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Industrial Internet: Pushing the Boundaries of Minds and Machines


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Industrial Internet: Pushing the Boundaries of Minds and Machines

  1. 1. Industrial Internet:Pushing the Boundariesof Minds and MachinesPeter C. Evans and Marco Annunziata November 26, 2012
  2. 2. Table of ContentsI. Executive Summary 3-4II. Innovation and Productivity: What’s Next? 5-6III. Waves of Innovation and Change 7-12The First Wave: The Industrial RevolutionThe Second Wave: The Internet RevolutionThe Third Wave: The Industrial InternetIV. How Big is the Opportunity? Three Perspectives 13-18Economic PerspectiveEnergy Consumption PerspectivePhysical Asset Perspective… Things That SpinV. The Benefits of the Industrial Internet 19-30Industrial Sector Benefits: The Power of One PercentCommercial AviationRail TransportationPower ProductionOil & Gas Development and DeliveryHealthcareEconomy-wide Gains: The Next Productivity BoomThe Great FizzlingThe Internet RevolutionReturn of the SkepticsIndustrial Internet: Here Comes the Next WaveHow Much of a Difference Would it Make?Industrial Internet and Advanced ManufacturingImpact on the Global EconomyRole of Business Practices and the Business EnvironmentVI. Enablers, Catalysts and Conditions 31-33InnovationInfrastructureCyber Security ManagementTalent DevelopmentVII. Conclusions 34VIII. Endnotes and Acknowledgements 35-37
  3. 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 anotherThe world is on the threshold of a new era of fore by the Internet Revolution. dimension to the analytic process. Theinnovation 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, andthe convergence of the global industrial of the Industrial Internet: predictive capabilities can join with thesystem with the power of advancedcomputing, analytics, low-cost sensing Intelligent machines: New ways of existing suite of “big data” tools. The resultand new levels of connectivity permitted connecting the word’s myriad of machines, is the Industrial Internet encompassesby the Internet. The deeper meshing of the facilities, fleets and networks with advanced traditional approaches with newer hybriddigital world with the world of machines sensors, controls and software applications. approaches that can leverage the powerholds the potential to bring about profound of both historic and real-time data with Advanced Analytics: Harnessing thetransformation to global industry, and in industry specific advanced analytics. power of physics-based analytics, predictiveturn 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, electricalinnovations promise to bring greater speed engineering and other key disciplines The Industrial Internet starts withand efficiency to industries as diverse required to understand how machines and embedding sensors and other advancedas aviation, rail transportation, power larger systems operate. instrumentation in and array of machinesgeneration, 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 industrialstronger 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 intelligentthe US or in China, in a megacity in Africa or inevitably the efficiency of the systems and design, operations, maintenance as well asin a rural area in Kazakhstan. networks that link them. Even the data itself higher quality service and safety. can become “intelligent,” instantly knowingWith better health outcomes at lower cost, which users it needs to reach. Connecting and combining these elementssubstantial savings in fuel and energy, offers new opportunities across firmsand better performing and longer-lived In the aviation industry alone, the potential and economies. For example, traditionalphysical assets, the Industrial Internet will is tremendous. There are approximately statistical approaches use historical datadeliver new efficiency gains, accelerating 20,000 commercial aircraft operating with gathering techniques where often thereproductivity growth the way that the 43,000 commercial jet engines in service. is more separation between the data, theIndustrial Revolution and the Internet Each jet engine, in turn, contains three analysis, and decision making. As systemRevolution did. And increased productivity major pieces of rotating equipment which monitoring has advanced and the cost ofmeans faster improvement in income and could be instrumented and monitored information technology has fallen, the abilityliving standards. In the US, if the Industrial separately. Imagine the efficiencies in to work with larger and larger volumes ofInternet could boost annual productivity engine maintenance, fuel consumption, real-time data has been expanding. Highgrowth by 1-1.5 percentage points, bringing crew allocation, and scheduling whenit back to its Internet Revolution peaks,then over the next twenty years through Figure 1. Key Elements of the Industrial Internetthe power of compounding it could raiseaverage incomes by an impressive 25-40percent of today’s level over and above thecurrent trend. And as innovation spreads 1 2 3globally, if the rest of the world couldsecure half of the US productivity gains, theIndustrial Internet could add a sizable $10-15 trillion to global GDP – the size of today’s Intelligent Advanced People atU.S. economy – over the same horizon. In Machines Analytics Worktoday’s challenging economic environment, Connect the Combines the Connecting people atsecuring 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 supportindividual and economy-wide level. and networks predictive more intelligent with advanced algorithms, design, operations,The Next Wave sensors, controls automation and maintenance andHow will this be possible? The Industrial and software deep domain higher serviceInternet brings together the advances applications expertise quality and safetyof two transformative revolutions: themyriad machines, facilities, fleets andnetworks that arose from the Industrial 3
