The term ‘Internet of things’ has been around a while. Broadly used to describe a single universe of connected intelligent products, processes and services that use imbedded technologies to communicate with other objects, applications, systems and people using the Internet, the original focus was consumers. Now the ‘Industrial Internet of Things’ is emerging. Early adopters have focused on operational efficiency, such as automation, flexible production techniques and predictive maintenance. However, a new Accenture report suggests that the Industrial Internet trend offers companies much more: a rich opportunity to introduce new digital products and services—and generate entirely new sources of revenue for a rapidly expanding marketplace.
The potential payoff is enormous. Optimistic predictions of the value created by the Industrial Internet range as high as $15 trillion of global GDP by 2030. Some pioneering examples of companies already leveraging its potential by adding digital services to their product offerings include the Michelin Group, which uses sensors inside tires combined with analytics to coach truck fleet drivers on how to save fuel, and Taleris (a General Electric-Accenture joint venture) deploying analytics to help airlines minimize disruptions from mechanical failures and weather delays.
So, how can executives exploit the revenue-generating opportunities of the Industrial Internet of Things to capture growth? According to the report, there are three ways:
- Boost revenues by increasing production and creating new hybrid business models: Improve the performance of existing assets and processes, while also converting products to product-service hybrids, which are defined as “connected, intelligent physical goods capable of producing data for use in digital services.” This will require companies to think unconventionally about customer value, determine which players from different industries could become collaborators, and leverage learning from these new services to guide future industrial product development.
- Exploit intelligent technologies to fuel innovation: Deploy sensor-driven computing, industrial analytics and intelligent machine applications over an Industrial Internet platform to enable a new breed of revenue-generating, connected products with associated digital services.
- Transform their workforce to cultivate new skills required for the Industrial Internet of Things jobs: Expand the talent base with key skillsets to create, support and sell new product-service hybrids and assimilate the intelligent technologies into the enterprise. Prepare workers to complete work differently in the Industrial Internet era, such as operating unmanned aerial vehicles and robots, or controlling intelligent mining equipment from remote locations.
The Industrial Internet does bring new challenges. For example, it involves bringing together two separate technology families: enterprise IT for resource planning, customer relationship management and decision support systems, and operations IT for monitoring and controlling field equipment, manufacturing and production processes. Then there is the question of new security threats. When manufacturing plants, equipment or remote facilities are interconnected and online, disruptions to operations, sabotage and loss of life from broken infrastructure, cyber-attacks and data theft from criminals, foreign governments and disgruntled employees are all possibilities. It is essential that companies proactively address these issues with a well thought out cyber-physical security architecture.
Nevertheless, companies that act now, those that understand that every business is a digital business, will be rewarded by fast-mover advantage. Those that hesitate risk being quickly outmaneuvered by existing competitors and new entrants, especially as industries become digitally contestable, a prime example of which is the introduction of Google’s driverless automobile, which is disrupting multiple industries, including car insurance and government licensing.
How to get started?
- Think boldly about value potential from product-service hybrids.
- Cultivate tomorrow’s partner ecosystem.
- Start now to design and develop an Industrial Internet platform.
- Closely study Industrial Internet financials.
- Prepare marketing/sales/service to promote new digital products and services.
- Clarify legal rights, obligations and secure access to data generated from machines to deliver new digital services.
- Think about how to augment workforce with smart machines.
For more insights, read the full report Driving Unconventional Growth through the Industrial Internet of Things
