The Internet of Things fuels revival of heavy industry

Copyright – Les Echos/Worldcrunch – August 5 2015 – By Hassan Lâasri

Industry applications of the Internet of Things are likely to take up 70% of the total market and generate twice as much revenue as usage by individual consumers.

The Internet of Things refers to the digitization of the physical world: connecting all hardware ever produced by manufacturers and all software ever developed by engineers in a giant, extended Internet. All these objects would be linked by the flow of information; they will be data consumers and data producers at the same time. Take a look at the world of electronics that surrounds us …

Not so long ago, when we thought about the Internet, we pictured computers, smartphones, tablets and televisions. More recently, we have added wristbands, weighing scales and watches. But the number of connected devices is growing every day. There are now electricity meters, bank cards, pressure cookers, cars, and even smart-buttons which allow the user to order a product when stocks are running low, without even having to turn on a computer or pick up a smartphone. A study by the Institut Montaigne estimates the number of connected devices to be around 10 billion today, and expects it to rise to between 30 and 220 billion by 2020.

Early origins

As with all technological innovations, the Internet of Things was not built in a day. It is not even new. Everything started in the 1990s when the Internet Engineering Task Force (the global organization responsible for the technical governance of the Internet) proposed the creation of IPv6. This successor to IPv4 would make it possible to allocate an IP address to any device that humanity could build, an ambition which IPv4 would not have been able to fulfil in the years to come.

In 1995, the famous Media Lab at MIT started a large, ambitious project with the no-less-impressive title of “Things That Think.” This initiative encouraged manufacturers across the world to sponsor the Research and Development of connected devices. Since the 2000s, several big software and hardware innovations resulted in systems on a chip. These are veritable miniature calculators, increasingly being integrated by manufacturers into their equipment and facilities in the aviation, motor, nuclear and rail sectors.

Market reach

Today, the media is focused on connected devices for use by the general public, but the Internet of Things will be primarily industrial. According to a study carried out by McKinsey &

Company, the Internet of Things for industry will occupy 70% of the total market, which the consultancy estimates will be worth between $3.9 and $11.1 billion in 2025, and will generate twice as much revenue as the consumer market.

If, as the McKinsey and Company study highlights, less than 1% of data generated is currently exploited and utilized by manufacturers, consider the situation of tomorrow: All industrial equipment and infrastructure (houses, offices, vehicles, business premises, factories, trains, ships, planes, construction sites …) and all human activity (agriculture, industry, services, information …) will be given sensors to continually oversee the activities of this equipment and infrastructure, to optimize them in real time, and to forecast preventative maintenance.

Thanks to ever smaller processors, and increasingly intelligent software, heavy industries are on their way to becoming high-tech industries.

Winners

The big winners are the cloud technology, Big Data and data analytics providers who adapt their products and services to the needs of heavy industries. The cranking up of investments has begun. On the software side, in May 2015 IBM announced an investment of $3 billion over three years with the aim of becoming the undisputed leader in the provision of software and services for the Internet of Things.

The same month, Google announced it is working on what it hopes will become the operating system for the Internet of Things. The two heavyweights want to reach Microsoft’s achievements with its Windows operating system for personal, professional and business use — but on an even bigger scale.

In hardware, semi-conductor producers work on multi-core processors that bring together thousands of processors capable of handling massive quantities of data in record time. When it comes to networks, telecommunications manufacturers and operators are working on 5G in order to provide even higher speeds.

On everyone’s radar are the industries producing, transporting, treating and distributing oil, gas and other raw materials; these industries are exploiting just 1% of the big data they generate.

But contrary to the Internet as it exists today, there are other, non-IT-based companies in the queue for tomorrow’s Internet of Things. These are the manufacturers themselves. General Electric in the U.S., Siemens in Germany, Schneider Electric in France and Hitachi in Japan — these companies see in the Internet of Things a great opportunity to digitize their products, their services and their industrial tools. General Electric was one of the first manufacturers to seize upon this opportunity, even before the name “Internet of Things” was born.

Since the turn of the century, General Electric has collected data on its engines from 100 or so sensors. Once analysed, this data allows them to optimize the performance of their engines. The Internet of Things will allow manufacturers to develop, promote and commercialize their services with a very high value-added.

Value chains of whole industries will be redesigned to create new ones where the industry and the services are combined into a single activity and where the relationship between the client and the provider is transformed into a connection between equals. For example, thanks to the collection and analysis of this data, General Electric helped Alitalia to reduce its kerosene consumption by recommending a more efficient way of using their engines.

Challenges ahead

But the Internet of Things does not offer only opportunities. There are also problems to be faced. The first is information overload. After all, our brain is limited and regularly makes mistakes when confronted with too much information. Researchers in socioeconomics have demonstrated that large quantities of information do not always result in the most optimal decision-making.

Secondly, we face the risk of consumers’ and citizens’ privacy being violated by unexpected organizations: We can all call to mind the revelations of Edward Snowden. The third problem involves the risk of accident from third parties taking control of the connected device. Recently, hackers (in reality, researchers specialized in security) succeeded in taking control of a car being driven by an accomplice (a Wired journalist) on an American highway.

The Internet of Things will not be built in a day. We will continue to see unconnected devices being produced, people running in the street with no fitness wristband, and applications that take too long to start up. As with all innovations, the Internet of Things will take shape thanks to a succession of changes, both technological and societal. The majority of the time these changes are imperceptible to the end user. And while the Internet of Things is being installed in our private and professional lives, incremental technological and organizational innovations will arrive to resolve or limit the problems mentioned above.

Future solutions

Despite these problems, the Internet of Things is already sounding the comeback of heavy industries, because problems can never stop innovation. Rather, it is quite the opposite; innovations often feed off the problems that we encounter. To combat information overload, there are filtering systems, visualization and learning tools that are proving their worth with the web’s big data. Organizational changes proposed by management consultants are also here. New laws protect privacy, notably in the United States and Europe.

It should also be noted that the Institut Montaigne proposes transforming private data into a business, in and of itself, where individuals are paid according to the use made of their personal data. For accident-prevention, technical solutions already widely used in aviation systems could be generalized to all objects.

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