Slidedeck exploring the GE industrial internet, and how this relates to the 'Internet of Things'.

1. Industrial Internet:
Pushing the Boundaries
of Minds and Machines
Peter C. Evans and Marco Annunziata
November 26, 2012

2. Table of Contents
I. Executive Summary 3-4
II. Innovation and Productivity: What’s Next? 5-6
III. Waves of Innovation and Change 7-12
The First Wave: The Industrial Revolution
The Second Wave: The Internet Revolution
The Third Wave: The Industrial Internet
IV. How Big is the Opportunity? Three Perspectives 13-18
Economic Perspective
Energy Consumption Perspective
Physical Asset Perspective… Things That Spin
V. The Benefits of the Industrial Internet 19-30
Industrial Sector Benefits: The Power of One Percent
Commercial Aviation
Rail Transportation
Power Production
Oil & Gas Development and Delivery
Healthcare
Economy-wide Gains: The Next Productivity Boom
The Great Fizzling
The Internet Revolution
Return of the Skeptics
Industrial Internet: Here Comes the Next Wave
How Much of a Difference Would it Make?
Industrial Internet and Advanced Manufacturing
Impact on the Global Economy
Role of Business Practices and the Business Environment
VI. Enablers, Catalysts and Conditions 31-33
Innovation
Infrastructure
Cyber Security Management
Talent Development
VII. Conclusions 34
VIII. Endnotes and Acknowledgements 35-37

3. I. Executive Summary Revolution, and the more recent powerful
advances in computing, information and
frequency real-time data brings a whole
new level of insight on system operations.
communication systems brought to the Machine-based analytics offers yet another
The world is on the threshold of a new era of fore by the Internet Revolution. dimension to the analytic process. The
innovation and change with the rise of the combination of physics- based approaches,
Together these developments bring together deep sector specific domain expertise,
Industrial Internet. It is taking place through
three elements, which embody the essence more automation of information flows, and
the convergence of the global industrial
of the Industrial Internet: predictive capabilities can join with the
system with the power of advanced
computing, analytics, low-cost sensing Intelligent machines: New ways of existing suite of “big data” tools. The result
and new levels of connectivity permitted connecting the word’s myriad of machines, is the Industrial Internet encompasses
by the Internet. The deeper meshing of the facilities, fleets and networks with advanced traditional approaches with newer hybrid
digital world with the world of machines sensors, controls and software applications. approaches that can leverage the power
holds the potential to bring about profound of both historic and real-time data with
Advanced Analytics: Harnessing the
transformation to global industry, and in industry specific advanced analytics.
power of physics-based analytics, predictive
turn to many aspects of daily life, including algorithms, automation and deep domain
Building Blocks and “Things that Spin”
the way many of us do our jobs. These expertise in material science, electrical
innovations promise to bring greater speed engineering and other key disciplines The Industrial Internet starts with
and efficiency to industries as diverse required to understand how machines and embedding sensors and other advanced
as aviation, rail transportation, power larger systems operate. instrumentation in an array of machines
generation, oil and gas development, and from the simple to the highly complex. This
People at work: connecting people,
health care delivery. It holds the promise of allows the collection and analysis of an
whether they be at work in industrial
stronger economic growth, better and more enormous amount of data, which can be
facilities, offices, hospitals or on the move,
jobs and rising living standards, whether in used to improve machine performance, and
at any time to support more intelligent
the US or in China, in a megacity in Africa or inevitably the efficiency of the systems and
design, operations, maintenance as well as
in a rural area in Kazakhstan. networks that link them. Even the data itself
higher quality service and safety.
can become “intelligent,” instantly knowing
With better health outcomes at lower cost, which users it needs to reach.
Connecting and combining these elements
substantial savings in fuel and energy,
offers new opportunities across firms
and better performing and longer-lived In the aviation industry alone, the potential
and economies. For example, traditional
physical assets, the Industrial Internet will is tremendous. There are approximately
statistical approaches use historical data
deliver new efficiency gains, accelerating 20,000 commercial aircraft operating with
gathering techniques where often there
productivity growth the way that the 43,000 commercial jet engines in service.
is more separation between the data, the
Industrial Revolution and the Internet Each jet engine, in turn, contains three
analysis, and decision making. As system
Revolution did. And increased productivity major pieces of rotating equipment which
monitoring has advanced and the cost of
means faster improvement in income and could be instrumented and monitored
information technology has fallen, the ability
living standards. In the US, if the Industrial separately. Imagine the efficiencies in
to work with larger and larger volumes of
Internet could boost annual productivity engine maintenance, fuel consumption,
real-time data has been expanding. High
growth by 1-1.5 percentage points, bringing crew allocation, and scheduling when
it back to its Internet Revolution peaks,
then over the next twenty years through Figure 1. Key Elements of the Industrial Internet
the power of compounding it could raise
average incomes by an impressive 25-40
percent of today’s level over and above the
current trend. And as innovation spreads
1 2 3
globally, if the rest of the world could
secure half of the US productivity gains, the
Industrial Internet could add a sizable $10-
15 trillion to global GDP – the size of today’s
Intelligent Advanced People at
U.S. economy – over the same horizon. In Machines Analytics Work
today’s challenging economic environment,
Connect the Combines the Connecting people at
securing even part of these productivity
world’s machines, power of physics- work or on the move,
gains could bring great benefits at both the
facilities, fleets based analytics, any time to support
individual and economy-wide level.
and networks predictive more intelligent
with advanced algorithms, design, operations,
The Next Wave
sensors, controls automation and maintenance and
How will this be possible? The Industrial and software deep domain higher service
Internet brings together the advances applications expertise quality and safety
of two transformative revolutions: the
myriad machines, facilities, fleets and
networks that arose from the Industrial
3