  4. 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 effectiveNote: Illustrative examples based on potential one percent savings applied across specific global industry sectors. and beneficial they can be relative to currentSource: 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 costsoperators. That is just today. In the next 15 savings of $30 billion over 15 years. Likewise, of deployment will be providing a positiveyears, 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 yieldservice 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 vulnerabilitiesSimilar instrumentation opportunities exist benefit from the Industrial Internet, through and protect sensitive information andin 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 poolfacilities and other critical assets. Overall, more than $63 billion in health care savings. including new cross-cutting roles thatthere are over 3 million major “things that Freight moved across the world rail networks, combine mechanical and industrialspin” in today’s global industrial asset if improved by one percent could yield engineering into new “digital-mechanicalbase—and those are just a subset of the another gain of $27 billion in fuel savings. engineers,” data scientists to create thedevices where the Industrial Internet can Finally, a one percent improvement in capital analytics platforms and algorithms, andtake hold. utilization upstream oil and gas exploration software and cyber security specialists. and development could total $90 billion in Endowing workers with these skills willPower of just one percent avoided or deferred capital expenditures. help ensure that, once again, innovationThe benefits from this marriage of These are but a few examples of what can be will result in more jobs as well asmachines and analytics are multiple and potentially achieved. higher productivity.significant. We estimate that the technicalinnovations of the Industrial Internet Broad Global Benefits It will take resources and effort, butcould find direct application in sectors As an early mover and source of key the Industrial Internet can transformaccounting for more than $32.3 trillion in innovation, the US is at the forefront of our industries and lives— pushing theeconomic 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 everIndustrial Internet will expand as well. By more rapid technology transfer, the2025 it could be applicable to $82 trillion benefits will be worldwide. In fact, withof output or approximately one half of the emerging markets investing heavily inglobal economy. infrastructure, early and rapid adoption of Industrial Internet technologies couldA conservative look at the benefit to specific act as a powerful multiplier. There may beindustries is instructive. If the Industrial opportunities to avoid the same phases ofInternet achieves just a one percent development that developed economiesefficiency improvement then the results are went through. For example, the use ofsubstantial. For example, in the commercial cables and wires may be avoided by goingaviation industry alone, a one percent straight to wireless technology. Or the 4
  5. 5. II. Innovation decisioning. We call this convergence the Industrial Internet. We highlight evidenceand Productivity: which suggests that a wide range of new innovations can yield significant benefitsWhat’s Next? to business and to the global economy. We believe the skeptics have been too quick toFor much of human history, productivity draw conclusions that close the book ongrowth was barely perceptible, and living productivity gains. Much like the Industrialstandards improved extremely slowly. Revolution, the Internet Revolution isThen approximately 200 years ago, a unfolding in dynamic ways—and we are nowstep change in innovation occurred: the at a turning point.Industrial Revolution, in which musclepower, from both humans and animals, A number of forces are at work to explainwas replaced by mechanical power. The why the Industrial Internet is happeningIndustrial Revolution unfolded in waves, today. The capabilities of machines are Processing gainsbringing us the steam engine, the internal not being fully realized. The inefficienciescombustion engine, and then the telegraph, that persist are now much greater at the continue unabated andtelephone and electricity. Productivity andeconomic growth accelerated sharply. Per system level, rather than at the individual physical machine level. Complexity has have reached the pointcapita income levels in western economies outstripped the