The industrial Internet

By 2025, the industrial and logistics sector will have deployed more than 500 million connected products. This massive rollout will have a major impact on the entire value chain, ushering in substantial productivity gains (potentially 5% to 8% of total production costs) as well as new business models.

A complete transformation of industrial processes

The transformation of industrial processes brought about by IoT, which many are calling the ‘fourth industrial revolution’, will affect manufacturing in its entirety. It will involve an overhaul of production infrastructure (smart factories) but also create new product and service possibilities and pave the way for a new paradigm in customer relations. New connectivity technologies (notably LPWA and 5G) will be employed, enabling new uses thanks to connected production tools, employees and finished goods. But connectivity alone is not enough: one of the main challenges lies in giving meaning to it all, through using analytic tools (big data) and artificial intelligence.

A host of initiatives and solid growth

Recognised by the giants of automation and engineering as a key transformation, supported by a variety of national and international initiatives (Industry 4.0 and the Industrial Internet Consortium (IIC), the industrial Internet will undergo tremendous development over the next decade, with a market that is expected to grow by an average 19% per annum from 2015 to 2025.

New value propositions

The industrial Internet will also usher in new business models. Most of the value will shift from manufacturing activities to R&D and design, and to before and after sales services. New Manufacturing-as-a-Service and Product-as-a-Service models are being developed today, with examples that include Michelin with its Fleet Solutions and Rolls-Royce with ‘TotalCare’ (Jet engine-as-a-Service). The industrial Internet also opens up new opportunities, such as elevating certain vertical industry players higher up the value chain to take on the role of platform and go after new markets (as with General Electric’s Predix), and monetise data.

A long-term trend and major challenges

It will take some time for the trend to fully take hold. It requires not only commitment from industry leaders but also collaboration over standardisation initiatives, improvements to the security and reliability of the technologies, and efforts to create a skilled labour force, along with organisational changes.

The development of the industrial Internet will also vary depending on use cases. Some developments are already underway (predictive maintenance, assets management, connected workers) while the adoption of others (large-scale data analysis, supply chain integration, connected products, automation) will be slower.

Asia/Pacific region is leading the way
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Source: IDATE DigiWorld in ''The industrial Internet''