4. Table 1: Industrial Internet: The Power of 1 Percent availability of private, semi-public, or public
cloud-based systems may displace the
What if... Potential Performance Gains in Key Sectors need for isolated systems. The result could
be a more rapid closing of the productivity
gap between advanced and emerging
Estimated Value
Industry Segment Type of Savings Over 15 Years nations. And in the process, the Industrial
(Billion nominal US dollars) Internet would ease resource and financial
constraints, making robust global growth
Aviation Commercial 1% Fuel Savings $30B more sustainable.
Enablers and Catalysts
Power Gas-fired Generation 1% Fuel Savings $66B
The Industrial Internet will require putting in
place a set of key enablers and catalysts:
1% Reduction in $63B
Healthcare System-wide
System Inefficiency • A sustained effort in technological
innovation is needed, along with investment
1% Reduction in to deploy the necessary sensors,
Rail Freight
System Inefficiency
$27B
instrumentation and user interface systems.
Investment will be a fundamental condition to
Exploration & 1% Reduction in rapidly transfer new technologies into capital
Oil & Gas Capital Expenditures
$90B
Development
stock. The pace of Industrial Internet growth
will ultimately be driven by how cost effective
Note: Illustrative examples based on potential one percent savings applied across specific global industry sectors. and beneficial they can be relative to current
Source: GE estimates
practice. The costs of deploying the Industrial
Internet will likely be sector and region
‘intelligent aircraft’ can communicate with improvement in fuel savings would yield a
specific, but the assumption is that the costs
operators. That is just today. In the next 15 savings of $30 billion over 15 years. Likewise,
of deployment will be providing a positive
years, another 30,000 jet engines will likely a one percent efficiency improvement in the
return for technology dollars invested.
go into service as the global demand for air global gas-fired power plant fleet could yield
service continues to expand. a $66 billion savings in fuel consumption. • A robust cyber security system and
The global health care industry will also approaches to manage vulnerabilities
Similar instrumentation opportunities exist benefit from the Industrial Internet, through and protect sensitive information and
in locomotives, in combined-cycle power a reduction in process inefficiencies: a one intellectual property.
plants, energy processing plants, industrial percent efficiency gain globally could yield • Development of a strong talent pool
facilities and other critical assets. Overall, more than $63 billion in health care savings. including new cross-cutting roles that
there are over 3 million major “things that Freight moved across the world rail networks, combine mechanical and industrial
spin” in today’s global industrial asset if improved by one percent could yield engineering into new “digital-mechanical
base—and those are just a subset of the another gain of $27 billion in fuel savings. engineers,” data scientists to create the
devices where the Industrial Internet can Finally, a one percent improvement in capital analytics platforms and algorithms, and
take hold. utilization upstream oil and gas exploration software and cyber security specialists.
and development could total $90 billion in Endowing workers with these skills will
Power of just one percent avoided or deferred capital expenditures. help ensure that, once again, innovation
The benefits from this marriage of These are but a few examples of what can be will result in more jobs as well as
machines and analytics are multiple and potentially achieved. higher productivity.
significant. We estimate that the technical
innovations of the Industrial Internet Broad Global Benefits It will take resources and effort, but
could find direct application in sectors As an early mover and source of key the Industrial Internet can transform
accounting for more than $32.3 trillion in innovation, the US is at the forefront of our industries and lives— pushing the
economic activity. As the global economy the Industrial Internet. Given increasingly boundaries of minds and machines.
grows, the potential application of the deeper global integration and ever
Industrial Internet will expand as well. By more rapid technology transfer, the
2025 it could be applicable to $82 trillion benefits will be worldwide. In fact, with
of output or approximately one half of the emerging markets investing heavily in
global economy. infrastructure, early and rapid adoption
of Industrial Internet technologies could
A conservative look at the benefit to specific act as a powerful multiplier. There may be
industries is instructive. If the Industrial opportunities to avoid the same phases of
Internet achieves just a one percent development that developed economies
efficiency improvement then the results are went through. For example, the use of
substantial. For example, in the commercial cables and wires may be avoided by going
aviation industry alone, a one percent straight to wireless technology. Or the
4

5. II. Innovation decisioning. We call this convergence the
Industrial Internet. We highlight evidence
and Productivity: which suggests that a wide range of new
innovations can yield significant benefits
What’s Next? to business and to the global economy. We
believe the skeptics have been too quick to
For much of human history, productivity draw conclusions that close the book on
growth was barely perceptible, and living productivity gains. Much like the Industrial
standards improved extremely slowly. Revolution, the Internet Revolution is
Then approximately 200 years ago, a unfolding in dynamic ways—and we are now
step change in innovation occurred: the at a turning point.
Industrial Revolution, in which muscle
power, from both humans and animals, A number of forces are at work to explain
was replaced by mechanical power. The why the Industrial Internet is happening
Industrial Revolution unfolded in waves, today. The capabilities of machines are Processing gains
bringing us the steam engine, the internal not being fully realized. The inefficiencies
combustion engine, and then the telegraph, that persist are now much greater at the continue unabated and
telephone and electricity. Productivity and
economic growth accelerated sharply. Per
system level, rather than at the individual
physical machine level. Complexity has have reached the point
capita income levels in western economies outstripped the ability of human operators
to identify and reduce these inefficiencies.
where it is possible
had taken eight hundred years to double by
the early 1800’s; in the following 150 years While these factors are making it harder to to augment physical
they rose thirteen-fold. But in the 1970’s, achieve improvements through traditional
productivity growth in the US, then at the means, they are creating incentives to machines with digital
“frontier” of productivity, fizzled out. apply new solutions arising from Internet-
based innovations. Computing, information, intelligence.
The second step change in innovation and telecommunication systems can now
followed more recently with the rise of support widespread instrumentation,
computing and the global internet monitoring, and analytics. The cost of
which rested on breakthroughs in instrumentation has declined dramatically,
information storage, computing and making it possible to equip and monitor
communication technology. Its impact on industrial machines on a widening scale.
productivity was even stronger, but seemed Processing gains continue unabated and
to lose momentum after just ten years, have reached the point where it is possible
around 2005. to augment physical machines with digital
intelligence. Remote data storage, big data
Some now argue that this is where the story sets and more advanced analytic tools that
ends. They acknowledge that businesses can process massive amounts of information
and economies have benefited significantly are maturing and becoming more widely
from past waves of innovation but are available. Together these changes are
pessimistic about the potential for future creating exciting new opportunities when
growth in productivity. They argue that applied to machines, fleets and networks.
the transformations brought about by
the Industrial Revolution were of a one- The rapid decline in the cost of
off nature, and their gains have already instrumentation is matched by the impact
been realized; that the Internet Revolution of cloud computing, which allows us to
has already played out, its innovations gather and analyze much larger amounts
being nowhere near as disruptive and of data, and at lower cost, than was ever
productivity-enhancing as those of the possible. This creates a cost-deflation trend
Industrial Revolution.
We challenge this view. In this paper we
examine the potential for a new wave
of productivity gains. Specifically, we
point to how the fruits of the Industrial
Revolution and the machines, fleets and
physical networks that it brought forth
are now converging with the more recent
fruits of the Internet Revolution: intelligent
devices, intelligent networks and intelligent
5