ability of human operators to identify and reduce these inefficiencies. where it is possiblehad taken eight hundred years to double bythe early 1800’s; in the following 150 years While these factors are making it harder to to augment physicalthey rose thirteen-fold. But in the 1970’s, achieve improvements through traditionalproductivity 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 nowfollowed more recently with the rise of support widespread instrumentation,computing and the global internet monitoring, and analytics. The cost ofwhich rested on breakthroughs in instrumentation has declined dramatically,information storage, computing and making it possible to equip and monitorcommunication technology. Its impact on industrial machines on a widening scale.productivity was even stronger, but seemed Processing gains continue unabated andto lose momentum after just ten years, have reached the point where it is possiblearound 2005. to augment physical machines with digital intelligence. Remote data storage, big dataSome now argue that this is where the story sets and more advanced analytic tools thatends. They acknowledge that businesses can process massive amounts of informationand economies have benefited significantly are maturing and becoming more widelyfrom past waves of innovation but are available. Together these changes arepessimistic about the potential for future creating exciting new opportunities whengrowth in productivity. They argue that applied to machines, fleets and networks.the transformations brought about bythe Industrial Revolution were of a one- The rapid decline in the cost ofoff nature, and their gains have already instrumentation is matched by the impactbeen realized; that the Internet Revolution of cloud computing, which allows us tohas already played out, its innovations gather and analyze much larger amountsbeing nowhere near as disruptive and of data, and at lower cost, than was everproductivity-enhancing as those of the possible. This creates a cost-deflation trendIndustrial Revolution.We challenge this view. In this paper weexamine the potential for a new waveof productivity gains. Specifically, wepoint to how the fruits of the IndustrialRevolution and the machines, fleets andphysical networks that it brought forthare now converging with the more recentfruits of the Internet Revolution: intelligentdevices, intelligent networks and intelligent 5
  6. 6. comparable to that which spurred rapid The Industrial Internet will help make eachadoption of information and communication of these levels of the industrial systemtechnology (ICT) equipment in the second perform better. It will enable enhancedhalf of the 1990’s—and which will this asset reliability by optimizing inspection,time accelerate the development of the maintenance and repair processes. It willIndustrial Internet. The mobile revolution improve operational efficiency at the level ofwill also accelerate this deflation trend, fleets as well as larger networks.making it more affordable to efficiently shareinformation and leading to decentralized The conditions are ripe and early evidenceoptimization and personalized optimization. suggests that this new wave of innovationRemote monitoring and control of industrial is already upon us. In the following pagesfacilities, distributed power, and personalized we present a framework for thinking aboutand portable medicine are just some of the how the Industrial Internet will unfold, andmost powerful examples. examples of benefits it holds for businesses and more broadly for economies aroundTo fully appreciate the potential, it is the world.important to consider how large the globalindustrial system has become. There arenow millions of machines across the world,ranging from simple electric motors tohighly advanced computed tomography(CT) scanners used in the delivery of healthcare. There are tens of thousands of fleets,ranging from power plants that produceelectricity to the aircraft which move peopleand cargo around the world. There arethousands of complex networks rangingfrom power grids to railroad systems, whichtie machines and fleets together. 6
  7. 7. III. Waves period, innovations in technology applied to manufacturing, energy production,of Innovation transportation and agriculture ushered in a period of economic growth andand Change transformation. The first stage started in the mid-eighteenth century with the commercialization of the steam engine. The Industrial Revolution started inOver the last 200 years, the world has Northern Europe, which at the time wasexperienced several waves of innovation. the most productive economy, and spreadSuccessful companies learned to navigate to the United States, where railways playedthese waves and adapt to the changing a crucial role in accelerating economicenvironment. Today we are at the cusp of development.1 The second surge cameanother 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 combustionwith the world of industrial machines. To engine, electricity and a host of otherfully understand what is taking place today, useful is useful to review how we got here andhow past innovations have set the stage for The Industrial Revolution changed thethe next wave we are calling the “Industrial way we lived: it brought about a profoundInternet.” transformation in transportation (from the horse-carriage and the sailboat toThe First Wave: The Industrial Revolution the railways, steamboats and trucks); inThe Industrial Revolution had a profound communication (telephone and telegraph);impact on society, the economy and in urban centers (electricity, runningculture of the world. It was a long process water, sanitation and medicine). Itof innovation that spanned a period of 150 dramatically transformed livingyears 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 scopeInnovation Time 7
