The Internet Of Things Revolution...
The Internet of Things is ground zero for a new phase of global transformation powered by technology innovation, generating significant economic opportunities and reshaping industries. Analyst firm Gartner recently declared that the Internet of
Things (IoT) was the most hyped technology in 2014. Much of this hype centres on consumer applications, such as smart homes, connected cars and consumer wearables
like wristband activity trackers. However, it is the IoT’s industrial applications, or the Industrial Internet”, which may ultimately dwarf the consumer side in potential business
and socioeconomic impacts. The Industrial Internet will transform many industries, including manufacturing, oil and gas, agriculture, mining, transportation and healthcare.
Collectively, these account for nearly two-thirds of the world economy. As society evolves towards an integrated digital-human workforce, the Industrial Internet will redefine
the new types of new jobs to be created, and will reshape the very nature of work. Given the greater significance, this report focuses exclusively on the Industrial Internet.
The Industrial Internet is still at an early stage, similar to where the Internet was in the late 1990s. Our survey results underscore this point: the vast majority (88%) of
respondents say that they still do not fully understand its underlying business models and long-term implications to their industries. While the evolution of the consumer
Internet over the past two decades provides some important lessons, it is unclear how much of this learning is applicable to the Industrial Internet given its unique scope
and requirements. For example, real-time responses are often critical in manufacturing, energy, transportation and healthcare. Real time for today’s Internet usually means
a few seconds, whereas real time for industrial machines is often sub-millisecond. The engineering rule of thumb dictates that a 10x change in performance requires an
entirely new approach, not to mention the 100x change that the Industrial Internet will likely need.
Another important consideration is reliability. The current Internet embodies a “best effort” approach, which provides acceptable performance for e-commerce or human
interactions. Unexpected server glitches at Google or Amazon cause delays in email or streamed video. However, the failure of the power grid, the air traffic control system or an automated factory for the same length of time would
have much more serious consequences. This strong bias towards real time and reliability, which has contributed to a conservative culture among industrial companies in
embracing change and new technologies, together with the high cost and long life span of typical industrial products, are all critical factors in shaping how the Industrial Internet
Improve Quality Of Life For Citizens And Consumers...
Despite these barriers, adoption of the Industrial Internet
is accelerating. During the past three years, for example,
the number of sensors shipped has increased more than
five times from 4.2 billion in 2012 to 23.6 billion in 2014.
Much attention is drawn to the efforts by large companies
such as Cisco, GE, and Huawei, and government initiatives
like Industrie 4.0 in Germany. The second Internet of
Things World Forum hosted by Cisco featured more
than 250 real-world deployment examples showing how
companies and municipalities from around the globe are
already applying the Industrial Internet to drive efficiencies,
create new revenue streams and improve quality of life for
citizens and consumers.
In addition, the event’s steering
committee, comprising more than 100 leading organizations
from the user and provider communities, introduced a
seven-layer IoT reference model as a common framework
and vocabulary to drive efficient collaboration and future
deployments. In another example, GE announced that it
has realized more than $1 billion in incremental revenues
in 2014 by helping customers improve asset performance
and business operations through Industrial Internet
capabilities and services. Outside of the US, Huawei
recently announced the acquisition of Neul -- the UKbased
Industrial Internet startup that was one of the key
supporters of the Weightless standard for low-power M2M
In Europe, the German government is sponsoring Industrie
4.0, a multi-year strategic initiative that brings together
leaders from the public and private sectors as well as from
academia to create a comprehensive vision and action plan
for applying digital technologies to the German industrial
sector. China has also recently proposed its “Made in China
2025” strategy to promote domestic integration of digital
technologies and industrialization. High-level dialogue is
underway between the German and Chinese governments
on how the two manufacturing powerhouses can work
together to accelerate the realization of the Industrial
Internet in their two countries.
Another sign of strong industry momentum is the
emergence of consortia to address the growing need
for industry collaboration on common concerns such
as security and interoperability. Among these are the
Industrial Internet Consortium (IIC), the AllSeen Alliance
and Open Interconnect Consortium (OIC). While AllSeen
and OIC focus on device-level connectivity, the goal of
the IIC is to accelerate the adoption and deployment of
Industrial Internet applications through technology testbeds,
use cases and requirements development. Since its
establishment in March 2014, IIC has expanded its member
base to include more than 100 organizations, with one-third
from outside the US. The rapid growth and diversity of IIC
membership shows both the value of and strong need for
high-level industry collaboration in this area.
The Industrial Internet has also attracted increasing levels
of venture capital, with an estimated $1.5 billion in 2014.
Unlike in other technology sectors, venture capital funding
for the Industrial Internet comes primarily from large
corporate venture funds, such as GE Ventures, Siemens
Venture Capital, Cisco Investments, Qualcomm Ventures
and Intel Capital.
Siemens, for example, recently launched a new $100 million
“Industry of the Future Fund” to fund early-stage start-ups
in industrial automation and other digital technologies that
can transform future manufacturing. Meanwhile, dedicated
and hybrid funds are also emerging in this market. McRock
Capital is one of the first such funds devoted to start-ups in
advanced manufacturing, grid automation, smart cities and
digital oil fields. And GE recently announced a partnership
with big data incubator Frost Data Capital to create Frost
I3, which will fund and incubate 30 Industrial Internet
technology start-ups in the next three years.
The outcome economy will be built on the automated
quantification capabilities of the Industrial Internet. The
large-scale shift from selling products or services to selling
measurable outcomes is a significant change that will
redefine the base of competition and industry structures.
Delivering outcomes will require companies to forge new
ecosystem partnerships centred on customer needs
rather than individual products or services. Because of
the rising importance in data, software and platforms,
incumbent players will need to expand their capabilities
and ecosystems in these areas to compete in this new
As the Industrial Internet becomes more ingrained in every
industry, it will ultimately lead to a pull-based economy
characterized by real-time demand sensing and highly
automated, flexible production and fulfilment networks.
This development will call for a pervasive use of automation
and intelligent machines to complement human labour
(machine augmentation). As a result, the face of the future
workforce will change dramatically, along with the skill sets
required to succeed in a much more automated economy.
To Be Continue...