GE (NYSE: GE) today released a new report detailing the business and economic impact of the Industrial Internet, an open global network that connects people, data, and machines. The report, “Industrial Internet: Pushing the Boundaries of Minds and Machines,” was written by GE’s Chief Economist Marco Annunziata and GE’s Director of Global Strategy and Analytics Peter C. Evans. It found that enabling Internet-connected machines to communicate and operate automatically can bring substantial efficiency gains. If the Industrial Internet boosts annual productivity growth by 1-to-1.5 percentage points in the U.S., with partial diffusion to the rest of the world and considering the power of compounding over the next twenty years, it could add $10-15 trillion to global GDP, about the current size of the U.S. economy.
“We found that the benefits from this marriage of machines and analytics are multiple and significant and in today’s challenging economic environment, securing even part of these productivity gains could bring great benefits at both the individual and economy-wide level,” said Annunziata. “The full potential of the Industrial Internet will be felt when the three primary digital elements — intelligent devices, intelligent systems and intelligent automation — fully merge with physical machines, facilities, fleets and networks. When this occurs, the benefits of enhanced productivity, lower costs and reduced waste will propagate through the entire industrial economy.”
The Industrial Internet will help eliminate hundreds of billions of dollars of wasted time and resources across critical industries by combining Internet-connected machines, product diagnostics, software, and analytics to make business operations efficient, proactive, predictive, and strategically automated.
While its benefits will reverberate throughout the economy, the initial impact of the Industrial Internet is likely to also be felt especially strongly in advanced manufacturing, which could become a stronger engine of job creation and productivity. To achieve these benefits, there must be significant investment to rapidly transfer new software and diagnostic technologies into manufacturing equipment. Equally important will be developing a strong talent pool including new roles that combine mechanical and industrial engineers into new “digital-mechanical engineers.” The report cites that the first wave of the Internet and Communications Technologies (ICT) revolution boosted U.S. labor productivity growth to an average annual rate of 3.1% during 1995-2004, twice the pace during the previous quarter-century. If the Industrial Internet revolution could recapture and maintain this 3.1% productivity growth, by 2030 this could translate to an average income gain of $20,000 per person over the current trend.