  8. 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. Inlarge industrial enterprise spanning new networks and what we now call the World eight years, Facebook enabled more thanindustries 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, andof scale and corresponding reduction in of the Internet, the open networks were more than 62 million songs were played 22costs as machines and fleets got larger heterogeneous. A key feature was that billion times.6and production volumes increased. It standards and protocols were explicitlyharnessed the efficiencies of hierarchical designed to permit incompatible The qualities of the Internet Revolutionstructures, with centralization of control. The machines in diverse locations owned were very different from the Industrialglobal capital stock of dedicated plant and by different groups to connect and Revolution. The Internet, computing andequipment grew dramatically. Innovation exchange information. the ability to transmit and receive largebegan to be thought of in a systematic way, amounts of data, have been built on thewith the rise of central laboratories and Openness and flexibility of the network were creation and value of networks, horizontalcenters 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 productionharness new inventions in order to create breathtaking. In August 1981 there were systems by permitting deeper integrationand 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 toDespite the enormous gains reaped by climbed to 19 million.4 Today the number research and development, the Internetthe economy and society, the Industrial is in the billions. Speed and volume of has enabled concurrent innovation. TheRevolution also had a downside. The information transmitted grew dramatically. ability to exchange information rapidly andglobal economic system became more In 1985 the very best modems were only decentralize decision-making has spawnedhighly resource-intensive and had a capable of speeds of 9.6 kilobits per second more collaborative work environmentsmore significant impact on the external (Kbps). The first generation of iPhone, by that are unconstrained by geography. As aenvironment as a result of both resource contrast, was 400 times faster, capable of consequence, older models of centralizedextraction and industrial waste streams. transmitting information at 3.6 megabits internal innovation have ceded ground toIn addition, working conditions during per second (Mbps).5 start-ups and more open innovation modelsthis era needed vast improvement . Much that harness an environment of moreof the incremental innovation that has The combination of speed and volume abundant knowledge. Thus, rather thanoccurred since the Industrial Revolution created powerful new platforms for resource- intensive, the Internet Revolutionhas 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 ofworking 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 reduceThe Second Wave: The Internet Revolution creating large new efficient markets for environmental footprints and support moreAt 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 digitalagain. The timeframe in which it unfolded platforms; however, the vast majority ofwas much shorter, taking place over the innovation and ferment centered onabout 50 years instead of 150; but like the the creation of brand new companies andIndustrial Revolution, the Internet Revolution capabilities. When eBay began in 1995, itunfolded in stages. The first stage started in closed the year with 41,000 users tradingthe 1950’s with large main frame computers, $7.2 million worth of goods. By 2006, itsoftware and the invention of “information- had 22 million users trading $52.5 billionpackets” which permitted computers to worth of goods. Social networking had acommunicate with one another. The first similar trajectory. Facebook was launchedstage consisted of experimentation with in February 2004 and in less than a yeargovernment-sponsored computer networks. reached 1 million active users. By August 8
