GE today released a new report detailing the business and
economic impact of the Industrial Internet, an open global network that
connects people, data, and machines. The report, "Industrial
Internet: Pushing the Boundaries of Minds and Machines," was
written by GE's Chief Economist Marco Annunziata and GE's Director of
Global Strategy and Analytics Peter C. Evans.
It found that enabling
Internet-connected machines to communicate and operate automatically can
bring substantial efficiency gains. If the Industrial Internet boosts
annual productivity growth by 1-to-1.5 percentage points in the U.S.,
with partial diffusion to the rest of the world and considering the
power of compounding over the next twenty years, it could add $10-15
trillion to global GDP, about the current size of the U.S. economy.
"We found that the benefits from this marriage of machines and analytics
are multiple and significant and in today's challenging economic
environment, securing even part of these productivity gains could bring
great benefits at both the individual and economy-wide level," said
Annunziata. "The full potential of the Industrial Internet will be felt
when the three primary digital elements intelligent devices,
intelligent systems and intelligent automation; fully merge with
physical machines, facilities, fleets and networks. When this occurs,
the benefits of enhanced productivity, lower costs and reduced waste
will propagate through the entire industrial economy."
The Industrial Internet will help eliminate hundreds of billions of
dollars of wasted time and resources across critical industries by
combining Internet-connected machines, product diagnostics, software,
and analytics to make business operations efficient, proactive,
predictive, and strategically automated.
While its benefits will reverberate throughout the economy, the initial
impact of the Industrial Internet is likely to also be felt especially
strongly in advanced manufacturing, which could become a stronger engine
of job creation and productivity.
To achieve these benefits, there must
be significant investment to rapidly transfer new software and
diagnostic technologies into manufacturing equipment. Equally important
will be developing a strong talent pool including new roles that combine
mechanical and industrial engineers into new "digital-mechanical
engineers."
The report cites that the first wave of the Internet and
Communications Technologies (ICT) revolution boosted U.S. labor
productivity growth to an average annual rate of 3.1% during 1995-2004,
twice the pace during the previous quarter-century. If the Industrial
Internet revolution could recapture and maintain this 3.1% productivity
growth, by 2030 this could translate to an average income gain of
$20,000 per person over the current trend.
The report showcases both industry waste and the Industrial Internet
opportunity:
Healthcare
The global cost of healthcare inefficiency is at least $731
billion per year, a 1 percent improvement in efficiency would lead to $63 billion global
healthcare savings over 15 years.
Energy
Globally, $1.9 trillion is spent on energy annually, just a 1% savings per year in power generation is equal to $20 billion
annually; $300 billion in over 15 years
Transportation
Globally, transportation logistics costs are estimated to be $6
trillion per year, or approximately 10% of global GDP. The commercial
transportation system accounts for $300 billion of this total industrial Internet applications can reduce commercial transportation
asset and operations management costs by 10 percent, yielding $5.6
billion per year in savings. The total cost of waste in airline operations today is $284 billion
per year in the aviation industry, a 1% reduction in jet fuel use from the
Industrial Internet could yield about $30 billion in fuel savings over
15 years.
