Emergence of the industrial IoT will bring unprecedented opportunities, along with new risks, to business and society. However, like the Internet was in the late 1990s, the Industrial Internet is currently in its early stages and many important questions remain, including how it will impact existing industries, value chains, business models and workforces,.

To address such questions, the World Economic Forum’s IT Governors launched its Industrial Internet initiative at the organization’s Annual Meeting 2014 in Davos, Switzerland. As a result of the work was published a new Industry Agenda report, produced in collaboration with Accenture, entitled “Industrial Internet of Things: Unleashing the Potential of Connected Products and Services.”

One key finding of the report is that disruption will come from new value creation made possible by massive volumes of data from connected products, and the increased ability to make automated decisions and take actions in real time. The key business opportunities will be found in four major areas:

– Vastly improved operational efficiency (for instance improved uptime and asset utilization) through predictive maintenance and remote management

–The emergence of an outcome economy, fueled by software-driven services; innovations in hardware; and the increased visibility into products, processes, customers and partners

–New connected ecosystems, coalescing around software platforms that blur traditional industry boundaries   

–Collaboration between humans and machines, which will result in unprecedented levels of productivity and more engaging work experiences 

From Products to Outcome-Based Services

The report’s authors argue that as the Industrial Internet gains broader adoption, businesses will shift from products to outcome-based services, where businesses compete on their ability to deliver measurable results to customers. Such outcomes may range from guaranteed machine uptimes on factory floors, to actual amounts of energy savings in commercial buildings, to guaranteed crop yields from a specific parcel of farmland.

Delivering such outcomes will require new levels of collaboration across an ecosystem of business partners, bringing together players that combine their products and services to meet customer needs. Software platforms will emerge that will better facilitate data capture, aggregation and exchange across the ecosystem. They will help create, distribute and monetize new products and services at unprecedented speed and scale.

The report also shows that the Industrial Internet will drive growth in productivity by presenting new opportunities for people to upgrade skills and take on new types of jobs that will be created. An overwhelming majority of executives we surveyed believe that the growing use of “digital labour” in the form of smart sensors, intelligent assistants and robots will transform the skills mix and focus of tomorrow’s workforce.

While lower-skilled jobs, whether physical or cognitive, will be increasingly replaced by machines over time, the Industrial Internet will also create new, high-skilled jobs that did not exist before, such as medical robot designers and grid optimization engineers.

Companies will also use Industrial Internet technologies to augment workers, making their jobs safer and more productive, flexible and engaging. As these trends take hold, and new skills are required, people will increasingly rely upon smart machines for job training and skills development.  

Risks and challenges

To realize the full potential of the Industrial Internet, businesses and governments will need to overcome a number of important hurdles. Chief among them are security and data privacy, which are already rising in importance given increased vulnerabilities to attacks, espionage and data breaches driven by increased connectivity and data sharing.

Another crucial barrier is the lack of interoperability among existing systems, which will significantly increase complexity and cost in Industrial Internet deployments. Today’s operational technology systems work largely in silos. However, in the future, a fully functional digital ecosystem will require seamless data sharing between machines and other physical systems from different manufacturers.

In addition, other notable risks include uncertain return on investments on new technologies, immature or untested technologies, lack of data governance rules across geographic boundaries and a shortage of digital talent. Overcoming these challenges will require leadership, investment and collaborative actions among key stakeholders.

For the full report:  http://www3.weforum.org/docs/WEFUSA_IndustrialInternet_Report2015.pdf