Industrial IoT can boost economy, but under risk: Accenture

  • Greater government and business action needed to fulfill its potential
  • Poor supporting conditions (e.g. lack of digital literacy) will hold many countries back
Industrial IoT can boost economy, but under risk: Accenture

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 action 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.

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For example, 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 (gross domestic product), Accenture said in a statement.
 
If the United States were to invest 50% 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% 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%. The United Kingdom could increase GDP by US$531 billion by 2030, lifting its GDP in 2030 by 1.8% 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% over trend projections.

However, the report reveals that these gains are at risk, in part because 73% 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 were CEOs (chief executive officers).
 
Only 7% of those surveyed have developed a comprehensive strategy with investments to match, Accenture said.
 
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%) of business leaders say that new revenues will be the greatest opportunity of the IIoT, fewer than one in seven (13%) 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% 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 at 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 organisational structures, and investing in new skills and talent,” he added.
 
Poor enabling conditions
 
Many countries have insufficient supporting conditions for the rapid adoption of the IIoT, according to Accenture’s analysis of 20 key economies.
 
The United States, 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,” he added.

Industrial IoT can boost economy, but under risk: Accenture

Industrial IoT can boost economy, but under risk: AccenturePositive impact for the workforce
 
Eighty-seven percent of business leaders believe that the IIoT 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, Accenture said.
 
“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 IIoT will not only augment work, but result in more virtual and collaborative working environments, as well as create entirely new categories of jobs,” he added.
 
Boosting IIoT adoption
 
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 organisations, 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 decentralise operations as technologies such as 3D printing enable products to be made closer to customers.
  • Capitalise 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, decentralised working environments will be needed to support the devolvement of decision making to workers on the front line. New organisational structures will be needed to allow workers to collaborate more creatively with counterparts in partner companies. 

For more Accenture’s insights on the Industrial Internet of Things, go to www.accenture.com/IIOT.
 
Related Stories:
 
Public-private-partnership needed to drive IoE: Cisco
 
Government regulation key factor for IoT to bloom
 
Asia Pacific to be the frontline for IoT: IDC
 
APAC companies recognise transformational role of IoT: Forrester-Zebra study
 
 
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