Active Stocks
Fri Jul 12 2024 15:58:30
  1. Tata Steel share price
  2. 168.70 -0.18%
  1. Wipro share price
  2. 560.05 4.81%
  1. ITC share price
  2. 459.00 0.07%
  1. NTPC share price
  2. 377.25 0.00%
  1. Kotak Mahindra Bank share price
  2. 1,830.05 -0.77%
Business News/ Opinion / IIoT: driving growth in the next decade

IIoT: driving growth in the next decade

Business and economic potential of IIoT on the industry and economy can be even more significant and disruptive than similar technologies

Photo: Ramesh Pathania/MintPremium
Photo: Ramesh Pathania/Mint

As the world starts to overcome a period of sluggish demand and low productivity growth, economists, business leaders and political leaders are eyeing the next wave of technology innovation to rekindle the world economy. The Industrial Internet of Things (IIoT)—the fast growing network of increasingly intelligent connected devices—could be the largest driver for economic growth and employment in the next decade. IIoT is a network of physical objects, systems, platforms and applications that contain embedded technology to communicate and share intelligence with each other, the external environment and with people. The business and economic potential of IIoT on the industry and economy can be even more significant and disruptive than similar technologies that are being applied in the realm of consumer electronics.

IIoT will create new markets as data from billions of connected devices unleash an era of products and services that will generate new revenue streams for the manufacturing ecosystem. It could add as much as $14.2 trillion to 20 of the world’s major economies over the next 15 years, according to the latest analysis from Accenture. It also promises a greater fillip to hard-pressed, mature economies than to their emerging market competitors. This would help restore a more healthy trade balance in the global economy.

The national absorptive capacity (NAC) index by Accenture is a measure of potential for economic diffusion of IIoT in a given country and countries in higher positions on the index are more likely to reap the rewards of IIoT diffusion. The US, Switzerland, Finland, Sweden, Norway and the Netherlands occupy the top positions in the index, while India is at a lower level. To put this into perspective, IIoT can add as much as $47.21 billion to the country’s gross domestic product (GDP) by 2030. India can leapfrog to join the countries on the top of the IIOT chart if companies are willing to take bolder actions and make greater investments in innovation and technology than they are doing today.

There are many companies at the forefront of IIoT-led transformation. Road transport solutions provider Michelin solutions is one such company that has built a high-tech, high-touch IIoT system to reduce fuel consumption in its clients’ truck fleets. For its new EffiFuel solution, sensors inside the vehicles collect data on fuel consumption, temperature, speed and location, which is then transmitted to a cloud service. Michelin solutions fuel experts analyse the data and make recommendations to fleet managers and its instructors train drivers in how to use less diesel when driving. Result: truck fleet managers can save two litres of fuel for every 100km driven.

Taleris, a joint venture between Accenture and General Electric, tackles the issue of airline delays and cancellations caused by equipment failure. It uses sensors that track the performance of equipment and engines whether in flight or not. By focusing on airline fleet optimization far beyond the operational condition of a specific piece of equipment, Taleris can impact overall maintenance schedules. This systemic approach means less disruption, lower costs, better spare-parts inventory management and more satisfied travellers.

These examples illustrate how IIoT has the capacity to create an outcome economy, where companies compete on their ability to deliver predictable outcomes instead of just products and services. It is through the outcome-based applications that IIoT can generate new revenue streams. So far, however, businesses have made gradual progress in applying IIoT to reduce operational expenses, boost productivity or improve worker safety. Drones, for example, are being used to monitor remote pipelines and intelligent drilling equipment can improve productivity in mines.

This slow start in shifting to revenue generating applications may be due to the fact that many countries do not have sufficient underlying conditions to enable this new digital revolution to sweep through their economies. Accenture analysis shows while IIoT could lift the annual GDP of the US, the Nordics or Switzerland by at least 2% by 2030, Spain and Italy look likely to enjoy gains of about half that. That dramatic difference can, in part, be attributed to the quality of their infrastructure, technology skills and innovative capacity, as well as the ease of creating new business models.

The good news is that IIoT is already here, at least among the most forward-thinking companies. But much of its potential is at risk of being lost as companies and policymakers fail to exploit the opportunity. According to an Accenture survey of more than 1,400 business leaders, only 36% claim they fully grasp the implications of IIoT. Just 7% have developed a comprehensive IIoT strategy with investments to match.

IIoT presents an opportunity to transform economies for those countries that are willing to put in place the necessary infrastructure and India’s commitment to digitizing the economy could prove a right step in that direction. If IIoT is to be incorporated in a significant way to drive both productivity and growth, business and government leaders need to cooperate in three key areas. First, they must welcome entirely new and more open organizational structures as business models evolve through the shift to a more sophisticated outcome economy. Second, they need to collaborate across industry, sectors and borders to form standards that promote the security and interoperability of data and machines, as well as establish governance structures that encourage and reward the appropriate sharing of key data. Finally, they will need to invest in the new skills needed in working environments, which increasingly amalgamate digital and human labour.

Avinash Vashistha is chairman and geography managing director at Accenture India.

3.6 Crore Indians visited in a single day choosing us as India's undisputed platform for General Election Results. Explore the latest updates here!

Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less
Published: 16 Mar 2015, 01:26 AM IST
Next Story footLogo
Recommended For You