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Summary:

Thanks to the internet, almost anything consumers might want is just a click away. But for businesses, the gains have been much less dramatic. That is about to change, with the arrival of the Imdustrial Internet.

GE's CEO Jeff Immelt Explains the $200M Smart Grid Fund

An internet revolution is upon us.

As we know it today, the internet has been largely about connecting people to information, people to people, and people to business. Monetization strategies range as widely as the options available, and for all the success, there are more failures. While many of the advancements have been extraordinary – even unthinkable a short time ago – too often we’re still left asking, “to what end?”

The internet can give consumers nearly anything with just a click, but global economies remain challenged.  The internet has become the biggest library in the world, but education is just now beginning to take advantage and change.  The internet can provide businesses with unprecedented data, but true insight remains contentious and change is slow.

The real opportunity for change is still ahead of us, surpassing the magnitude of the development and adoption of the consumer internet. It is what we call the “Industrial Internet,” an open, global network that connects people, data and machines. The Industrial Internet is aimed at advancing the critical industries that power, move and treat the world.

There are now many millions of machines across the world, ranging from simple electric motors to highly advanced MRI machines. There are tens of thousands of fleets of sophisticated machinery, ranging from power plants that produce electricity to aircraft that move people and cargo around the world. There are thousands of complex networks ranging from power grids to railroad systems, which tie machines and fleets together.

This vast physical world of machines, facilities, fleets and networks can more deeply merge with the connectivity, big data and analytics of the digital world. This is what the Industrial Internet Revolution is all about.

Productivity Revolution

The Industrial Internet leverages the power of the cloud to connect machines embedded with sensors and sophisticated software to other machines (and to us) so we can extract data, make sense of it and find meaning where it did not exist before. Machines – from jet engines to gas turbines to CT scanners – will have the analytical intelligence to self-diagnose and self-correct. They will be able to deliver the right information to the right people, all in real time. When machines can sense conditions and communicate, they become instruments of understanding. They create knowledge from which we can act quickly, saving money and producing better outcomes.

As an example, we have pushed the boundaries of physical and material sciences in our aircraft engines to the point where these engines are more powerful and efficient than ever. We will continue to improve them physically, but at the same time we can use software, monitoring and big data analytics to attack the $284 billion in annual waste in the airline industry that is caused by fuel inefficiency, unscheduled aircraft maintenance, and delayed flights.

Consider that just a one percent improvement in aircraft engine maintenance efficiency can reduce related costs by $250 million annually. A similar one percent fuel savings in power generation could add more than $4 billion annually to the global economy.

Whether in terms of operations, performance or maintenance excellence, all industries are looking for their next major productivity gains. Health care is burdened by a system where doctors and caregivers have to go searching for vital information; it is inefficient at best and life threatening at worst. We need to make the data more intelligent and integrated, more predictive and proactive, so information finds the doctor instead of the other way around.

Intelligent data flows speed up care delivery and can prevent chronic conditions by getting the treatment right the very first time. Similarly, in terms of health management costs, “intelligent” hospitals are deploying systems that behave like air traffic control for medical staff and devices, and provide a full detailed view of hospital resources. Better utilization cuts capital expenses. Better asset location leaves nurses more time to focus on patients. Better management improves patient flow, cuts operating costs, and saves hospitals millions.

There are similar scenarios in every other major industry, and the economic benefit can be huge.  Assuming growth similar to what prevailed during the internet boom, the Industrial Internet revolution will add about $15 trillion to global GDP by 2030. That’s the equivalent of adding another U.S. economy to the world.

The amazing aspect of this growth is that it stems from what appears to be minor productivity improvements. At GE, we have 5,000 software engineers and another 9,000 IT engineers. We’re focused on mining for just one percent gains in productivity. The potential is irresistible.

Roadmap to the Revolution

In the near future, I expect nothing short of an open, global fabric of highly intelligent machines that connect, communicate and cooperate with us. This Industrial Internet is not about a world run by robots, it is about combining the world’s best technologies to solve our biggest challenges. It’s about economically and environmentally sustainable energy, curing the incurable diseases, and preparing our infrastructure and cities for the next 100 years.

