Report: The impact of Industrial Internet

"The Industrial Internet has the potential to add $10-15 trillion to global GDP by 2030. Connecting machines and the Internet could eliminate $150 billion in waste across major industries, driving a productivity revolution. Just a 1% increase in ef ciency can mean savings of $30 billion in aviation, $66 billion in power generation and $63 billion in healthcare over 15 years." (GE Report)

GENERAL ELECTRIC COMPANY released a new report at the end of 2012 detailing the business and economic impact of what they are calling 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.

The report found that enabling Internetconnected machines to communicate and operate automatically can bring substantial effi ciency 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 signifi cant and in today's challenging economic environment, securing even part of these productivity gains could bring great benefi ts 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 ¡ª intelligent devices, intelligent systems and intelligent automation ¡ª fully merge with physical machines, facilities, fl eets and networks. When this occurs, the benefi ts of enhanced productivity, lower costs and reduced waste will propagate through the entire industrial economy."

According to GE, 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 effi cient, proactive, predictive and strategically automated.

The report also stated that while its benefi ts will reverberate throughout the economy, the initial impact of the Industrial Internet would likely to also be felt especially strongly in advanced manufacturing, which could become a stronger engine of job creation and productivity.

"To achieve these benefi ts, there must be signifi cant 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 "digitalmechanical engineers," the authors wrote.

The report cites that the fi rst 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, singling out the following industries as potential target areas:

HEALTHCARE

• The global cost of healthcare ineffi ciency is at least $731 billion per year

• A 1 percent improvement in effi ciency 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.

For more information and to view the full report: www.gereports.com/meeting-of-minds-and-machines/