  9. 9. The Third Wave: The Industrial Internet deeply merge with the connectivity, big data • Advanced Analytics: Advances inToday, in the twenty-first century, the and analytics of the digital world. “big data” software tools and analyticIndustrial Internet promises to transform techniques provide the means to understandour world yet again. The melding of the Intelligent Devices the massive quantities of data that areglobal 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 theRevolution, with the open computing and Industrial Internet Revolution. Several factors Together, these forces are changing the costcommunication systems developed as part have aligned to make the widespread and value of collecting, analyzing and actingof the Internet Revolution, opens up new instrumentation of industrial machines on data that has existed in theory but hasfrontiers 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 canhuman work experience. condition for the rise of the Industrial be generated by intelligent devices is one Internet. Several forces are at work toIndeed, the Industrial Internet Revolution is of the key components of the Industrial make machines and collections ofalready 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, makingavailable over the last decade. However, hardware, software and intelligence. Data it possible to equip and monitor industrial is harvested from intelligent devices andwe currently stand far below the possibility machines in a more economical mannerfrontier: the full potential of Internet-based networks. The data is stored, analyzed and than in the past. visualized using big data and analytics technology has yet to be fully realizedacross the global industry system. Intelligent • Computing power: Continued The resultant “intelligent information” candevices, intelligent systems, and intelligent improvements in microprocessor chips then be acted upon by decision makers, indecisioning represent the primary ways have reached a point that now makes it real-time if necessary, or as part of broaderin which the physical world of machines, possible to augment physical machines industrial assets optimization or strategicfacilities, 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 nt lligeoning t LD tw at or ion R Inte cisi k L WO de B leet tion ITA op E ent F iza tim N IG elligtems E D Int ys F I T Fa miza s S cilit tion op ti ent ellig ices y Int dev op As iza tim se tio t n s w ork Net IN ets Fle D U S T ties R ili IA Fac L W O s ine R ch L Ma D 9
  10. 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 AnalyticsIntelligent information can also be shared transferred to remote locations for analysis predictive analytics can be combined toacross machines, networks, individuals or and storage. Determining the degree of local avoid unplanned outages and minimizegroups 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 andbroader group of stakeholders to engage the many and diverse companies who will All of these benefits come from machinein asset maintenance, management and benefit from being a part of it. The important instrumentation using existing informationoptimization. It also ensures that local and point here is that new innovations are technologies and doing so in ways thatremote individuals that have machine- permitting sensitive data generated by an enable people to do their jobs morespecific 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 devicescan also be fed back to the originating be transferred remotely so that they can be so potentially powerful. In an era whenmachine. This not only includes data that visualized, analyzed, augmented and acted it is increasingly challenging to squeezewas produced by the originating machine, upon, as appropriate, by people at work or more productivity from high-performancebut also external data that can enhance on the move. machines such as highly-engineeredthe operation or maintenance of machines, aircraft engines, the broad deploymentfleets and larger systems. This data feedback Over time, these data flows provide a history of intelligent devices holds the potentialloop enables the machine to “learn” from of operations and performance that enables to unlock additional performance andits 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 hoursEach instrumented device will produce large a particular component has been operatingquantities of data that can be transferred and under what conditions. Analytic toolsvia the Industrial Internet network to remote can then compare this information to themachines and users. An important part of operating histories of similar componentsthe implementation of the Industrial Internet in other plants to provide reliable estimateswill involve determining which data remains of the likelihood and timing of componentresident on devices and which data is failure. In this manner, operating data and 10
  11. 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 fromEach machine can system can be coordinated to achieve airplanes coupled with information about operational efficiencies at the network location and flight history can providebe 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 aresystem 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 drivinglearning 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. 