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11/27/2012
12:35 PM
Chris Murphy
Chris Murphy
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What GE's $15 Trillion Industrial Internet Needs

GE makes the case that a more business-oriented 'Internet of things' will spur a productivity boom. Not so fast.

People Need New Skills

Annunziata highlights three new job growth areas: skills that cut across traditional lines of engineering and software development, creating a new role like a "digital-mechanical engineer"; data scientists, who specialize in fields from cybersecurity to pattern recognition to data visualization; and user interface experts, who can design human-machine interfaces that make a job easier and people more productive. We recently wrote about how Ford is recruiting more electrical and software engineers to do this kind of engineering-plus-design work for its cars, as software becomes a bigger part of why people buy a vehicle. As cars get more connected, such as sharing data car-to-car to know if there's an accident or traffic jam ahead, these skills get more important. Companies such as GE and Ford need universities to start training such specialists.

Policymakers And The Public Must Be Convinced

How much machine automation should people allow? We see this debate beginning around Google's self-driving car. In financial markets, automated high-speed trading creates controversy at times such as the "flash crash," when markets seem to overreact.

The risks are real, Annunziata says, so we need "transparent public debate on how much control we are giving to machines." Cybersecurity also becomes of vital public importance when it relates to networked power plants, jet engines and healthcare equipment. GE argues for cybersecurity regulation that's less fragmented across states and countries. Again, it points to why GE needs to make a case that the risks and economic disruption of a more networked and automated business world will pay off in economic growth.

Companies Must Invest

GE's report focuses mostly on macroeconomics. Getting the U.S. economy back to the 3.1% productivity growth rate of the 1995 to 2005 Internet boom, rather than the 1.6% rate since then, drives its prediction of $10 trillion to $15 trillion in economic growth from the industrial Internet.

But investing in the industrial Internet is a microeconomic issue -- companies make this decision one by one, project by project. The New York Times, in writing about GE's industrial Internet concept, cited an example of a wind farm operator upgrading the sensors and optimization software -- and netting a modest 3% energy output gain. InformationWeek wrote about Union Pacific's system to monitor train wheels and use analytics to predict failures, leading to a 75% drop in wheel-related derailments, but the next level of investment and innovation hinges on more effective sensors, better predictive analytics and better data sharing to predict the effects on the entire rail network.

The decision by companies whether to invest in this technology brings us back to the need for better analytics, more automation and new skills, factors that will drive the ROI of these Internet of things projects. We are seeing companies take these steps and make incremental gains with networked machines. But we need an innovation ecosystem to kick in to get anywhere near GE's $15 trillion vision.

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ChrisMurphy
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ChrisMurphy,
User Rank: Author
11/29/2012 | 3:30:54 PM
re: What GE's $15 Trillion Industrial Internet Needs
That's interesting. When we wrote about the railroad Union Pacific's initiatives in this area earlier this year, one limitation is the lack of extremely precise location information. Some of these discussions presume that all data is available, and it's not the case.
PLOM
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PLOM,
User Rank: Apprentice
11/30/2012 | 1:48:26 AM
re: What GE's $15 Trillion Industrial Internet Needs
Well, you don't need location information in the geo-spatial sense (because that might prove impossible) but if you had referential information you can get there. "Hey, the third bogey back on the 9:34 from NY has excessive vibrations." can be useful without needing to know the pricise lat/lon of the locomotive... With the internet of things may come the singularity - I can't wait.
ChrisMurphy
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ChrisMurphy,
User Rank: Author
11/30/2012 | 2:41:28 PM
re: What GE's $15 Trillion Industrial Internet Needs
You're exactly right on the value of referential information -- and in fact that kind of location data Union Pacific actually does have today. It gets a read out on each train as it passes a sensor, and the crew will be told exactly what you describe about a problem wheel. But it doesn't have highly precise location data (GPS isn't accurate enough to use) on a moving train, it has to leave more safety cushion, and thus have less capacity, than it might if it could more precisely know the location at any given time.
ChrisMurphy
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ChrisMurphy,
User Rank: Author
12/3/2012 | 3:57:55 AM
re: What GE's $15 Trillion Industrial Internet Needs
I checked the website and the work OGC is doing, very interesting. It sounds like the work might fit with what GE is describing as this need for "digital-mechanical engineers"
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