6. comparable to that which spurred rapid The Industrial Internet will help make each
adoption of information and communication of these levels of the industrial system
technology (ICT) equipment in the second perform better. It will enable enhanced
half of the 1990’s—and which will this asset reliability by optimizing inspection,
time accelerate the development of the maintenance and repair processes. It will
Industrial Internet. The mobile revolution improve operational efficiency at the level of
will also accelerate this deflation trend, fleets as well as larger networks.
making it more affordable to efficiently share
information and leading to decentralized The conditions are ripe and early evidence
optimization and personalized optimization. suggests that this new wave of innovation
Remote monitoring and control of industrial is already upon us. In the following pages
facilities, distributed power, and personalized we present a framework for thinking about
and portable medicine are just some of the how the Industrial Internet will unfold, and
most powerful examples. examples of benefits it holds for businesses
and more broadly for economies around
To fully appreciate the potential, it is the world.
important to consider how large the global
industrial system has become. There are
now millions of machines across the world,
ranging from simple electric motors to
highly advanced computed tomography
(CT) scanners used in the delivery of health
care. There are tens of thousands of fleets,
ranging from power plants that produce
electricity to the aircraft which 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.
6

7. III. Waves period, innovations in technology applied
to manufacturing, energy production,
of Innovation transportation and agriculture ushered
in a period of economic growth and
and Change transformation. The first stage started
in the mid-eighteenth century with the
commercialization of the steam engine.
The Industrial Revolution started in
Over the last 200 years, the world has
Northern Europe, which at the time was
experienced several waves of innovation.
the most productive economy, and spread
Successful companies learned to navigate
to the United States, where railways played
these waves and adapt to the changing
a crucial role in accelerating economic
environment. Today we are at the cusp of
development.1 The second surge came
another wave of innovation that promises to
later, in 1870, but was even more powerful,
change the way we do business and interact
bringing us the internal combustion
with the world of industrial machines. To
engine, electricity and a host of other
fully understand what is taking place today,
useful machines.
it is useful to review how we got here and
how past innovations have set the stage for The Industrial Revolution changed the
the next wave we are calling the “Industrial way we lived: it brought about a profound
Internet.” transformation in transportation (from
the horse-carriage and the sailboat to
The First Wave: The Industrial Revolution
the railways, steamboats and trucks); in
The Industrial Revolution had a profound communication (telephone and telegraph);
impact on society, the economy and in urban centers (electricity, running
culture of the world. It was a long process water, sanitation and medicine). It
of innovation that spanned a period of 150 dramatically transformed living
years between 1750 and 1900. During this standards and health conditions.2
Figure 2. Rise of the Industrial Internet
Wave 3
Industrial
Internet
Wave 2
Machine-based
Internet analytics: physics-
Revolution based, deep domain
Computing expertise, automated,
Wave 1 power and rise predictive
Industrial of distributed
Revolution information
networks
Machines and
factories that
power economies
of scale and scope
Innovation
Time
7

8. Several key features characterized this In the 1970’s, these closed government 2008, Facebook had 100 million active users.
period.3 It was marked by the rise of the and private networks gave way to open Facebook now has over one billion users. In
large industrial enterprise spanning new networks and what we now call the World eight years, Facebook enabled more than
industries from textiles to steel to power Wide Web. In contrast to the homogenous 140 billion friend connections to be made,
production. It created significant economies closed networks used during the first stage 265 billion photos were uploaded, and
of scale and corresponding reduction in of the Internet, the open networks were more than 62 million songs were played 22
costs as machines and fleets got larger heterogeneous. A key feature was that billion times.6
and production volumes increased. It standards and protocols were explicitly
harnessed the efficiencies of hierarchical designed to permit incompatible The qualities of the Internet Revolution
structures, with centralization of control. The machines in diverse locations owned were very different from the Industrial
global capital stock of dedicated plant and by different groups to connect and Revolution. The Internet, computing and
equipment grew dramatically. Innovation exchange information. the ability to transmit and receive large
began to be thought of in a systematic way, amounts of data, have been built on the
with the rise of central laboratories and Openness and flexibility of the network were creation and value of networks, horizontal
centers for research and development (R&D). key elements that created the basis for its structures and distributed intelligence.
Enterprises, both large and small, worked to explosive growth. The speed of growth was It changed thinking about production
harness new inventions in order to create breathtaking. In August 1981 there were systems by permitting deeper integration
and profit from new markets. less than 300 computers connected to the and more flexible operations. Also, rather
Internet. Fifteen years later the number had than an ordered linear approach to
Despite the enormous gains reaped by climbed to 19 million.4 Today the number research and development, the Internet
the economy and society, the Industrial is in the billions. Speed and volume of has enabled concurrent innovation. The
Revolution also had a downside. The information transmitted grew dramatically. ability to exchange information rapidly and
global economic system became more In 1985 the very best modems were only decentralize decision-making has spawned
highly resource-intensive and had a capable of speeds of 9.6 kilobits per second more collaborative work environments
more significant impact on the external (Kbps). The first generation of iPhone, by that are unconstrained by geography. As a
environment as a result of both resource contrast, was 400 times faster, capable of consequence, older models of centralized
extraction and industrial waste streams. transmitting information at 3.6 megabits internal innovation have ceded ground to
In addition, working conditions during per second (Mbps).5 start-ups and more open innovation models
this era needed vast improvement . Much that harness an environment of more
of the incremental innovation that has The combination of speed and volume abundant knowledge. Thus, rather than
occurred since the Industrial Revolution created powerful new platforms for resource- intensive, the Internet Revolution
has been focused on improving efficiency, commerce and social exchange by driving has been information and knowledge-
reducing waste and enhancing the down the cost of commercial transactions intensive. It has highlighted the value of
working environment . and social interactions. Companies went networks and the creation of platforms.
from selling nothing over the internet to It has opened up new avenues to reduce
The Second Wave: The Internet Revolution creating large new efficient markets for environmental footprints and support more
At the end of the twentieth century, the exchange. In some cases this involved eco-friendly products and services.
Internet Revolution changed the world yet existing companies shifting to new digital
again. The timeframe in which it unfolded platforms; however, the vast majority of
was much shorter, taking place over the innovation and ferment centered on
about 50 years instead of 150; but like the the creation of brand new companies and
Industrial Revolution, the Internet Revolution capabilities. When eBay began in 1995, it
unfolded in stages. The first stage started in closed the year with 41,000 users trading
the 1950’s with large main frame computers, $7.2 million worth of goods. By 2006, it
software and the invention of “information- had 22 million users trading $52.5 billion
packets” which permitted computers to worth of goods. Social networking had a
communicate with one another. The first similar trajectory. Facebook was launched
stage consisted of experimentation with in February 2004 and in less than a year
government-sponsored computer networks. reached 1 million active users. By August
8

