,1. Introduction to the Industrial Internet
Alasdair Gilchrist1
(1)Bangken, Nonthaburi, Thailand
GE (General Electric) coined the name “Industrial Internet ” as their term for the Industrial Internet
of Things, and others such as Cisco termed it the Internet of Everything and others called it Internet
4.0 or other variants. However, it is important to differentiate the vertical IoT strategies (see
Figure 1-1), such as the consumer, commercial, and industrial forms of the Internet from the
broader horizontal concept of the Internet of Things (IoT ) , as they have very different target
audiences, technical requirements, and strategies. For example, the consumer market has the
highest market visibility with smart homes, personal connectivity via fitness monitors,
entertainment integrated devices as well as personal in-car monitors. Similarly, the commercial
market has high marketability as they have services that encompass financial and investment
products such as banking, insurance, financial services, and ecommerce, which focus on consumer
history, performance, and value. Enterprise IoT on the other hand is a vertical that includes small-
, medium-, and large-scale businesses. However this book focuses on the largest vertical of them
all, the Industrial Internet of Things, which encompasses a vast amount of disciplines such as
energy production, manufacturing, agriculture, health care, retail, transportation, logistics,
aviation, space travel and many more.
Figure 1-1. Horizontal and vertical aspects of the Internet of Things
In this book to avoid confusion we will follow GE’s lead and use the name Industrial Internet of
Things (IIoT) as a generic term except where we are dealing with conceptually and strategically
different paradigms, in which case it will be explicitly referred to by its name, such as Industry 4.0
.
, Many industrial leaders forecast that the Industrial Internet will deliver unprecedented levels
of growth and productivity over the next decade. Business leaders, governments, academics, and
technology vendors are feverishly working together in order to try to harness and realize this huge
potential.
From a financial perspective, one market research report forecasts growth of $151.01 billion
U.S. by 2020, at a CAGR of 8.03% between 2015 and 2020. However, in practical terms,
businesses also see that industrial growth can be realized through utilizing the potential of the
Internet. An example of this is that manufacturers and governments are now seeing the opportunity
to reindustrialize and bring back onshore, industry, and manufacturing, which had previously been
sent abroad. By encouraging reindustrialization, governments hope to increase value-add from
manufacturing to boost their GDPs.
The potential development of the Industrial Internet is not without precedence, as over the last
15 years the business-to-consumer (B2C) sector via the Internet trading in retail, media, and
financial services has witnessed stellar growth. The success of B2C is evident by the dominance
of web-scale giants born on the Internet, such as Amazon, Netflix, eBay, and PayPal. The hope is
that the next decade will bring the same growth and success to industry, which in this context
covers manufacturing, agriculture, energy, aviation, transportation, and logistics. The importance
of this is undeniable as industry produces two-thirds of the global GDP, so the stakes are high.
The Industrial Internet, however, is still in its infancy. Despite the Internet being available for
the last 15 years, industrial leaders have been hesitant to commit. Their hesitance is a result of
them being unsure as to how it would affect existing industries, value chains, business models,
workforces, and ultimately productivity and products. Furthermore, in a survey of industry
business leaders, 87% claimed in January 2015 that they still did not have a clear understanding
of the business models or the technologies.
This is of course to be expected as the Industrial Internet is so often described at such a high
level it often decouples the complexities of the technologies that underpin it to an irrelevance. For
example, in industrial businesses, they have had sensors and devices producing data to control
operations for decades. Similarly, they have had machine-to-machine (M2M ) communications
and collaboration for a decade at least so the core technologies of the Industrial Internet of Things
are nothing new. For example, industry has also not been slow in collecting, analyzing, and
hoarding vast quantities of data for historical, predictive, and prescriptive information. Therefore
the question industrial business leaders often ask is, “why would connecting my M2M architecture
to the Internet provide me with greater value?”
What Is the Industrial Internet?
To explain why businesses should adopt the Industrial Internet, we need to first consider what the
IIoT actual is all about. The Industrial Internet provides a way to get better visibility and insight
into the company’s operations and assets through integration of machine sensors, middleware,
software, and backend cloud compute and storage systems. Therefore, it provides a method of
transforming business operational processes by using as feedback the results gained from
interrogating large data sets through advanced analytics. The business gains are achieved through
, operational efficiency gains and accelerated productivity, which results in reduced unplanned
downtime and optimized efficiency, and thereby profits.
Although the technologies and techniques used in existing machine-to-machine (M2M )
technologies in today's industrial environments may look similar to the IIoT, the scale of operation
is vastly different. For example, with Big Data in IIoT systems, huge data streams can be analyzed
online using cloud-hosted advanced analytics at wire speed. Additionally, vast quantities of data
can be stored in distributed cloud storage systems for future analytics performed in batch formats.
These massive batch job analytics can glean information and statistics, from data that would never
previously been possible because of the relatively tiny sampling pools or simply due to more
powerful or refined algorithms. Process engineers can then use the results of the analytics to
optimize operations and provide the information that the executives can transform to knowledge,
in order to boost productivity and efficiency and reduce operational costs.
