By Jason Dies, President, Document Messaging Technologies, Pitney Bowes.
From toasters to dog collars, thermostats to hair brushes, our hyperconnected world is transforming the way we live. By 2025, there will be more than 82 billion IoT-connected endpoints, according to IDC1. Take the smart fridge, probably one of the connected Internet's earliest innovations.
Now widely available, many of these have internal cameras which take a photo of your fridge's contents every time the door closes, so you can see what you need to stock up from the office. You can use an app to create a shopping list. You can listen to music or watch TV through your appliance, and integrate it with smart Bluetooth speakers. It's fun, it's great for household management, and – let's face it - it will really impress your friends.
The Industrial Internet – the wiser older brother to the IoT
The Industrial Internet is the more sensible older brother to the Internet of Things, although it's just as game-changing, innovative and exciting. The Industrial Internet takes the Internet of Things and turbocharges it.
Across industry sectors from manufacturing to agriculture, aerospace to transportation, it brings together powerful machines, smart processes, skilled people and advanced analytics, connecting them across a global network. The Industrial Internet fuels the development of next-generation devices and technologies, and facilitates far-reaching change with a huge potential impact on society – more powerful engines, safer cars, better wind turbines creating cleaner energy. And it is built on data.
The fourth Industrial Revolution
The more connected we become, the more data we generate. This is particularly true in an industrial environment in which huge volumes of data are produced and analytics extracted – the result of fitting sensors onto products and equipment. A sensor is a remarkable feat of engineering, and has become the foundation on which the Industrial Internet is built.
Mining this data for key insights – and acting on those insights - is transforming businesses, creating new opportunities and optimising operations. Organisations can:
- Deliver an enhanced, differentiated customer experience
- Drive growth in productivity
- Boost operational excellence through intelligent operations
- Improve worker safety
- Produce real-time analysis
- Enhance efficiency
- Overhaul processes
- Generate decisions based on real-time intelligence
- Improve visibility and transparency across the business
- Accelerate innovation and product development cycles
- Minimise risk through data-driven decision-making
- Protect against fraud, and
- Drive compliance
Now, businesses have the potential to shift gears, moving their organisations from enhancing their operations with the Industrial Internet, to diversifying revenue streams. This exciting next stage of the Industrial Internet, coined as the fourth Industrial Revolution or the Industrial Internet 2.0, will be disruptive and transformative, as businesses use the industrial internet as a springboard to create new revenue opportunities.
Unlocking value from new revenue streams
Today's agile businesses are regenerating themselves, seeking new ways of creating revenue. Think of petrol stations pairing up with supermarket chains; and book shops selling toys, coffee and cakes. Unlocking value from an organisation's data creates crucial new revenue streams, with minimal risk and needing no major capital investment: the information is to hand, it's just a matter of extracting from it meaningful insights – and acting on them, in real-time. Data has become a corporate asset, often cited as 'the new oil', generating rewards for those who maximise its untapped potential.
Gartner, Inc calls the monetising of data 'infonomics'. The global analyst firm states, "Monetizing information is part of a growing demand for infonomics, or giving economic significance to information. In fact, we estimate that 80% of successful CDOs will have value creation or revenue generation as their Number 1 priority through 2021, up from less than 50% in 2016. Infonomics provides the framework businesses need to monetise, manage, and measure information as a real asset, thereby improving its benefits to the organisation"2.
The shift towards outcomes generating income
Access to in-depth, real-time industrial analytics enables organisations to integrate an outcome- based approach to their business models, so businesses will shift from product-led organisations to service-led companies.The ability to forecast results with accuracy is a very strong business proposition. A report from the World Economic Forum states, "In recent years, pressure has been mounting for manufacturers to look downstream to uncover new value creation opportunities by helping customers use their products to meet specific outcomes, such as optimizing transportation of people across long distances, increasing crop yield and providing lighting only when it is needed".
The report continues, "Such outcomes may range from guaranteed machine uptimes on factory floors, to actual amounts of energy savings in commercial buildings, to guaranteed crop yields from a specific parcel of farmland"3. Guaranteed outcomes are immensely powerful. They can be packaged and sold 'as a service', improving profitability by:
- removing guesswork and assumptions from forecasting, enabling accurate forecasting of trends and behaviours
- achieving operational excellence through predictive maintenance, capacity planning and performance optimisation
- boosting service levels
- Creating a truly differentiated customer experience
The Industrial Internet is still at a fairly early stage of adoption, but is accelerating rapidly, showing huge potential: Accenture forecast that it could add $14.2 trillion to 20 of the world's major economies over the next 15 years4. 84% of respondents in the Accenture report felt the Industrial Internet would generate new, service-based income streams, but only 73% felt their companies were making progress in this area.
For many businesses, optimising their operations is the most compelling reason for rolling out the Industrial Internet. Having the power to facilitate predictive maintenance, network optimisation, demand forecasting and capacity planning is game-changing.
Add to this the opportunity to generate revenue and become a service-led business, and the vast potential of the Industrial Internet begins to emerge. It's the Industrial Internet 2.0, and has the power to transform the industrial landscape as we know it.
- Source: IDC Market Forecast Worldwide Internet of Things Installed Base by Connectivity Forecast, 2017–2021
- Smarter with Gartner, Keys to success for chief data officers, February 17, 2017, http://www.gartner.com/smarterwithgartner/keys-to-success-for-chief-data-officers/
- Source: World Economic Forum in collaboration with Accenture – Industrial Internet of Things, Unleashing the Potential of Connected Products and Services.
- Source: Accenture report cited in The Telegraph