9. The Third Wave: The Industrial Internet deeply merge with the connectivity, big data • Advanced Analytics: Advances in
Today, in the twenty-first century, the and analytics of the digital world. “big data” software tools and analytic
Industrial Internet promises to transform techniques provide the means to understand
our world yet again. The melding of the Intelligent Devices the massive quantities of data that are
global industrial system that was made Providing digital instrumentation to generated by intelligent devices.
possible as a result of the Industrial industrial machines is the first step in the
Revolution, with the open computing and Industrial Internet Revolution. Several factors Together, these forces are changing the cost
communication systems developed as part have aligned to make the widespread and value of collecting, analyzing and acting
of the Internet Revolution, opens up new instrumentation of industrial machines on data that has existed in theory but has
frontiers to accelerate productivity, reduce not only possible, but economically viable. not been fully harnessed in practice.
inefficiency and waste, and enhance the Widespread instrumentation is a necessary
Making sense of the rivers of data that can
human work experience. condition for the rise of the Industrial
be generated by intelligent devices is one
Internet. Several forces are at work to
Indeed, the Industrial Internet Revolution is of the key components of the Industrial
make machines and collections of
already underway. Companies have been Internet. As illustrated in Figure 3, the
machines more intelligent.
applying Internet-based technologies to Industrial Internet can be thought of in
• Costs of deployment: Instrumentation terms of the flow and interaction of data,
industrial applications as they have become costs have declined dramatically, making
available over the last decade. However, hardware, software and intelligence. Data
it possible to equip and monitor industrial is harvested from intelligent devices and
we currently stand far below the possibility machines in a more economical manner
frontier: the full potential of Internet-based networks. The data is stored, analyzed and
than in the past. visualized using big data and analytics tools.
digital technology has yet to be fully realized
across the global industry system. Intelligent • Computing power: Continued The resultant “intelligent information” can
devices, intelligent systems, and intelligent improvements in microprocessor chips then be acted upon by decision makers, in
decisioning represent the primary ways have reached a point that now makes it real-time if necessary, or as part of broader
in which the physical world of machines, possible to augment physical machines industrial assets optimization or strategic
facilities, fleets and networks can more with digital intelligence. decision processes across widely diverse
industrial systems.
Figure 3. Applications of the Industrial Internet Ne imiz
op
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lligeoning
t
LD
tw at
or ion
R Inte cisi
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L WO de
B leet tion
ITA
op
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F iza
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F
I T Fa miza
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op
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ellig ices
y
Int dev
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As iza
tim
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Net
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Fle
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9

