4 Takeaways From Accenture's $14 Trillion IoT Prediction - InformationWeek
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1/22/2015
05:15 PM
Chris Murphy
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4 Takeaways From Accenture's $14 Trillion IoT Prediction

Accenture's report says the industrial Internet of Things will create more jobs than it kills, but that companies aren't doing much to exploit it yet.

Accenture has lobbed in its prediction of how much the economy will get from the industrial Internet of Things -- $14.2 trillion by 2030, which is an eerily similar to Internet of Things predictions from GE and Cisco.

But that $14 trillion figure isn't the most interesting -- or actionable -- idea in Accenture's report. The report focuses on the industrial Internet of Things -- tactics such as putting a sensor on a welding machine, a jet engine, an x-ray machine, or a turnstile and gathering data from that to make better decisions, like when to do maintenance or increase staff. This industrial IoT is easier to execute in many ways than a customer-facing IoT strategy, like Google's Nest, because the industrial IoT involves a closed loop of company-controlled gear and employees, with clear goals of cutting costs or driving up sales.

Still, big obstacles remain to industrial IoT success, as Accenture makes clear. Here are three conclusions that struck me about Accenture's report:

Developed economies are better positioned than emerging economies
The industrial Internet of Things requires a strong technical and business foundation, and Accenture ranked countries into three broad groups in terms of how ready they are to take advantage of IoT. Factors included the society's willingness to embrace new technology and the social and organizational changes it might bring; R&D spending and tech skills; and business fundamentals such as strong banking, education, and supplier networks.

[ Want more? Read Internet Of Things: What's Holding Us Back. ]

Accenture ranked the US No. 1 on this "national absorptive capacity," with Switzerland, the Nordic countries, and the Netherlands in the top tier. The likes of China, Germany, Japan, and the UK land in the middle tier. The lowest tier includes Spain, Brazil, Italy, India, and Russia. 

The US had a jump in electricity production and use, Accenture writes, so it got an economic head start in industries tied to that trend. The same will happen for countries in industrial IoT, it predicts.  

Robots wont' take all workers' jobs
Accenture's survey finds 87% of executives think the industrial IoT will create net new jobs. A lot of employees will find their assurance of "freeing up workers to perform more creative and collaborative work" no assurance at all, since they've seen automation cut factory jobs over recent decades. Accenture cites examples of blue-collar workers becoming more important, though -- like an oil-drill operator using data to tweak performance out in the field.

In addition to requiring an educated workforce, such a world also requires companies that can handle decentralized decision-making, since not all data can flow back to a central nerve center for analysis.

IoT will change the products companies sell
Data will change expectations, and it already is changing the conversation. If industrial IoT allows for predictive maintenance, so you'll know when my machine will break, why should I buy an extended warranty? In fact, if you know when my motor will break, why don't I buy "operating minutes" for my tractor, oven, or jet engine, instead of the machine itself? Accenture describes this as the "outcome economy," offering another example of guaranteed crop yields from a particular parcel of land.

This "outcome economy" will send ripples back through business models. Does your existing break-then-fix service channel have a way to respond pro-actively before problems hit? And how do you get paid for pro-active, non-emergency maintenance advice instead of to-the-rescue service?

Almost no one has a real IoT plan
So, you don't have a crystal clear game plan to get your chunk of that $14 trillion industrial IoT bonanza? Accenture says hardly anyone else does either. Just 7% of 1,400 C-suite decision makers it surveyed have a comprehensive plan and investments to tackle this. Seventy-three percent say they haven't made any concrete progress. Yet 84% think their companies can wring new, service-based revenue from the industrial IoT.

There's a huge gap between the 84% believers and the 73% doing nothing about it. Is it $14 trillion worth of huge? Check back in 15 years.

Chris Murphy is editor of InformationWeek and co-chair of the InformationWeek Conference. He has been covering technology leadership and CIO strategy issues for InformationWeek since 1999. Before that, he was editor of the Budapest Business Journal, a business newspaper in ... View Full Bio
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Charlie Babcock
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Charlie Babcock,
User Rank: Author
1/23/2015 | 8:16:07 PM
Digital revolution will proceed faster than industrial
The notion that developed economies have the advantage over emerging economies is striking. We've emerged from the hunter/gatherer phase to industrialized society quite slowly and still draw many analogies from outmoded ideas in the natural world, such as "horsepower." The digital economy is going to develop much faster and rest in the hands of those who shift their thinking into the logic of moving bits instead of the logic of moving bushels, barrels and locomotives.
Gary_EL
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Gary_EL,
User Rank: Ninja
1/23/2015 | 2:44:43 PM
Three significant figures - huh.
14.2. The very precision of such a figure casts doubt on the whole prediction. The IOT will be a major fork in the road - nobody can seriously doubt that. But to pinpoint it to such a degree is almost silly. There are too many ifs, ands and buts, too many unknowns, too many things that can break in any number of directions. Assumption upon assumption upon assumption. It would be much more believable if they would have said, say, between $12 and $16 Trillion. I was briefly involved in the "prediction industry" at one time, and, yes, those who commission such surveys do demand decimal points. I wasn't high up enough in the food chain to know if they actually believe in them themselves.
pfretty
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pfretty,
User Rank: Ninja
1/23/2015 | 8:51:37 AM
Potential is there
No doubt the potential is there for the industrial IoT to succeed. After all, there are a handful of large organizations who are already operating with a closed loop IoT system -- seeing tremendous results.  However, the big challenge for many organizations is the lack of data knowledge/expertise. Before IoT can truly take off, the data maturity level needs to improve and organizatons need to truly develop an analytical culture capable of driving data-based decisions on a very regular basis. The type of decisions that continue to push the envelope into areas of uncertainty.

Peter Fretty, IDG blogger working on behalf of SAS

 
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