How the Industrial Internet of Things is Influencing the Growth Potential of Corporations

Digitization is increasingly changing the business world. The car rider service taxi app Uber, for example, is in the process of transforming the taxi business. Similar changes lie ahead for industry with the Internet of Things, says Prith Banerjee, Managing Director of Global Technology R&D at Accenture.

 

 

All about M2M here discusses with Mr. Banerjee the Industrial Internet of Things and its consequences for corporations.

 

Mr. Banerjee, in Accenture’s recently published point of view you focused on the Industrial Internet of Things (IIoT). Can you classify the term?

For the last 20 or 30 years the Internet as we know it has focused primarily on consumers. The increasing popularity of mobile devices has driven electronic commerce, email and other web services

In the next 10 to 15 years the industrial world is going to be connected. This includes products, machinery and vehicles. Sensors and actuators play an important role in this development. Today we have maybe 10 million connected sensors but we are quickly moving to an internet with 50 billion connected sensors and actuators and 5 billion connected people by 2020. A significant number of these connected sensors and actuators will be working in industrial products and machines.

 

So it’s no surprise that the payoff of IIoT is predicted to be enormous. Independent estimates suggest spending on the IIoT worldwide will reach $500 billion by 2020. More optimistic predictions of the value created by the IIoT range as high as $15 trillion of global GDP by 2030.

 

What does that mean for companies?

 

When it comes to the IIoT, most companies think about improving operational efficiency. If you monitor, for example, the condition of an aircraft engine by putting a sensor in it, you will be able to identify potential for improvement and increase the efficiency of that engine from say 80 percent to 85 percent. But in fact operational efficiency is the lower hanging fruit. The greater opportunity is the topline growth due to new equipment and digital services that will be unleashed by the IIoT.

 

Companies can boost their revenues significantly when they transform their products into product-service hybrids. We define them as connected, intelligent physical goods capable of producing data for use in digital services. Going back to the aircraft example, Taleris, a joint venture between GE Aviation and Accenture, provides services aimed at airline fleet optimization. In addition to selling jet engines, through Taleris, GE is now able to offer services that employ predictive analytics to identify problems within an airline fleet. Using sensors to monitor aircraft parts, components and systems “from tip to tail,” it employs analytics to identify anomalies in engineering systems and their overall health, to analyze the root cause of abnormalities, and to determine when units need replacement or repair. By knowing when maintenance work is needed across the fleet, airlines can schedule the least disruptive and least costly time and location for maintenance, and arrange for aircraft to cover routes for any grounded aircraft.

 

Why should companies move to a service related business model?

 

If you don’t do it, your competitors may do it and get ahead of you. Today you make your business by selling products. Instead of buying a product, customers want to buy the value of the product. By developing product as a service offerings companies can fulfill customer wishes much better.

 

We are currently observing how certain companies are impacting traditional business models. Take Uber for example. The car rider service is impacting the traditional business of taxi drivers. Or consider Airbnb. It is revolutionizing the hotel industry. Industrial companies see themselves confronted with a similar development. Once they integrate connectivity in their products, they can collect information that opens new possibilities to create services on top of that data.

 

What stops enterprises from moving into the IIoT?

 

There are challenges with the interoperability of systems. When you connect sensors with an engine or on-board computer, for example, integrating these new systems and the data they generate with older legacy systems isn’t an easy task. Another concern is security. Plenty of things can go wrong when manufacturing plants, equipment or remote facilities are connected to the Internet. Recently, an oil rig’s control systems were reportedly hacked when saboteurs were able to tilt the rig’s platform, while another rig became so infected with computer malware that it took weeks for the operator to make it seaworthy again. It’s important for companies to proactively address these issues with a well thought out cyber-physical security architecture.

 

Additionally the volume of sensors will present a great challenge for the Internet. You can’t upload all the collected data to the cloud. This is where a technology kicks in that we call sensor-based computing. A computing device at the edge of these sensors harvests and compresses the data and then uploads this information to the cloud, where it is analyzed.

 

So the value of the IIoT is all about data?

 

Yes and no. On top of data analysis you have to create intelligent machine applications. The idea here is that you will have a whole bunch of machine apps, just like you have hundreds of consumer apps on your smartphone today. You will have an app to control your transformer, your switch gate and your air conditioner. All these apps will talk with other apps through the Industrial Internet – we also have machines that will talk to other machines and other humans over the internet.

 

Speaking of humans: How will their work be impacted by the IIoT?

 

The automation that is being enabled by this Industrial Internet of Things will allow machines to do much of the repetitive, tedious work while the humans will focus on doing more interesting knowledge work. Humans and machines will work together to solve interesting problems. In our point of view we talk about how advances in robot technology will further change how people do their work. Today’s robots are generally used to perform hazardous, highly repetitive and unpleasant tasks. However, a new breed of robots is being designed to team up with people and work safely with them. For example, a robot could modulate its physical behavior to avoid causing injuries or learn tasks without the need for programming.

 

Some people say that the Industrial Internet of Things will destroy jobs. And you just said that it is opening up a new workforce. Can you explain more in detail why?

 

On the one hand the IIoT requires a new workforce because you need people that create, sell and support the new product-service hybrids. On the other hand, as mentioned, it transforms traditional work into knowledge work. Think about equipment operators: their jobs take on more sophistication and skill when they move from driving equipment in the field to operating UAVs and robotic equipment from a hub and service center. Augmentation could play an important role in that respect. Instead of looking at a manual, workers could use a wearable computing device, like smart glasses. The heads up display gives them context aware information and guides them through the repair process.

 

What advice would you give executives that want to transform their business like GE did into an IIoT-related business model?

 

First, it’s important to take a look at the current business model. You should think about where your company is today and how you can transform your existing business into a disruptive business, like moving from selling jet engines to selling broader airline fleet management services

 

Second, you should consider whether you need to form new partnerships. Think about what other products and services will talk to yours, and who will make, operate and service them. What capabilities and information does your company have that they need? How can you use this ecosystem to extend the reach and scope of your products and services through the Industrial Internet of Things?

 

Third, you need to know which technologies you need to embrace. For example, how will I embed sensors in my products? How do I collect and transmit all the data? Should I use sensor-based computing?

 

Finally, you need to ask what new business benefits you want to achieve and explore how to augment your workforce with this new technology.

 

Tags: Internet of Things , Industrial Internet of Things , digitalization , Business Models , Accenture

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