12. Intelligent DECISIONING and analyze high frequency real-time dataThe full power of the Industrial Internet will brings a new level of insight on systembe realized with a third element—Intelligent operations. Machine-based analytics offerDecisioning. Intelligent Decisioning occurs yet another dimension to the analyticwhen enough information has been process. Using a combination of physics-gathered from intelligent devices and based methodologies, deep sector-specificsystems to facilitate data-driven learning, domain expertise, increased automation ofwhich in turn enables a subset of machine information flows, and predictive techniques,and network-level operational functions advanced analytics can be joined with theto be transferred from operators to secure existing suite of “big data” tools. The resultdigital systems. This element of the Industrial is the Industrial Internet encompassesInternet is essential to grapple with the traditional approaches with newer hybridincreasing complexity of interconnected approaches that can leverage the powermachines, 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 Internetfacilities or fleets across wide geographic will be felt when the three primary digitallocations. Operators need to quickly make elements—intelligent devices, intelligentthousands 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, thethe system to perform select operations benefits of enhanced productivity, lowerwith human consent. The burden of costs and reduced waste will propagatecomplexity is transferred to the digital through the entire industrial economy.system. For example, within an intelligentsystem, signals to increase the output ofa dispatchable power plant will not haveto be sent to the operators of individualplants. Instead, intelligent automation willbe used to directly co-dispatch flexibleplants in response to variable resources likewind and solar power, changes in electricitydemand, and the availability of other plants.These capabilities will facilitate the abilityof people and organizations to do their jobsmore effectively.Intelligent Decisioning is the long-termvision of the Industrial Internet. It is theculmination of the knowledge gathered asthe elements of the Industrial Internet areassembled device-by-device and system-by-system. It is a bold vision that, if realized,can unlock productivity gains and reduceoperating costs on a scale comparable tothe Industrial and Internet Revolutions.Integrating the elementsAs the intelligent pieces are broughttogether, the Industrial Internet bringsthe power of “big data” together withmachine-based analytics. Traditionalstatistical approaches use historical datagathering techniques where often thereis more separation between the data, theanalysis, and decision making. As systemmonitoring has advanced and the costof information technology has fallen, theability to work with real-time data has beenexpanding. Greater capability to manage 12
  13. 13. IV. How Big is Economic Perspective Traditional economic definitions of global while in developing economies industrial sectors represent about 37 percent ofthe Opportunity? industry include manufacturing, natural resource extraction, construction, and GDP output. Within this industrial total, manufacturing activities represent 15Three 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 economicTo appreciate the scale of the opportunity trillion dollar world economy.8 Of that, accounting measures, industrial activityof the Industrial Internet it is useful to first manufacturing of goods represented 17 represents roughly one-third of all economicscale 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 isWe therefore suggest three different construction contributed about 13 percent extremely large, it does not capture the fullperspectives: 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 aof machines, facilities, fleets and networks. the economic structure and resource broader array of sectors than capturedWhile not exhaustive, these measures when endowment of any particular country. by conventional economic categories. Fortaken together provide a useful perspective Within the developed economies, industry example, it will also engage large swaths ofon 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 Non - Industrial Industrial Economy Economy Economy Economy $18.1 Trillion $9.7 Trillion $31 Trillion $10.8 Trillion Other Other $14.3 Billion $23.1 Trillion7 Trillion 7 Trillion6 Trillion 6 Trillion5 Trillion 5 Trillion4 Trillion 4 Trillion3 Trillion 3 Trillion2 Trillion 2 Trillion1 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. 14. industrial transport fleets and large-scale Industrial Internet will be felt beyond thoselogistical operations such as aviation, sectors. For example, the positive impactrail, and marine transport.9 In 2011, the on the health sector will result in betterglobal transportation services sector health outcomes, which in turn will resultincluding land, air, marine, pipelines, in fewer workdays lost because of sicknesstelecommunications and supporting logistics across the rest of the economy. Similarly,services, represented about 7 percent of improvements in transportation and logisticsglobal economic activity. Transportation will benefit all economic activities which relyfleets are critical links in the supply on shipping of goods and on the reliabilityand distribution chains associated with and efficiency of supply chains.manufacturing and energy production. Herethe Industrial Internet helps by optimizing Energy Consumption Perspectivetiming and flow of goods within heavyindustries. In commercial transport services One of the key benefits of the integration of smarter technologies and robust networks About 46 percent oflike passenger aircraft, there are furtheropportunities for optimizing operations and