David Floyer, CTO and Co-founder of Wikibon, discussed the research company’s latest report on the Industrial Internet with theCUBE host Dave Vellante, live at the GE Industrial Internet event in San Francisco.

Asked what prompted the research, Floyer said: “We were interested in the Internet of Things, what was going to happen after the consumer Internet.” On the consumer side, data is driven entirely by advertisements, he explained. Google, for example, is making a lot of money in this space.

“We were looking  at other Big Data areas,” Floyer notes, and those are surveillance and the industrial Internet. What Wikibon found was that “the quality of data coming out of these machines is much, much higher than that coming from the consumer Internet.”

Where’s the Value in the Industrial Internet?

Asked what drove value for the industrial Internet, Floyer said it was “the ability to improve efficiency and reduce risk.” A company can improve efficiency at a local level, but also expand it at a higher level. “If you can do the math and the analytics in real time and adjust things on the fly, you can have efficiency across things,” even at a nationwide level. If one can bring that up to a higher level, another network, there is huge potential and opportunities for ways to make money.

For 2012, spending on the industrial Internet was estimated at $20 billion, which reflects total cost of the equipment – sensors, local network, cloud, services, people running it, the total spend on the process. The return was estimated by Wikibon to be $23 billion, with value created through savings, productivity increase, risk reduction, and less downtime.

By the end of the decade the spend will reach $500 billion, an increase fueled by “the establishment of platforms, protocols, collaboration agreements.” By 2020, value created will reach $1.3 trillion.

What’s Holding Us Back from Living like the Jetsons?

Commenting on what’s holding back the industrial Internet, Floyer pointed out that the industry in general rides on the initial consumer to lead any sort of process. He used the example of flash and the years it took to come into the enterprise. The same is happening with the industrial Internet: “You have very well-established ways of doing things, paper procedures,” which need to be replaced with a computer that makes real time decisions. That’s a big big cultural test, “especially for an engineer with a system that works well,” Vellante pointed out. One of the challenges, Floyer said, would be to manage the risk of the very low chance the machine would make a catastrophic decision.

Data standards currently depend on the industry, Floyer added “in some industries those are quite plentiful, in others they are not.”