Over the past three years, the emergence of the Industrial Internet of Things (IIoT) has led to an outpouring of technological cooperation, as more than 350 firms have joined various consortia to hammer out standards around open digital platforms. Yet this leaves industrial companies in an uncertain competitive position in terms of creating and capturing value for themselves. With the industrial internet accounting for nearly $800 billion in commerce last year and growing to a multi-trillion dollar opportunity over the next decade, companies don’t just need to cooperate: they need to focus on forging a digital platform strategy that generates growth.
Indeed, while these digital networks are meant to be “open,” there is also great advantage in being the provider of the platform. The Industrial Internet Consortium, for instance, counts Bosch, GE, Intel, IBM, SAP, and Schneider Electric among founding members working to assure that different equipment can share data for energy, health care, manufacturing, transportation, and smart cities applications. While the rise of Industrial Internet platforms does not mean every company must build one, every company must have a strategy for how to remain relevant to their customers.
For a prime example of a company doing both, we need to look no further than General Electric, whose turbines generate 300 data points per second (see image). If GE increases fuel efficiency 1% in its jet engines by analyzing data from embedded sensors, airline industry profits could increase by $3 billion.
At the same time it is providing those kinds of benefits for those who plug into its Predix operating system, GE’s digital industrial business generated about $7 billion in revenue last year and is on track to reach $15 billion by 2020. That is good for GE, but the question for other firms is clear: is there still an opportunity to build your own digital platform, even on a smaller scale, or is the best strategy to simply plug your equipment in and cooperate?