10. Figure 4. Industrial Internet Data Loop
Instrumented
Intelligence flows Industrial Machine
back into machines
Extraction and storage
Physical and of proprietary machine
Human Networks data stream
Data
terabytes
store now query
time
mobile databases tools
compressionbig
Storage
data
database
Twitter
support
SQL big data new storage
processing
Industrial
information
analyses
analysis
Data Systems
example column-store
SECURE, CLOUD-
Data sharing with BASED NETWORK
the right people
and machines
Machine-based
0 1 10 1 0001101000100101101010 1 10 0
0 0 10 1 0001100101101101000010 1 10 1 algorithms and
1 0 10 1 1001000101101000110100 1 10 1
0 1 10 0 1001011010001101000010 1 10 0 data analysis
1 0 11 0 1010000100110110010100 0 11 0
1 0 10 0 1001011000011010001101 0 10 0
0 1 10 1 0010100101000100110010 1 10 1
0 1 10 0 1010000100110110010100 1 10 0
0 0 11 0 1001011010001101000010 0 11 0
1 0 10 0 1001011000011010001101 0 10 0
0 1 10 1 0010100101000100110010 1 10 1
1 0 10 0 1001011010001101000011 0 10 0
Remote and 0 1 10 1 1001001010001101000010 1 10 1
1 1 10 1 1001000101101000110100 1 10 1
Centralized Data 0 1 10 1 0001100101101101000010 1 10 1
1 1 10 1 0001101000100101101010 1 10 1
Visualization
Big Data Analytics
Intelligent information can also be shared transferred to remote locations for analysis predictive analytics can be combined to
across machines, networks, individuals or and storage. Determining the degree of local avoid unplanned outages and minimize
groups to facilitate intelligent collaboration data residency is one of the keys to ensuring maintenance costs.
and better decision making. This enables a the security of the Industrial Internet and
broader group of stakeholders to engage the many and diverse companies who will All of these benefits come from machine
in asset maintenance, management and benefit from being a part of it. The important instrumentation using existing information
optimization. It also ensures that local and point here is that new innovations are technologies and doing so in ways that
remote individuals that have machine- permitting sensitive data generated by an enable people to do their jobs more
specific expertise are brought into the fold instrumented machine to remain on-board, effectively. This is what makes the wide-
at the right time. Intelligent information where it belongs. Other data streams will spread deployment of intelligent devices
can also be fed back to the originating be transferred remotely so that they can be so potentially powerful. In an era when
machine. This not only includes data that visualized, analyzed, augmented and acted it is increasingly challenging to squeeze
was produced by the originating machine, upon, as appropriate, by people at work or more productivity from high-performance
but also external data that can enhance on the move. machines such as highly-engineered
the operation or maintenance of machines, aircraft engines, the broad deployment
fleets and larger systems. This data feedback Over time, these data flows provide a history of intelligent devices holds the potential
loop enables the machine to “learn” from of operations and performance that enables to unlock additional performance and
its history and behave more intelligently operators to better understand the condition operational efficiencies.
through on-board control systems. of the critical components of the plant.
Operators can understand how many hours
Each instrumented device will produce large a particular component has been operating
quantities of data that can be transferred and under what conditions. Analytic tools
via the Industrial Internet network to remote can then compare this information to the
machines and users. An important part of operating histories of similar components
the implementation of the Industrial Internet in other plants to provide reliable estimates
will involve determining which data remains of the likelihood and timing of component
resident on devices and which data is failure. In this manner, operating data and
10

11. Intelligent Systems the event of major storms, earthquakes or
The potential benefits of intelligent systems other natural hazards, a network of smart
are vast. Intelligent systems include a meters, sensors, and other intelligent devices
variety of traditional networked systems, and systems can be used to quickly detect
but the definition is broader to encompass and isolate the biggest problems so that
the combination of widespread machine they do not cascade and cause a blackout.
instrumentation with software as deployed Geographic and operational information
across fleets and networks. As an increasing can be combined to support utility
number of machines and devices join the recovery efforts.
Industrial Internet, the synergistic effects of
Learning: Network learning effects are
widespread machine instrumentation can
another benefit of machine interconnection
be realized across fleets and networks.
with a system. The operational experiences
Intelligent systems come in a number of of each machine can be aggregated into a
different forms: single information system that accelerates
learning across the machine portfolio in
Network Optimization: The operation a way that is not possible with a single
of interconnected machines within a machine. For example, data collected from
Each machine can system can be coordinated to achieve airplanes coupled with information about
operational efficiencies at the network location and flight history can provide
be aggregated into level. For example, in health care, assets a wealth of information about airplane
performance in a variety of environments.
a single information can be linked to help doctors and nurses
route patients to the correct device more The insights derived from this data are
system that accelerates quickly. Information can then be seamlessly
transmitted to care providers and patients
actionable and can be used to make the
entire system smarter, thereby driving
learning across the resulting in shorter wait times, higher a continuous process of knowledge
equipment utilization, and better quality accumulation and insight implementation.
machine portfolio. care. Intelligent systems are also well suited
for route optimization within transportation Building out intelligent systems harnesses
networks. Interconnected vehicles will the benefits of widely deploying intelligent
know their own location and destination, devices. Once an increasing number of
but also can be alerted to the location and machines are connected within a system,
destination of other vehicles in the system— the result is a continuously expanding,
allowing optimization of routing to find the self-learning system that grows smarter
most efficient system-level solution. over time.
Maintenance Optimization: Optimal,
low-cost, machine maintenance across
fleets can also be facilitated by intelligent
systems. An aggregate view across
machines, components and individual
parts provides a line of sight on the status
of these devices and enables the optimal
number of parts to be delivered at the
right time to the correct location. This
minimizes parts inventory requirements and
maintenance costs, and provides higher
levels of machine reliability. Intelligent
system maintenance optimization can
be combined with network learning and
predictive analytics to allow engineers
to implement preventive maintenance
programs that have the potential to
lift machine reliability rates to
unprecedented levels.
System Recovery: Establishing broad
system-wide intelligence can also assist
in more rapidly and efficiently restoring
systems after major shocks. For example, in
11

12. Intelligent DECISIONING and analyze high frequency real-time data
The full power of the Industrial Internet will brings a new level of insight on system
be realized with a third element—Intelligent operations. Machine-based analytics offer
Decisioning. Intelligent Decisioning occurs yet another dimension to the analytic
when enough information has been process. Using a combination of physics-
gathered from intelligent devices and based methodologies, deep sector-specific
systems to facilitate data-driven learning, domain expertise, increased automation of
which in turn enables a subset of machine information flows, and predictive techniques,
and network-level operational functions advanced analytics can be joined with the
to be transferred from operators to secure existing suite of “big data” tools. The result
digital systems. This element of the Industrial is the Industrial Internet encompasses
Internet is essential to grapple with the traditional approaches with newer hybrid
increasing complexity of interconnected approaches that can leverage the power
machines, facilities, fleets and networks. of both historic and real-time data with
industry-specific advanced analytics.
Consider fully instrumented networks of The full potential of the Industrial Internet
facilities or fleets across wide geographic will be felt when the three primary digital
locations. Operators need to quickly make elements—intelligent devices, intelligent
thousands of decisions to maintain optimal systems and intelligent decision-making—
system performance. The challenges of this fully merge with physical machines, facilities,
complexity can be overcome by enabling fleets and networks. When this occurs, the
the system to perform select operations benefits of enhanced productivity, lower
with human consent. The burden of costs and reduced waste will propagate
complexity is transferred to the digital through the entire industrial economy.
system. For example, within an intelligent
system, signals to increase the output of
a dispatchable power plant will not have
to be sent to the operators of individual
plants. Instead, intelligent automation will
be used to directly co-dispatch flexible
plants in response to variable resources like
wind and solar power, changes in electricity
demand, and the availability of other plants.
These capabilities will facilitate the ability
of people and organizations to do their jobs
more effectively.
Intelligent Decisioning is the long-term
vision of the Industrial Internet. It is the
culmination of the knowledge gathered as
the elements of the Industrial Internet are
assembled device-by-device and system-
by-system. It is a bold vision that, if realized,
can unlock productivity gains and reduce
operating costs on a scale comparable to
the Industrial and Internet Revolutions.
Integrating the elements
As the intelligent pieces are brought
together, the Industrial Internet brings
the power of “big data” together with
machine-based analytics. Traditional
statistical approaches use historical data
gathering techniques where often there
is more separation between the data, the
analysis, and decision making. As system
monitoring has advanced and the cost
of information technology has fallen, the
ability to work with real-time data has been
expanding. Greater capability to manage
12