is the ability to create energy saving the global economy or efficiencies and reduce costs. Constraintsassets while improving service and safety. on the energy system are intensifying. $32.3 trillion in global Scarcity of resources, need for betterOther commercial and government environmental sustainability, and lack of output can benefit fromservices sectors will also benefit. Forexample, 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 responsesecure data can literally be a matter of life to increasing resource constraints andor death. The health care industry, including scarcity. Therefore, another perspective onpublic and private spending, is estimated to the scale of the Industrial Internet comescomprise 10 percent of the global economy from understanding the energy footprintor $7.1 trillion in 2011—a giant sector of the associated with the global industrial economy by itself. Here the focus of Huge volumes of energy resources arethe Industrial Internet shifts from optimizing required to create the goods and servicesthe flow of goods to the flow of information the world needs. If energy production andand workflows of individuals—getting the conversion is considered in addition toright 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’sWhen traditional industry is combined with energy consumption.the transportation and health servicessectors, about 46 percent of the global The energy sector involves the spectrum ofeconomy or $32.3 trillion in global output activities required to create finished energycan 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 energiesindustrial sector (defined here broadly) willgrow to approximately 50 percent of the • Refining and processing primary fuelsglobal 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 electricityThe technologies of the Industrial Internetwill not be instantly applied to the entireasset base corresponding to the 50 percentof the world economy described above.Introducing them will require investment,and the pace of the investment may in turndepend on the speed at which the enablinginfrastructures are developed. To this extent,what we have described represents an upperlimit, the available envelope. On the otherhand, it also limits this envelope to thosesectors where the Industrial Internet canfind direct application. But the benefits of the 14
  15. 15. In 2011, the world produced more than Shifting to the consumption side of the energy The transportation sector is another large13.0 billion metric tons of energy, when balance, the world’s primary energy sources consumer of energy comprising 27 percentconverted to an oil equivalent basis (Btoe) were converted into 9.5 Btoe of useful energy of global energy demand—primarily oilfor 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 fuelin 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 railone Btoe. Of this 13.0 Btoe of global primary natural gas, and chemical feedstocks. This locomotives. The other half of transportenergy production, 4.9 Btoe was converted to roughly aligns with the manufacturing sector sector energy (52 percent) is used in lightelectricity at a conversion efficiency of about described in the economic perspective above. duty vehicles. Using information technology40 percent and the other 8.1 Btoe was refined, Within the industrial sector, the heaviest and networked devices and systems toprocessed for impurities, washed (in the energy consumers are the steel and metals optimize transport appears to be one ofcase of coal) or converted in preparation for industries and the petrochemical industry. the most exciting opportunities from thetransport and delivery to energy consumers. Together, these heavy industries represent Industrial Internet. Assuming most ofIt’s important to recognize there are immense about 50 percent of the industrial energy the large fleets and a portion of the lightcosts associated with energy production. consumed. Recent studies indicated that duty vehicle fleets can benefit, perhapsTo maintain and grow energy supply, the if best practice technologies are deployed, 14 percent of global transportation fuelglobal energy industry including coal, gas, heavy industry energy consumption could be demand can be impacted by Industrialoil, 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 deploymentGDP) in new capital spending each year. The can support this effort through process There are clearly many dimensions andlarge volume and cost creates tremendous integration, life-cycle optimization, and more challenges in achieving real changes inscope for continued deployment of Industrial efficient utilization and maintenance of global energy consumption. Each systemInternet 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 ConsumptionGas 22% 9.5 BTOERenewables 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. 