To do this industry and government need to work together on two critical areas: standardization and security.  We need to establish common standards so that innovative minds can develop the best solutions for the machines and systems that move our world. Just as the advancement of mobile devices and operating systems have brought forth a prosperous  “app” economy, a standard language for machines will unleash waves of innovation that will truly change how the world works. This is a critical step and needs government policies that favor advancement.

Attaining the vision set forth for the Industrial Internet will also require an effective internet security regime. Cyber security should be considered in terms of both network security (a defense strategy specific to the Cloud) and the security of devices that are connected to the network. We need industry to effectively secure facilities and networks and governments to enforce a regulatory regime that promotes innovative solutions and international standards.

The Industrial Internet era has already begun. And during a time when the global economy is recovering but remains volatile and where resources are constrained for people, governments, and companies, what we need most is to not lose sight of a real opportunity to create meaningful change around the world.

After all, this is what revolutions are all about.

Jeff Immelt is the chairman and CEO of GE. 

  1. Interesting to hear what GE means by “Industrial Internet” and it can bring major changes to sectors like healthcare or road safety..
    There is a bigger revolution at the horizon and that’s 3D printing. A great article on the subject http://www.foreignaffairs.com/articles/138154/neil-gershenfeld/how-to-make-almost-anything?page=show

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  2. welcome to star track

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  3. I read the news article about GE’s report and thought it was interesting, but was surprised with it become the center-point of the Keynote and part of several other presentations at the Gartner Application Architecture, Development and Integration Summit in Las Vegas yesterday.

    This is an enormous opportunity and risk for the technology industry and business consumers of tech. It is Phase 2 of the Internet. We wrote up the Gartner keynote here:

    http://successfulworkplace.com/2012/11/27/gartner-calls-it-a-game-change-the-aadi-summit-keynote/#comment-3072

    I call it Phase 2 because we’ve so far only replaced existing ways of communicating and made them faster through email and the Web. We moved data before and we sent messages, but we never had our thermostat talking to the power grid and that’s revolutionary.

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  4. What a brave new world of technology…

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  5. Hasn’t IBM been saying this for years with their Smarter Planet initiatives and marketing?

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    1. Yes, we have, Kevin.

      Like in these two example videos from June 2009 and March 2010:
      “IBM New Intelligence toward a Smarter Planet “: https://www.youtube.com/watch?v=9wfZH6ZWxmk and
      “The internet of things”: https://www.youtube.com/watch?v=sfEbMV295Kk

      /Miranda Edner,
      Account Mgr and IBM Innovation Network member in Sweden

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  6. David G Stevens Sunday, December 2, 2012

    You stated in your article, “We need to establish common standards so that innovative minds can develop the best solutions for machines and systems that move our world.”
    Is standardization really the answer, though?
    Its true, standardization creates a readily discernible path to implementation. However, new innovations are usually discovered outside the box. In order for new ideas to be discovered, we must be free to explore other options. Standardization could adversely affect this process.

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  7. A true revolution still needs a new way of thinking about human reasoning, which yields a more profound and fruitful manner. Codonology, a way to start.

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  8. Some interesting points in here and fascinating to hear how GE is aggressively targeting even small productivity gains. Curious what time frame they are thinking. A lot of this has been talked about for years but technology often advances slower than people think at the beginning and them faster only a few years later. The potential to solve complex health problems has been the most exciting idea although progress has been slower than people have been hoping for…

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  9. An interesting and welcome aspiration, which is happening already to a large extent. In a domestic setting, I can easily see internet-connected utility meters being supplemented with internet-connected appliances, allowing consumers to better understand, manage and optimize their resource usage.

    I would be surprised if the same shift is not already well underway in industrial settings, (depending, of course, on where individual businesses are in their individual capital investment cycles).

    The main challenge for equipment manufacturers will be controlling software development costs. This is something that the hardware manufacturers (that I have encountered) have struggled to do well. This is because it is very very difficult, and requires a particular organizational culture and focus. In my experience, only organizations with an explicit software-centric management culture have really been able to develop quality software whilst also keeping a lid on costs.

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