13. IV. How Big is Economic Perspective
Traditional economic definitions of global
while in developing economies industrial
sectors represent about 37 percent of
the Opportunity? industry include manufacturing, natural
resource extraction, construction, and
GDP output. Within this industrial total,
manufacturing activities represent 15
Three Perspectives utilities sectors.7 Based on these categories, percent and 20 percent of advanced and
developing country economic output,
in 2011, global industry represented
about 30 percent or $21 trillion of the $70 respectively. Thus, by traditional economic
To appreciate the scale of the opportunity
trillion dollar world economy.8 Of that, accounting measures, industrial activity
of the Industrial Internet it is useful to first
manufacturing of goods represented 17 represents roughly one-third of all economic
scale the global industrial system. How big is
percent of output, while other industries activity, with country-by-country variation.
this system? The simple answer is very big.
However, there is no single simple measure. including resource extraction and
While one-third of the global economy is
We therefore suggest three different construction contributed about 13 percent
extremely large, it does not capture the full
perspectives: economic share, energy of global output. At a regional level, there
expanse of the Industrial Internet’s potential.
requirements, and physical assets in terms is considerable variation depending on
The Industrial Internet will encompass a
of machines, facilities, fleets and networks. the economic structure and resource
broader array of sectors than captured
While not exhaustive, these measures when endowment of any particular country.
by conventional economic categories. For
taken together provide a useful perspective
Within the developed economies, industry example, it will also engage large swaths of
on the vast potential scale and scope of the
represents roughly 24 percent of output, the transport sector including:
Industrial Internet.
Figure 5. Industrial Internet Potential GDP Share
Global GDP ~$70 Trillion
Developing Advanced
Economies Economies
$29 Trillion $41 Trillion
Non-Industrial Industrial Industrial Non-Industrial
Economy Economy Economy Economy
$18.1 Trillion $10.8 Trillion $9.7 Trillion $31 Trillion
Other Other
$14.3 Trillion $23.1 Trillion
7 Trillion 7 Trillion
6 Trillion 6 Trillion
5 Trillion 5 Trillion
4 Trillion 4 Trillion
3 Trillion 3 Trillion
2 Trillion 2 Trillion
1 Trillion 1 Trillion
Transportation Healthcare Other Industrial Manufacturing Manufacturing Other Industrial Transportation Healthcare
$2.2 Trillion $1.7 Trillion $5.3 Trillion $5.5 Trillion $6.1 Trillion $3.6 Trillion $2.6 Trillion $5.3 Trillion
Industrial Internet opportunity ( $32.3 Trillion ) 46% share of global economy today
Source: World Bank, 2011 and General Electric
13

14. industrial transport fleets and large-scale Industrial Internet will be felt beyond those
logistical operations such as aviation, sectors. For example, the positive impact
rail, and marine transport.9 In 2011, the on the health sector will result in better
global transportation services sector health outcomes, which in turn will result
including land, air, marine, pipelines, in fewer workdays lost because of sickness
telecommunications and supporting logistics across the rest of the economy. Similarly,
services, represented about 7 percent of improvements in transportation and logistics
global economic activity. Transportation will benefit all economic activities which rely
fleets are critical links in the supply on shipping of goods and on the reliability
and distribution chains associated with and efficiency of supply chains.
manufacturing and energy production. Here
the Industrial Internet helps by optimizing Energy Consumption Perspective
timing and flow of goods within heavy
industries. In commercial transport services
One of the key benefits of the integration of
smarter technologies and robust networks
About 46 percent of
like passenger aircraft, there are further
opportunities for optimizing operations and
is the ability to create energy saving the global economy or
efficiencies and reduce costs. Constraints
assets while improving service and safety. on the energy system are intensifying. $32.3 trillion in global
Scarcity of resources, need for better
Other commercial and government environmental sustainability, and lack of output can benefit from
services sectors will also benefit. For
example, in health care, finding the critical
infrastructure are issues across the world.
It might even be argued that the rise of
the Industrial Internet.
commonalities and analogs in high-volume the Industrial Internet is a direct response
secure data can literally be a matter of life to increasing resource constraints and
or death. The health care industry, including scarcity. Therefore, another perspective on
public and private spending, is estimated to the scale of the Industrial Internet comes
comprise 10 percent of the global economy from understanding the energy footprint
or $7.1 trillion in 2011—a giant sector of the associated with the global industrial system.
global economy by itself. Here the focus of Huge volumes of energy resources are
the Industrial Internet shifts from optimizing required to create the goods and services
the flow of goods to the flow of information the world needs. If energy production and
and workflows of individuals—getting the conversion is considered in addition to
right information, to the right person, at the manufacturing and transportation sectors,
right time. the scope of the Industrial Internet benefits
encompasses more than half of the world’s
When traditional industry is combined with energy consumption.
the transportation and health services
sectors, about 46 percent of the global The energy sector involves the spectrum of
economy or $32.3 trillion in global output activities required to create finished energy
can benefit from the Industrial Internet. As for consumption including:
the global economy grows and industry
• Extracting fuels (e.g. oil, gas, coal,
grows, this number will grow as well. By
uranium) or harnessing water, wind and
2025, we estimate that the share of the
solar energies
industrial sector (defined here broadly) will
grow to approximately 50 percent of the • Refining and processing primary fuels
global economy or $82 trillion of future into finished products for delivery (e.g.
global output in nominal dollars.10 gasoline, LNG)
• Converting those fuels into electricity
The technologies of the Industrial Internet
will not be instantly applied to the entire
asset base corresponding to the 50 percent
of the world economy described above.
Introducing them will require investment,
and the pace of the investment may in turn
depend on the speed at which the enabling
infrastructures are developed. To this extent,
what we have described represents an upper
limit, the available envelope. On the other
hand, it also limits this envelope to those
sectors where the Industrial Internet can
find direct application. But the benefits of the
14

