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Industrial Internet ‘could be worth $1,700bn by 2020’

24 June, 2013

Expenditure on the Industrial Internet will soar from $20bn in 2012 to around $514bn by 2020, while the cumulative net value created by the Industrial Internet will amount to $1,700bn by 2020 – according to a pair of new reports from the Wikibon project, a global community dedicated to improving the adoption of technology through the sharing of free advisory knowledge.

The reports – Defining and Sizing the Industrial Internet and The Industrial Internet and Big Data Analytics: Opportunities and Challenges – define the Industrial Internet (II) as the connection of machine sensors and actuators to local processing and the Internet, and onward connections to other industrial networks.

They say that the value created by the II is much greater than that from similar amounts of data in consumer and social Internets. This results from three main components:

• increasing the efficiency of industrial equipment and improving its long-term maintenance and management, which they estimate to be worth 10–25%;

• contributing to adjoining II networks; and

• introducing disruptive new business models which might add no value but “could, in a few cases, be dramatically high”.

Although the Industrial Internet can drive up industrial machinery operating efficiencies, it has potentially even greater value in contributing to the efficiencies of second-order industrial networks, according to Wikibon. “For example,” it says, “avoiding the cost of a single power-generation turbine failure can be significant, but this pales in comparison with the value of preventing a nation-wide outage of the electrical grid.”

The drivers of the Industrial Internet include:

• advances in sensor technology, leading to smaller, cheaper, and faster devices with lower power consumption and a reduced overhead impact on the equipment being sensed;

• advances and standardisation of Internet network technologies which allow sensor data to be combined at low cost with an “avalanche” of related business process and consumer activity data; and

The projected spend on Industrial Internet technology (blue) and the value that it delivers (red) in $bn
Source: Wikibon

• a growing understanding by businesses and governments of the potential benefits of the Industrial Internet and the realisation that the data can be used to optimise the costs and delivery of industrial services.

According to Wikibon, businesses are starting to see opportunities for disruptive changes in industrial business models. One example is the opportunity for aviation engine manufacturers to offer services based on the expectation that enhanced feedback from a network of engines will lead to improved designs and lower manufacturing and maintenance costs.

Wikibon warns that that are several constraints – some legal, some cultural, and some technical ­– that could back adoption of the Industrial Internet. These include:

•  a lack of data standards;

•  conservatism and aversion to risk among the engineers who will have to implement the II; and

•  the lack of a common Industrial Internet platform, which will need to be scalable, secure, based on flexible open standards, and must support automatic orchestration of platform components.

According to Wikibon’s projections, the return-on-investment in Industrial Internet expenditure could be as high as 149% by 2020, but it expects a slowdown in the growth of II after this date.

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