UPDATED 15:18 EDT / JUNE 18 2013

Industrial Internet Value Potential Huge but Slow to Develop

The Industrial Internet has the potential to be a $514 billion annual market with a net value of $1.7 trillion by 2020 (see chart at right). However, that value will be derived from different sources than that of the consumer Internet, and the market will be slow developing, write Wikibon CTO David Floyer and Lead Big Data Analyst Jeff Kelly in their Professional Alert, “Defining and Sizing the Industrial Internet“. Based on surveys and other Wikibon analysis, they warn that it faces significant constraints including the lack of data standards in most areas, adoption resistance from conservative engineers, and the lack of a common platform based on flexible open standards that supports high availability and security.

 While the consumer Internet derives most of its value from advertising, Wikibon’s research shows that the Industrial Internet or Internet of Things will get its value from three main sources:

  1. Increased efficiency of equipment and other assets such as highway bridges, and in particular of the long term maintenance and management of that equipment.
  2. The value contribution to adjoining Industrial Internet networks, such as balancing short-term positive cash flow against additional long-term equipment purchase and maintenance costs.
  3. The value of its contribution to disruptive new business models. This is hard to estimate and will vary widely from industry to industry but can be “dramatically high”.

One of the major effects of the Industrial Internet will be changing maintenance and repair from a break/fix game to an exact strategy in which maintenance and repair will be guided by knowledge of exactly what is failing at what rate. This will allow repair to be guided by anticipation of future failures, avoiding large expenses ranging from the unplanned shutdown of a production line to the huge liability associated with loss of life due for instance to a bridge or other structural failure.

This can become the basis of disruptive new business models. The report envisions aircraft engine manufacturers offering inclusive rental programs including servicing based on the feedback from sensors built into critical locations inside the engines. The data from these sensors could help the manufacturers improve their design and reduce costs of manufacturing and maintenance.

While consumer Internet data comes from consumer activities on the network ranging from shopping to participating in social media, the main sources of data on the Industrial Internet will be networked sensors or machines and industrial sensors ranging from bridges to airplane engines. This data will be much more structured and regular than that of the consumer Internet and for the next few years at least will have much lower volume. Over time, however that volume will increase dramatically. Total ROI of the market is expected to reach 149% by 2020, mandating that Industrial Internet be applied to virtually everything from nuclear power plants to office buildings.

As with all Wikibon research, this report is available in its entirety publicly, without charge, on the Wikibon Web site. IT professionals are invited to join the Wikibon community, which allows them to comment on research and post their own questions, tips, Alerts, and white papers. Members also receive invitations to the periodic Peer Incite Meetings, at which IT professionals discuss how they are using advanced technologies to solve real business and technical problems.

 


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