15. In 2011, the world produced more than Shifting to the consumption side of the energy The transportation sector is another large
13.0 billion metric tons of energy, when balance, the world’s primary energy sources consumer of energy comprising 27 percent
converted to an oil equivalent basis (Btoe) were converted into 9.5 Btoe of useful energy of global energy demand—primarily oil
for comparative purposes.11 To help put this products including 1.9 Btoe of electricity and products. Within the transportation sector,
in perspective, all the cars and light vehicles 7.1 Btoe of other finished fuels. Industrial approximately half (48 percent) of the fuel
in the United States, which now total about end-users consumed 36 percent in the form consumed is in heavy fleets including trucks,
240 million, consumed less than one half of of electricity, diesel fuel, metallurgical coal, buses, aircraft, marine vessels, and rail
one Btoe. Of this 13.0 Btoe of global primary natural gas, and chemical feedstocks. This locomotives. The other half of transport
energy production, 4.9 Btoe was converted to roughly aligns with the manufacturing sector sector energy (52 percent) is used in light
electricity at a conversion efficiency of about described in the economic perspective above. duty vehicles. Using information technology
40 percent and the other 8.1 Btoe was refined, Within the industrial sector, the heaviest and networked devices and systems to
processed for impurities, washed (in the energy consumers are the steel and metals optimize transport appears to be one of
case of coal) or converted in preparation for industries and the petrochemical industry. the most exciting opportunities from the
transport and delivery to energy consumers. Together, these heavy industries represent Industrial Internet. Assuming most of
It’s important to recognize there are immense about 50 percent of the industrial energy the large fleets and a portion of the light
costs associated with energy production. consumed. Recent studies indicated that duty vehicle fleets can benefit, perhaps
To maintain and grow energy supply, the if best practice technologies are deployed, 14 percent of global transportation fuel
global energy industry including coal, gas, heavy industry energy consumption could be demand can be impacted by Industrial
oil, and power, on average, will require about reduced by 15 to 20 percent.12 The continued Internet technologies.
$1.9 trillion dollars (about 3 percent of global and expanded Industrial Internet deployment
GDP) in new capital spending each year. The can support this effort through process There are clearly many dimensions and
large volume and cost creates tremendous integration, life-cycle optimization, and more challenges in achieving real changes in
scope for continued deployment of Industrial efficient utilization and maintenance of global energy consumption. Each system
Internet technologies. motors and rotating equipment. and sub-system needs to be evaluated
Figure 6: 2011 Global Energy Flows
Other
Conversion Losses
Energy
Light-Duty
Production
Transport
13 BTOE 14% Buildings
32% Other
10%
Oil 31%
Coal 28%
Energy
Consumption
Gas 22%
9.5 BTOE
Renewables 11%
Nuclear 5%
Hydro 3%
Heavy-Duty
Electricity Industry Transport
Electricity
28% 16%
Fuel
Input Electricity
Conversion Losses
Industrial Internet can impact 100% Industrial Internet can impact 44%
of energy production of global energy consumption
Source: GE, Global Strategy & Planning Estimates, 2011
15

