Industrial Internet of Things Will Boost Economic Growth, but Greater Government and Business Action Needed to Fulfill its Potential, Finds Accenture

Impact of Industrial IoT on US GDP

Workforce of the future to benefit from new digital technologies.

At a time of uncertain economic growth, the Industrial Internet of Things could contribute US$14.2 trillion to world output by 2030, according to new research by Accenture. But these potential gains are at risk because neither companies nor governments are taking sufficient actions to put in place the conditions necessary for the wide adoption of new digital technologies.

The Industrial Internet of Things (IIoT), which enables new digital services and business models based on intelligent connected devices and machines, is expected to particularly boost growth in mature markets, according to the report titled ‘Winning with the Industrial Internet of Things.’
By 2030, capital investments in the IIoT and the productivity gains that should follow are expected to add US$6.1 trillion to the United States’ cumulative GDP. If the U.S. were to invest 50 percent more in IIoT technologies and improve enabling factors, such as its skills and broadband networks, the gain could reach US$7.1 trillion by 2030, raising its GDP 2.3 percent higher in 2030 than trend projections.

  • Germany could lift its cumulative GDP by US$700 billion by 2030 by taking similar additional actions, raising its GDP in 2030 by 1.7 percent. The UK could increase GDP by US$531billion by 2030, lifting its GDP in 2030 by 1.8 percent over trend projections.
  • China looks set to see greater economic gains from the IIoT than Russia, India or Brazil. With IIoT-enhanced measures in place, China could lift cumulative GDP by US$1.8 trillion by 2030, raising its GDP in 2030 by 1.3 percent over trend projections.

However, the report reveals that these gains are at risk, in part because 73 percent of companies have yet to make concrete plans for the IIoT, according to a survey of more than 1,400 global business leaders, of whom 736 are CEOs. Only seven percent of those surveyed have developed a comprehensive strategy with investments to match.

The lack of commitment to the Industrial Internet of Things is largely due to the difficulty of applying it to generate new revenue streams, according to the research. Although a majority (57 percent) of business leaders say that new revenues will be the greatest opportunity of the IIoT, fewer than one in seven (13 percent) think their company will actually benefit in this way. Instead, their companies are focused on using the IIoT to make efficiency gains and see employee productivity and reduced operational expenses (cited by 46 and 44 percent respectively) as the most likely benefits for their companies.

“The Industrial Internet of Things is here today, helping to improve productivity and reduce costs,” said Paul Daugherty, chief technology officer, Accenture.

“But its full economic potential will only be achieved if companies move beyond using digital technology to make efficiency gains alone and unlock the value of data to create new markets and revenue streams. That means radically changing how they do business: working with competitors, forming partnerships with other industries, redesigning organizational structures and investing in new skills and talent.”

Ranking of Countries for Industrial IoT forcesPoor enabling conditions hold some countries back

Many countries have insufficient supporting conditions for the rapid adoption of the Industrial Internet of Things, according to Accenture analysis of 20 key economies. The U.S., Switzerland, Nordic countries and the Netherlands come out on top. Spain and Italy join Russia, India and Brazil as the countries with the weakest supporting conditions. These include limited infrastructure, skills or institutional foundations required to support the widespread adoption of new technologies. The report suggests that businesses will have to help governments identify improvements to these enabling conditions to encourage greater investment in the IIoT and scale its adoption.

“The Industrial Internet of Things has the capacity to significantly boost the productivity and competitiveness of industrial economies, but poor supporting conditions – especially the lack of digital literacy – will hold many countries back,” said Bruno Berthon, managing director, Digital Strategy, Accenture Strategy.

“Businesses must work with policy makers to put in place the necessary factors, not just to unleash the innovative and entrepreneurial spirit that is needed to create and apply digital technologies broadly across economies, but to compete for foreign investors seeking ideal locations for their global operations.”

Positive impact for the workforce of the future

Eighty-seven percent of business leaders believe that the Industrial Internet of Things will be a net creator of jobs, according to the research. An accompanying report by Accenture and the World Economic Forum indicates that digital technologies will have a positive impact on the workforce of the future by augmenting existing skills and enabling workers to undertake more sophisticated work. For example, drill operators could operate equipment remotely, enabling them to collaborate with engineers and data analysts to improve the precision and productivity of drilling operations.

“The Industrial Internet of Things will make every worker a knowledge worker, enabling machine operators and other workers to use data to achieve more with equipment than they can today,” said Daugherty.

“It’s not just about productivity but about being able to offer new value with the help of data delivered to workers in new ways. The Industrial Internet of Things will not only augment work, but result in more virtual and collaborative working environments, as well as create entirely new categories of jobs.”

Three ways to accelerate the broad adoption of Industrial Internet of Things

Accenture has identified three areas that companies need to address to scale the adoption of the Industrial Internet of Things:

  • Re-imagine industry models. Companies will have to redesign their organizations, partnerships and operations. For example, agro-chemical companies collaborating with software vendors, climate data providers and satellite operators to improve crop yields in specific locations and conditions. Manufacturers may also need to decentralize operations as technologies such as 3D printing enable products to be made closer to customers.
  • Capitalize on the value of data. This includes establishing interoperability and security standards to ensure data can be shared with confidence between companies. New financial models will also be needed to support pay-per-use and other services-based offerings.
  • Prepare for the future of work. With greater access to data, decentralized working environments will be needed to support the devolvement of decision making to workers on the front line. New organizational structures will be needed to allow workers to collaborate more creatively with counterparts in partner companies.

Related posts