Small improvements can have big and lasting results. A report from GE
estimates that using the internet to improve the connection of people, data and machines that overall productivity of people can be increased by 1 to 1.5 percentage points annually. When annual compounding is factored in and a twenty year time frame is considered, that amounts to an additional $10-15 trillion that can be added to the global GDP.
Does a 1 percent productivity gain sound like a lot? Especially in an economy that is barely plodding along? The GE report says that it’s totally doable, and to support their claim, they reference the productivity gains seen during the initial growth of the internet between 1995 and 2004. During that period they estimate that advances in the internet improved US labor productivity by an average annual rate of 3.1 percent.
GE’s “Industrial Internet” sounds a lot like the “Internet of Things
“, a concept that’s been around for more than a decade
where any and every physical object could be assigned an IP address and made available for communication with any other object. GE identifies the following three components for their vision of the Industrial Internet:
Intelligent Machines – machines will be equipped with advanced feedback sensors and advanced instrumentation, all monitorable and controllable by software
Advanced Analytics – creation of analytics and predictive algorithms that include the knowledge of physical world disciplines like material science and electrical engineering
People at Work – Improve efficiency, product quality and safety of machines used by people at industrial facilities, offices and hospitals
GE estimates that implementing the Industrial Internet will eliminate $150 billion in waste across major industries. By increasing productivity by just 1 percent, efficiency savings over a period of 15 years are possible in the area of aviation ($30 billion), power generation ($66 billion) and healthcare ($63 billion).
The GE report concludes that “In a context where the largest advanced economies struggle with disappointing economic growth, resulting in high unemployment and disappointing income dynamics, the benefits of such an acceleration in productivity and growth would be enormous. Moreover, the Industrial Internet would play a substantial role in alleviating the constraints to strong and sustainable global growth, in terms of commodities consumption and reduced environmental impact.”
To help realize this vision, GE is starting a new initiative at their offices in San Ramon, California. They intend to hire 400 software engineers to work on the Industrial Internet, with application for power plants, jet engines, medical systems, and electric vehicle charging stations.