16. in terms of how it performs within the machines and critical systems. There are Table 2 provides an illustrative list of major
system and how it interacts with the larger now millions of machines across the world, pieces of rotating machinery in key industry
energy networks. Advances over the last ranging from simple electric motors to categories. Within this list, there are currently
two decades in process management and highly advanced computed cosmography over 3 million types of major rotating
automation appear to have been largely (CT scanners) used in the delivery of health equipment. These numbers are based on a
successful. While some parts of the energy care. All of these pieces of equipment are basic review of major system processes in
system are being optimized, new efforts associated with information (temperature, these machines and plants. The high degree
are underway. All of the many machines, pressure, vibration and other key indicators) of customization within the industrial system
facilities, fleets, and networks involved in and are valuable to understanding makes comparisons difficult. However, a
energy production and conversion have performance of the unit itself and in relation general assessment can be made based on
inefficiencies that can be improved through to other machines and systems. the typical sets of rotating equipment and
the growth of the Industrial Internet. key devices that are targets for monitoring
One area of particular interest concerns and control. The result is an estimate of
Physical Asset Perspective… critical rotating machinery. While it is “things that spin” in parts of the industrial
Things That Spin probably impossible to know precisely system. All of these assets are subject to
how many machines and devices, fleets, temperature, pressure, vibration and other
A third perspective on opportunities to
and networks exist within the world’s ever key metrics, which are already being, or can
expand the Industrial Internet is to look at
expanding industrial system, it is possible be, monitored, modeled, and manipulated
specific physical assets involved in various
to look at some specific segments to get a remotely to provide safety, enhanced
parts of the industrial system. The industrial
feel for the scale of the industrial system. productivity, and operational savings.
system is comprised of huge numbers of
Table 2. Things that Spin: Illustrative List of Rotating Machines # of Global “Big”
Assets & things
Sector Plants that spin
Transportation Rotating Machinery
Rail: Diesel Electric Engines Wheel Motors, Engine, Drives, Alternators 120,000 2,160,000
Aircraft: Commercial Engines Compressors, Turbines, Turbofans 43,000 129,000
Marine: Bulk Carriers Steam Turbines, Reciprocating Engines, Pumps, Generators 9,400 84,600
Oil and Gas Rotating Machinery
Big Energy Processing Plants (1) Compressors, Turbines, Pumps, Generators, Fans, Blowers, Motors 990 36,900
Midstream Systems (2) Engines, Turbines, Compressors, Turbo Expanders, Pumps, Blowers 16,300 63,000
Drilling Equipment: Drillships, Land Rigs etc. Engines, Generators, Electric Motors, Drilling Works, Propulsion Drives 4,100 29,200
Power Plants Rotating Machinery
Thermal Turbines: Steam, CCGT, etc. Turbines, Generators 17,500 74,000
Other Plants: Hydro, Wind, Engines, etc. (3) Turbines, Generators, Reciprocating Engines 45,000 190,000
Industrial Facilities Rotating Machinery
Steel Mills Blast and Basic Oxygen Furnace Systems, Steam Turbines, Handling Systems 1,600 47,000
Pulp and Paper Mills Debarkers, Radial Chippers, Steam Turbines, Fourdrinier Machines, Rollers 3,900 176,000
Cement Plants Rotary Kilns, Conveyors, Drive Motors, Ball Mills 2,000 30,000
Sugar Plants Cane Handling Systems, Rotary Vacuums, Centrifuges, Cystalizers, Evaporators 650 23,000
Ethanol Plants Grain Handling Systems, Conveyors, Evaporators, Reboilers, Dryer Fans, Motors 450 16,000
Ammonia and Methanol Plants Steam Turbines, Reformer and Distillation Systems, Compressors, Blowers 1,300 45,000
Medical Machines Rotating Machinery
CT Scanners Spinning X-Ray Tube Rotors, Spinning Gantries 52,000 104,000
Notes: Not exhaustive. (1) includes LNG processing trains, Refineries, and Ethylene steam crackers. (2) includes Compressor and pumping
stations, LNG regasification terminals, Large Crude carriers, gas processing plants. (3) Only counting engines in large scale power generation
greater than 30 MW Total 3,207,700
Sources: Multiple aggregated sources including Platts UDI, IHS-CERA, Oil and Gas Journal, Clarkson Research, GE Aviation & Transportation,
InMedica, industrial info, RISI, US Dept. of Energy, GE Strategy and Analytics estimates of large rotating systems
16

17. Commercial Jet Aircraft rotating machinery in the global fleet of The most common combined cycle
The number of rotating parts and the commercial engines. configuration today is a 2x1, which uses
potential for instrumentation in the two gas turbines and one steam turbine.
Combined Cycle Power Plants In this example, there are 6 major rotating
commercial jet engine fleet is significant.
According to Jet Information Services, there The opportunities for Industrial Internet components: 2 gas turbines, 2 gas turbine
are approximately 21,500 commercial jet instrumentation are just as vast in the global generators, one steam turbine and one
aircraft and 43,000 jet engines in service fleet of power plants. There are 62,500 power steam turbine generator. Beyond the big
around the world in 2011. Commercial jets plants operating around the world today critical systems, we estimate that there
are most commonly powered by a twin jet with a capacity of 30 megawatts or greater. are another 99 rotating components in the
engine configuration. These aircraft take The total global capacity of power plants is balance of plant—from feed water pumps to
approximately 3 departures per day, for a approximately 5,200 gigawatts (GW). These air compressors. In all, there are 105 rotating
total of 23 million departures annually.13 plants are displayed in Figure 7. Consider components in a 2x1 combined cycle power
Each jet engine contains many moving parts; only the large amount of instrumentable plant that are instrumentable.
however, there are three major pieces of rotating parts in just one small slice of this
fleet: combined cycle power plants, which Consider the implications for the global
rotating equipment: a turbo fan, compressor,
represent just 2.5 percent of global power combined cycle fleet. If instrumentation
and turbine. Each of these components will
plants, or 1,768 plants. These plants have a was applied to every component in all 1,768
be instrumented and monitored separately.
global installed capacity of 564 GW.15 plants, this would represent about 10,600
In total, there are approximately 129,000
major system pieces and 175,000 smaller
major pieces of spinning equipment
Combined cycle gas turbines use both gas rotating parts available for instrumentation.
operating in the commercial fleet
turbines and steam turbines in tandem, Looking forward over the next 15 years,
today. Beyond the commercial jet fleets,
converting the same source of heat—natural another 2,000 combined cycle plants
instrumentation opportunities exist in
gas—into mechanical and then electric amounting to 638 GW of capacity are
the military and non-commercial general
energy. By combining gas and steam likely to be added to the global industrial
aviation fleets, which are over 10 times as
turbines, combined cycle gas turbines use system.16 This will add another 12,000 units
large as the commercial jet aircraft fleet.14
two thermodynamic cycles (gas turbine of large rotating equipment and at least
The bottom line is that the opportunities for
Brayton cycle and a steam turbine another 200,000 pieces of smaller rotating
instrumentation of jet airline fleets are vast
Rankine cycle) to improve efficiency and equipment to complete these plants. If other
and increasing daily. GE Aviation estimates
reduce operating costs. A combined cycle types of power plants are considered, the
that to meet the growing needs of air travel
gas turbine power plant typically uses scope for further expansion of Industrial
another 32,000 engines might to be added
multiple sets of gas turbine-steam Internet technologies is clearly significant.
to the global fleet over the next 15 years.
This represents another 100,000 pieces of turbine combinations.
Figure 7. Global Power Plant Fleet by Technology
Fuel Type
Biomass
Geothermal
Solar
Wind
Natural Gas
Oil
Nuclear
Hydro
Coal
Other
Source: Power plant data source Platts UDI Database, June 2012
Note: Circle size represents installed capacity (MW).
17