16. in terms of how it performs within the machines and critical systems. There are Table 2 provides an illustrative list of majorsystem and how it interacts with the larger now millions of machines across the world, pieces of rotating machinery in key industryenergy networks. Advances over the last ranging from simple electric motors to categories. Within this list, there are currentlytwo decades in process management and highly advanced computed cosmography over 3 million types of major rotatingautomation appear to have been largely (CT scanners) used in the delivery of health equipment. These numbers are based on asuccessful. While some parts of the energy care. All of these pieces of equipment are basic review of major system processes insystem are being optimized, new efforts associated with information (temperature, these machines and plants. The high degreeare underway. All of the many machines, pressure, vibration and other key indicators) of customization within the industrial systemfacilities, fleets, and networks involved in and are valuable to understanding makes comparisons difficult. However, aenergy production and conversion have performance of the unit itself and in relation general assessment can be made based oninefficiencies that can be improved through to other machines and systems. the typical sets of rotating equipment andthe 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 ofPhysical Asset Perspective… critical rotating machinery. While it is “things that spin” in parts of the industrialThings 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 otherA third perspective on opportunities to and networks exist within the world’s ever key metrics, which are already being, or canexpand the Industrial Internet is to look at expanding industrial system, it is possible be, monitored, modeled, and manipulatedspecific physical assets involved in various to look at some specific segments to get a remotely to provide safety, enhancedparts 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 52,000 104,000Notes: Not exhaustive. (1) includes LNG processing trains, Refineries, and Ethylene steam crackers. (2) includes Compressor and pumpingstations, LNG regasification terminals, Large Crude carriers, gas processing plants. (3) Only counting engines in large scale power generationgreater than 30 MW Total 3,207,700Sources: 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. 17. Commercial Jet Aircraft rotating machinery in the global fleet of The most common combined cycleThe number of rotating parts and the commercial engines. configuration today is a 2x1, which usespotential for instrumentation in the two gas turbines and one steam turbine. Combined Cycle Power Plants In this example, there are 6 major rotatingcommercial jet engine fleet is significant.According to Jet Information Services, there The opportunities for Industrial Internet components: 2 gas turbines, 2 gas turbineare approximately 21,500 commercial jet instrumentation are just as vast in the global generators, one steam turbine and oneaircraft and 43,000 jet engines in service fleet of power plants. There are 62,500 power steam turbine generator. Beyond the bigaround the world in 2011. Commercial jets plants operating around the world today critical systems, we estimate that thereare most commonly powered by a twin jet with a capacity of 30 megawatts or greater. are another 99 rotating components in theengine configuration. These aircraft take The total global capacity of power plants is balance of plant—from feed water pumps toapproximately 3 departures per day, for a approximately 5,200 gigawatts (GW). These air compressors. In all, there are 105 rotatingtotal of 23 million departures annually.13 plants are displayed in Figure 7. Consider components in a 2x1 combined cycle powerEach 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 globalrotating equipment: a turbo fan, compressor, represent just 2.5 percent of global power combined cycle fleet. If instrumentationand turbine. Each of these components will plants, or 1,768 plants. These plants have a was applied to every component in all 1,768be instrumented and monitored separately. global installed capacity of 564 GW.15 plants, this would represent about 10,600In total, there are approximately 129,000 major system pieces and 175,000 smallermajor 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 plantsinstrumentation opportunities exist in gas—into mechanical and then electric amounting to 638 GW of capacity arethe military and non-commercial general energy. By combining gas and steam likely to be added to the global industrialaviation fleets, which are over 10 times as turbines, combined cycle gas turbines use system.16 This will add another 12,000 unitslarge as the commercial jet aircraft fleet.14 two thermodynamic cycles (gas turbine of large rotating equipment and at leastThe bottom line is that the opportunities for Brayton cycle and a steam turbine another 200,000 pieces of smaller rotatinginstrumentation of jet airline fleets are vast Rankine cycle) to improve efficiency and equipment to complete these plants. If otherand increasing daily. GE Aviation estimates reduce operating costs. A combined cycle types of power plants are considered, thethat to meet the growing needs of air travel gas turbine power plant typically uses scope for further expansion of Industrialanother 32,000 engines might to be added multiple sets of gas turbine-steam Internet technologies is clearly 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 OtherSource: Power plant data source Platts UDI Database, June 2012Note: Circle size represents installed capacity (MW). 17