IoT Impact on Manufacturing
The number of things connected to the Internet now exceeds the total number of humans on the planet, and we’re accelerating to as many as 50 billion connected devices by the end of the decade. For manufacturers, the implications of this emerging “Internet of Things” are huge.
According to a recent McKinsey Global Institute report, the Internet of Things (IoT) has the potential to unleash as much as $6.2 trillion in new global economic value annually by 2025. The firm also projects that 80 to 100 percent of all manufacturers will be using IoT applications by then, leading to potential economic impact of as much as $2.3 trillion for the global manufacturing industry alone.
The rise of the IoT has been driven by the convergence of market forces and parallel innovation of enabling technologies.
To capture this great wave of value creation opportunity, manufacturers have an urgent need to rethink nearly everything — from how products are created, operated, and serviced. Those who don’t, place their current competitive advantage at risk.
The Internet of Things: Smart, connected products and other Things connected through an Internet-like infrastructure to a computing infrastructure, creating new forms of value.
Smart, Connected Products in the Internet of Things
The phrase “Internet of Things” has arisen to describe this growing number of products connected to the Internet and reflects the new opportunities they represent. Yet this phrase is not a very helpful in understanding the phenomenon or its implications. The Internet, whether involving people or things, is simply a mechanism for transmitting information. What makes this transformative is not the Internet, but the changing nature of the “things” – the products themselves. It is the novel capabilities of smart, connected products and the data they generate that is ushering in a new era of competition.
Some have suggested that that the Internet of Things “changes everything” (sound familiar?) but this is a dangerous oversimplification. As with the Internet itself, smart, connected products are indeed creating a whole new set of technological possibilities. But the rules of competition and competitive advantage remain the same. Navigating the world of smart, connected products will require understanding these rules better than ever.
Products have evolved from physical assets to complex and interconnected systems of smart, connected products.As their definition evolved, product capabilities have multiplied creating new forms of value for manufacturers and their customers. Today, these smart, connected products deliver extended functionality, improved performance and reliability and even do things well beyond their primary function.
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Smart, connected products enable new capabilities for manufacturers, but also disrupt the status quo. To learn how manufacturers capitalize on the IoT.
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We live in a smart, connected world. The impact is a fundamental transformation of how manufacturers create and exchange value with customers. For those that get it right, the future represents a huge opportunity.
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IoT Educational Resources
This report combines wide-ranging research findings and expert interviews to examine the business models behind successful machine to machine (M2M) applications, identify the factors that will support more significant uptake, and propose action items for businesses and governments to overcome barriers to widespread adoption.
The authors highlight the following key findings: M2M market forecasts vary, but all predict big potential; cheaper sensor technology and smaller devices will drive uptake; proven efficiency and cost savings will be the most immediate measure of success for M2M business models; many firms are not yet ready to embrace M2M or don’t fully understand its potential; infrastructure challenges related to standards, IT, and telecom will need to be overcome through industry innovation and collaboration; and, customer concerns about privacy and security will ultimately decide the success of many M2M applications.
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The potential long-term impact of the Internet of Things—called “The Internet of Everything” (IoE) by Cisco—is broadly understood to be massive, both in terms of economic value and the transformation of the way we live and do business. In this white paper, Cisco steps back from the long view to explore the near-term benefits, asking: “How much value are private-sector firms capturing from IoE in 2013?”
Among the key insights of their research, Cisco stated that: the IoE may have already contributed to $613 billion in corporate profits in 2013; executives believe that IoE will drive job growth and wage increases, while catalyzing improvements in information security; that the organizations which apply IoE technology and strategies to enhance the people and process elements of their business will be the real winners; and, that data on its own is no longer a differentiator.
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McKinsey Global Institute
Applications of the Internet of Things could have a direct economic impact of $2.7 trillion to $6.2 trillion per year by 2025, according to the McKinsey Global Institute (MGI). In this expansive research report, the Internet of Things is one of 12 disruptive technologies that MGI evaluates in terms of potential reach, scope, disruption of current business models, and potential economic impact.
The report examines current and future applications of smart and connected technologies across multiple industries such as manufacturing and health care, in addition to the role the Internet of Things can play in smart systems for energy management and vehicle traffic. The ability to collect data from a dizzying array of sensors and use cases will require a robust communications infrastructure to transmit information and control instructions, along with powerful data analytics capabilities to distill meaningful insights from the data.
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Cisco Internet Business Systems Group
In this white paper, Dave Evans, former Chief Futurist of Cisco, explains how the Internet of Things (IoT) represents the next evolution of the Internet, and has the potential to transform our world in ways that go well beyond the impact the Internet already has had on education, communication, business, science, government, and humanity.
The IoT will make it possible to gather, analyze, and distribute previously untapped data that we can turn into information, knowledge, and, ultimately, wisdom. Although challenges exist—related to the communications infrastructure, common standards, energy, and security needed to sustain the IoT’s ecosystem of billions of connected devices—there are already projects under way which focus on improving the distribution of the world’s resources and helping us to better understand our planet.
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Peter C. Evans and Marco Annunziata of GE describe the coming of the “Industrial Internet,” where the machines, facilities, and networks that arose from the Industrial Revolution merge with the recent computing and information innovations of the Internet Revolution.
Together, this has the potential to reduce waste and inefficiency and improve safety and environmental sustainability, causing a new wave of increased productivity. In their vision, three key elements comprise the Industrial Internet: Intelligent Machines, Advanced Analytics, and People at Work. Although significant capital, research, and planning are needed to realize the full potential of the Industrial Internet, the authors are confident that these investments will pay off with immediate, long-lasting, and widespread benefits.
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