing has disappeared, so they’re almost in a position of rebuilding,” says David Stonehouse, a technologist in PA Consulting Group’s Cambridge Technology Centre.

Challenges are certain—including absence of standards, which hampers interoperability and prevents organic growth of ecosystems. Such absence is among the challenges groups like the Industrial Internet consortium, the AllSeen Alliance and the OPC Foundation are trying to address by creating common standards and best practices. Another important element, says the World Economic Forum, will be to address cybersecurity concerns.

As with many big changes, the start is often slow, says Manfred Hauswirth, managing director of the Fraunhofer Institute for Open Communication Systems, “But once we reach a critical mass, there will be a transition phase when everything will happen at the same time.”

This article is published in collaboration with GE LookAhead. Publication does not imply endorsement of views by the World Economic Forum.

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Author: Sarah Murray is a specialist writer on business, society and the environment.

Image: An internet cable is seen at a server room. REUTERS/Kacper Pempel. RTR2WVIQ