In Depth: Industrial Internet Will Add $15 Trillion to Global GDP by 2030

By: | April 28th, 2013

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The Industrial Internet is described as an “ecosystem of connected machines and software” designed to increase efficiency, minimize waste, and help people make better decisions. A recent GE white paper “Pushing the Boundaries of Minds and Machines”  discusses the ways in which brilliant machines will transform our lives. The way intelligence is embodied in machines and devices used in the industrial sector is being revolutionized. The Industrial Internet is not a new separate Internet but much of it will be run on private secure networks.

The Industrial Internet will connect the world’s machines, facilities, fleets and networks with advanced sensors, controls and software applications. Using physics-based analytics, predictive algorithms, automation and deep domain expertise, workers anywhere will be connected 24×7 to providing support, and executing more intelligent decisions in operations, maintenance and safety.

The following chart shows savings in major sectors totaling $276 billion if only a 1 percent savings is achieved:

The Power of 1%

For example in commercial aviation, a 1% improvement in fuel savings would yield $30 billion over 15 years. A 1% efficiency improvement in global gas-fired power plants would yield about $60 billion in savings in fuel consumption over the same time.

New Innovation Leads to Increased Productivity

The following figure shows the Industrial Revolution that lasted from 1750 to 1900, the Internet Revolution which took place over 50 years from 1950 the year 2000 and the Industrial Internet which is just 10 years old and shows all signs of picking up steam.

A key driver of the Industrial Internet is costs of deployment of intelligent devices and instrumentation have dramatically fallen recently. Computing power and improved microprocessor chips are now allowing heretofore unseen levels of digital intelligence and advanced analytical techniques to be applied to “big data.” These trends are ushering in a new ways of thinking and working.

Waves

Applications of the Industrial Internet

We are beginning to witness the coming together of the industrial world and digital worlds leading to heretofore elusive synergies that are leading to improvements in network, fleet, facility, and asset optimization.

Digital & Industrial World

Industrial Internet Data Loop

The following chart shows the data loop including extraction and storage of proprietary data; creation of data systems, algorithms, and new forms of data analysis; big data analytics; data visualization and sharing; the integration of physical and human networks, and the flow of experience and ideas back into machines.

Data Loop

Data flows help operators understand the history of their operations and performance enabling them to tweak systems more effectively. Intelligent systems will be characterized by network and maintenance optimization, system recovery, and enhanced learning. More intelligent decisions will come about from the integration of all of the elements being tracked.

Effect on Global GDP

It is not often that we can get our minds around the meaning of “Global GDP” let alone how it might be affected by a new technology or process. But according to the following chart “Industry” represents 30% of the $70 trillion world economy or $21 trillion.

Within developed countries Industry represents 24% of output while in developing economies Industry represent about 37% of GDP. Therefore about 46% of the global economy or $32.3 trillion in global out put can benefit from the Industrial Internet.

GDP Share

Global Energy Flows

The industrial Internet can effect both energy production and consumption in significant ways.

The industrial system is comprised of huge numbers of machines and systems. There are millions of machines across the world from electric motors to CT scanners, etc. All these machines have information from temperature, pressure, vibration and other key indicators. Engineers will soon be able to understand the performance of a machine in relation to other machines and systems.

The following table shows major pieces of “rotating machinery” in key industry categories. In this list there are currently over 3 million types of rotating equipment. Monitoring, measuring and modeling key metrics associated with these machines will lead to better efficiency, safety, productivity and operational savings.

Things that Spin

Global Power Plant Fleet

Commercial jet aircraft, combined cycle power plants, locomotives, oil refineries and healthcare are all areas that feed off of the global power system. The following chart shows the global power plant fleet by technology and fuel type.

These are the industries that will first be targeted for advanced monitoring and control.

Global Power Plant Fleet

Benefits of the Industrial Internet

One area as an example of where the industrial Internet will have a big impact is in aviation. An intelligent aircraft will tell maintenance crews which parts of it are likely to need replacement and when. Current maintenance schedules are based on the number of cycles; this will change to maintenance schedules based on actual need. This type of maintenance will be applied to rail transportation, power production, etc.

Aviation Industrail Internet

Healthcare Spending Per Capita

The digitization of healthcare will transform the way people think about healthcare, live, interact with their doctors and are diagnosed. Due to the critical need to reduce costs and improve performance the Industrial Internet will enable safe and efficient operations in hospital and medical environments saving hundreds of millions dollars. Over time we should see a narrowing in the differences in medical costs per capita and outcomes as the Industrial Internet spreads.

Health Care Spending Per Capita

Labor Productivity Growth

One of the great bellwethers of economic health is labor productivity and while it increased significantly from 1980 to 2005 it has recently fizzled. The 1990s saw an acceleration in productivity not seen since record levels of the mid-1960s. A recent rebound in labor productivity is believed to be tied directly to the Industrial Internet.

US Labor Productivity Growth

Industrial Internet Tidal Wave Arriving Now

According to General Electric the industrial Internet will be much larger than the Internet Revolution. While there are currently about four and half billion people connected to the Internet there are as many as 10 billion devices connected with billions more to be added in coming decades.

If we think of how the Internet has affected business and interpersonal communication thus far it is exciting to think about how the Industrial Internet will help optimize and speed improvement of many economic activities.

US Productivity Decline & Rebound

Expected Productivity Improvements by 2030

Current thinking is that the Internet Revolution will boost productivity growth to levels not seen since 1996 to 2004 when labor productivity grew at an average annualized rate of 3.1%. The following chart shows the effects such a change would have on per capita GDP.

Change in GDP Per Capita

The Benefits of the Industrial Internet to the World Economy

The GE report focuses primarily on the US because it is the most advanced economy and is likely to help catapult the Industrial Internet forward globally. If the Industrial Internet has the same effect as the Internet Revolution the world would see $15 trillion in additional global GDP by 2030.

Benefits to World Economy

Keeping an Eye on the Industrial Internet

It is not clear how quickly the benefits of the Industrial Internet will spread. In coming months we will be looking at innovation and equipment, analytics, system platforms, business process infrastructure and cyber security to track the world’s progress.

David Schilling

David lives in Boston in close proximity to Boston University, Boston College, MIT, Harvard, Northeastern as well as Bostons leading companies and labs. You can also find David on Google+.

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One thought on “In Depth: Industrial Internet Will Add $15 Trillion to Global GDP by 2030

  1. Tony Kay
    May 21, 2013 at 2:29 pm

    Your article on the Industrial Internet is spot on. We at http://www.livemonitoring.co.za are a small South African industrial monitoring software developer and are already in the process of converting our industrial based software to become serious players in the “industrial Internet” Very exciting times ahead with our multiprotocol in cloud access drop n play monitoring modules with feedback and trending covering virtually a full spectrum of industry, agriculture, mining, locomotive, retail, carbon emissions etc. see our GEMS (Global energy, emissions, efficiency monitoring solutions.) which is currently being scoped. Tx for some great articles.

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