Industrial Internet:
Efficiency Gains Will Drive Adoption of the “Internet of Things”
With a mind-set still shaped by the austerity of the Great Recession and its aftermath, companies are looking for the most cost-effective ways to deploy their cash. We believe that the development of the industrial internet, or the internet of things, will become increasingly attractive, as big data collection and analytics, process automation, and the resultant efficiency gains will present attractive low-hanging fruit.
Much of the time we think of big data and connectivity in terms of consumer-facing sectors: e-commerce, for example. However, the potential size and impact of the industrial internet — in which more and more devices and processes become networked, generating data and receiving instruction — could dwarf the consumer-oriented applications.
Here are some simple reflections to illustrate that point. Compare the importance of a malfunctioning internet connection on an instrument monitoring a patient’s respiration and heart-rate on the one hand — to a redirection error when trying to click on an internet banner ad. Or compare the effects of a glitch in the monitors and controls of a power-generation substation, to an error that erases the contents of your shopping cart when you’re buying housewares online. Industrial internet applications are often much more fundamentally high-stakes than
consumer-facing applications, with more potential economic gains and great potential human and economic losses involved. These high stakes, we believe, will translate into a greater value ascribed to systems that function correctly — and to the companies that can deliver those systems.
Companies will be hungry to implement the industrial internet because of the efficiencies they can create, and they will turn to partners who can roll out that infrastructure securely and reliably. By some estimates, the total addressable market for industrial internet will amount to $2 trillion by 2020.
The cost of connecting devices to the internet to collect data and automate their functions should continue to fall, reaching the point where it simply makes sense to connect almost everything. Here are some examples from a variety of sectors of the kinds of efficiencies that could be generated:
The Healthcare Sector
The constant flow of data about patients can help healthcare administrators improve efficiency in a host of ways. Big data analytics can reveal patterns of illness, allowing resources to be deployed and high-value assets such as MRI machines to be replaced and upgraded in a more rational fashion. The same goes for staffing — crunching of historical data can help managers understand when and where staff will be needed.
Monitors on objects as lowly as hand-soap dispensers can help managers ensure process compliance; up to 10 percent of patients admitted to hospitals develop infections after arrival, and a single case of antiobiotic-resistant MRSA infection can cost a hospital $30,000.
Patients will be able to go home with monitoring devices that will send a constant stream of data back to physicians, reducing unneeded return hospital visits or allowing proactive interventions before a condition gets too serious.
The Energy Sector
Every step in the process of energy generation and delivery provides opportunities for the internet of things to improve efficiencies.
Consider a machine as complex as a wind turbine. Sensors inside such a machine can grab data from all its moving parts, and those data can be crunched to deliver information about wear and tear, making maintenance more efficient. And those reams of data can also help rationalize the functioning of an entire wind farm.
On the consumption side, the applications are even more obvious. One dimension of the internet of things that’s poised for the most immediate growth is home automation, and there is a host of efficiencies in energy consumption to be reaped here. Constant data gathering from smart devices and smart meters will help utilitiespredict energy consumption patterns, spot inefficiencies on a household and macro level, and offer services to customers tailored to each household’s usage pattern. One analyst estimates that smart metering alone can result in a 3 to 5 percent energy savings.
Transportation
According to Boeing, a round-trip flight by a Dreamliner generates a terabyte of data. As more vehicles are equipped with data monitoring and those data are analyzed, the same kinds of efficiency gains can be reaped:
more targeted and proactive maintenance, reducing downtime; better fleet management; efficiency gains in fuel use; and a better understanding of their customers, creating the opportunities for new products tailored to those customers’ needs. These gains could apply to airlines, rail transport, and trucking alike.
Security: The Fly in the Ointment
As we noted above, the rise in cybercrime will intersect with the rise of the industrial internet to produce deep concerns for companies and for consumers. We believe that the growth of the industrial internet will be secular– fears of cybercrime will not prevent it. But as it grows, it will provide an even greater opportunity to cybersecurity firms.
