At a Minds and Machines 2012 conference this week, GE released the results of an economic study that says the potential economic benefit from the investment in the “Internet of Things” would add trillions of dollars in value to the gross domestic product (GDP) on a global basis. The challenge is finding a way to spur those investments at a time when the economic climate leans a lot more towards retrenchment than investment.
According to GE Chief Economist Marco Annunziata, what GE refers to as the “Industrial Internet” could spur annual productivity gains of 1 to 1.5 percentage points in the U.S. alone. Extrapolating that out over the rest of the globe on a compounded annual basis, and the Industrial Internet could add $10 to $15 trillion to the global GDP over a 20-year period, says Annunziata. GE estimates that a truly Industrial Internet would also eliminate $150 billion in waste across major industries, while a one percent increase in productivity would generate savings of $30 billion in aviation, $66 billion in power generation and $63 billion in health care over 15 years.
Annunziata says technology advances in the area of networking and the ability to cost-effectively analyze massive amounts of Big Data are making it possible to automate a wide range of functions in real time that today are largely done manually. While there’s no doubt that automation of those tasks would result in some job loss, Annunziata says that history has shown time and again that more higher-paying jobs are created when GDP grows, so over a 20-year period most people would be better off.
The two big challenges, says Annunziata, are creating the incentives that companies need to make the kinds of investments required, and developing the skillsets required to develop and manage systems that are attached to an Industrial Internet. In particular, Annunziata says companies will need people with both mechanical engineering and computer software expertise.https://o1.qnsr.com/log/p.gif?;n=203;c=204663295;s=11915;x=7936;f=201904081034270;u=j;z=TIMESTAMP;a=20410779;e=i
As part of an effort to help jumpstart that process, GE this week launched nine industrial service technologies and announced a joint venture with Accenture that will utilize diagnostics software and analytics technologies. In addition, GE, in partnership with Kaggle, a social network for data scientists, also announced two “Industrial Internet Quests,” a contest in which developers and data scientists are challenged to create the new algorithms and design applications to reduce air travel delays and deliver the ultimate patient experience.
While some are critical of the whole Internet of Things concept because of the lack of interoperability between systems connected to the Internet, Annunziata says that interoperability is not a perquisite for economic success. The productivity benefits will largely be driven by the higher level of automation afforded by being able to automate the management of more remote systems.
Clearly, there is a much greater need for an Industrial Internet. The only real question is whether this will occur as part of a global initiative or come about in a more piecemeal fashion over a more extended period of time. History would suggest that we’ll see more of the latter than the former.