Attending the World Economic Forum this year at Davos, I was reminded of the expression “it’s a small world.” Hosting 2,500 participants this year from more than 100 countries, the event, once again, succeeded in connecting topics of worldwide significance with business leaders, heads of state and government officials who are representative of a global economy. One topic in particular shows how that connection—and the “small world” syndrome—is about to become even more the new normal. The Internet of Things has caught the imagination, showing how objects – from cars to refrigerators and even people – are transforming consumer experiences. But the extension of sensors and other digital technologies to the industrial sphere promises very significant gains in growth through new business models. Such potential gains, however, are not guaranteed.
Indeed, our work with global organizations, together with extensive research, has found that failure to take tangible action around the Industrial Internet of Things (IIoT) could hinder organizations from capitalizing on long-term revenue gains. In our latest research, Accenture discovered a strong economic argument for the IIoT with estimates showing it could lift real gross domestic product by 1.5 percent in 2030 over trend projections for 20 major economies studied.
Are business leaders prepared to exploit the IIoT opportunity? Not according to Accenture’s global survey of 1,400 C-suite decision makers. We found that while the majority of C-suite leaders see the IIoT as a net creator of jobs and expect to be able to reduce operational expenses using it, only seven percent are matching strategy with investment and nearly three-fourths say they have yet to make concrete progress with the IIoT.
Today, the Industrial Internet of Things is helping to improve productivity, reduce operating costs and enhance worker safety. For example, in the petroleum industry wearable devices sense dangerous chemicals and unmanned aerial vehicles can inspect remote pipelines. According to joint research published by Accenture and the World Economic Forum, the longer-term economic and employment potential will demand more. Companies will need to establish entirely new product and service hybrids that disrupt their own markets and generate fresh revenue streams. Many of these will underpin the emergence of the “outcome economy,” where organizations shift from selling products to delivering measurable outcomes.
Delivering outcomes will require companies to forge new ecosystem partnerships centred on customer needs rather than individual products or services. Because of the rising importance in data, software and platforms, incumbent players will need to expand their capabilities and ecosystems in these areas to compete in this new marketplace, using advanced analytics and new data streams from smart products in the field to gain timely insights about customer needs and behaviors.
It is the digital age that makes the outcome economy possible. With the proliferation of connected sensors, the physical world is moving online, becoming increasingly quantified and accessible. For example, Monsanto, a multinational agrochemical and agricultural biotechnology company, is helping farmers increase crop productivity while conserving water and energy. It has access to mapping data on all 25 million farming fields in America by field shape, type of crop, crop yields, soil capacity and other critical metrics. By adding that data to Monsanto’s data on seed yields, farmers can better understand which seeds will grow best in which fields and under what conditions.
Success in this environment will require greater cooperation among businesses than ever before. I believe the conditions are ripe for the widespread adoption of the IIoT; market leaders should embrace these disruptions, whether related to technology or the vagaries of the market. They must recognize that while process efficiencies and cost cutting are worthy goals, they need to adopt a broader, more strategic spectrum. Above all, leaders should seek out the best outcomes—to benefit their businesses, their countries and the worldwide economy.
For more on business leader perspectives of the IIOT click here.
Our panel discussion on IIoT with business leaders can be found here.