The Power of 1%
However, an interesting point with regard to the Industrial Internet is what is termed the power of
1% . What this relates to is that operational cost/in-efficiency savings in most industries only
requires Industrial Internet savings of 1% to make significant gains. For example, in aviation, the
fuel savings of 1% per annum relates to saving $30 billion. Similarly, 1% fuel savings for the gas-
fired generators in a power station returns operational savings of $66 billion. Furthermore, in the
Oil and Gas industry, the reduction of 1% in capital spending on equipment per annum would
return around $90 billion. The same holds true in the agriculture, transportation, and health care
industries. Therefore, we can see that in most industries, a modest improvement of 1% would
contribute significantly to the return on investment of the capital and operational expenses incurred
by deploying the Industrial Internet. However, which technologies and capital expenses are
required when initiating an IIoT strategy?
Key IIoT Technologies
The Industrial Internet is a coming together of several key technologies in order to produce a
system greater than the sum of its parts. The latest advances in sensor technologies, for example,
produce not just more data generated by a component but a different type of data, instead of just
being precise (i.e., this temperature is 37.354 degrees). sensors can have self-awareness and can
even predict their remaining useful life. Therefore, the sensor can produce data that is not just
precise, but predictive. Similarly, machine sensors through their controllers can be self-aware, self-
predict and self-compare. For example, they can compare their present configuration and
environment settings with preconfigured optimal data and thresholds. This provides for self-
diagnostics.
Sensor technology has reduced dramatically in recent years in cost and size. This made the
instrumentation of machines, processes, and even people financial and technically feasible.
Big Data and advanced analytics as we have seen are another key driver and enabler for the
IIoT as they provide for historical, predictive, and prescriptive analysis, which can provide insight
Alasdair Gilchrist1
(1)Bangken, Nonthaburi, Thailand
GE (General Electric) coined the name “Industrial Internet ” as their term for the Industrial Internet
of Things, and others such as Cisco termed it the Internet of Everything and others called it Internet
4.0 or other variants. However, it is important to differentiate the vertical IoT strategies (see
Figure 1-1), such as the consumer, commercial, and industrial forms of the Internet from the
broader horizontal concept of the Internet of Things (IoT ) , as they have very different target
audiences, technical requirements, and strategies. For example, the consumer market has the
highest market visibility with smart homes, personal connectivity via fitness monitors,
entertainment integrated devices as well as personal in-car monitors. Similarly, the commercial
market has high marketability as they have services that encompass financial and investment
products such as banking, insurance, financial services, and ecommerce, which focus on consumer
history, performance, and value. Enterprise IoT on the other hand is a vertical that includes small-
, medium-, and large-scale businesses. However this book focuses on the largest vertical of them
all, the Industrial Internet of Things, which encompasses a vast amount of disciplines such as
energy production, manufacturing, agriculture, health care, retail, transportation, logistics,
aviation, space travel and many more.
Figure 1-1. Horizontal and vertical aspects of the Internet of Things
In this book to avoid confusion we will follow GE’s lead and use the name Industrial Internet of
Things (IIoT) as a generic term except where we are dealing with conceptually and strategically
different paradigms, in which case it will be explicitly referred to by its name, such as Industry 4.0
.
, Many industrial leaders forecast that the Industrial Internet will deliver unprecedented levels
of growth and productivity over the next decade. Business leaders, governments, academics, and
technology vendors are feverishly working together in order to try to harness and realize this huge
potential.
From a financial perspective, one market research report forecasts growth of $151.01 billion
U.S. by 2020, at a CAGR of 8.03% between 2015 and 2020. However, in practical terms,
businesses also see that industrial growth can be realized through utilizing the potential of the
Internet. An example of this is that manufacturers and governments are now seeing the opportunity
to reindustrialize and bring back onshore, industry, and manufacturing, which had previously been
sent abroad. By encouraging reindustrialization, governments hope to increase value-add from
manufacturing to boost their GDPs.
The potential development of the Industrial Internet is not without precedence, as over the last
15 years the business-to-consumer (B2C) sector via the Internet trading in retail, media, and
financial services has witnessed stellar growth. The success of B2C is evident by the dominance
of web-scale giants born on the Internet, such as Amazon, Netflix, eBay, and PayPal. The hope is
that the next decade will bring the same growth and success to industry, which in this context
covers manufacturing, agriculture, energy, aviation, transportation, and logistics. The importance
of this is undeniable as industry produces two-thirds of the global GDP, so the stakes are high.
The Industrial Internet, however, is still in its infancy. Despite the Internet being available for
the last 15 years, industrial leaders have been hesitant to commit. Their hesitance is a result of
them being unsure as to how it would affect existing industries, value chains, business models,
workforces, and ultimately productivity and products. Furthermore, in a survey of industry
business leaders, 87% claimed in January 2015 that they still did not have a clear understanding
of the business models or the technologies.
This is of course to be expected as the Industrial Internet is so often described at such a high
level it often decouples the complexities of the technologies that underpin it to an irrelevance. For
example, in industrial businesses, they have had sensors and devices producing data to control
operations for decades. Similarly, they have had machine-to-machine (M2M ) communications
and collaboration for a decade at least so the core technologies of the Industrial Internet of Things
are nothing new. For example, industry has also not been slow in collecting, analyzing, and
hoarding vast quantities of data for historical, predictive, and prescriptive information. Therefore
the question industrial business leaders often ask is, “why would connecting my M2M architecture
to the Internet provide me with greater value?”
What Is the Industrial Internet?
To explain why businesses should adopt the Industrial Internet, we need to first consider what the
IIoT actual is all about. The Industrial Internet provides a way to get better visibility and insight
into the company’s operations and assets through integration of machine sensors, middleware,
software, and backend cloud compute and storage systems. Therefore, it provides a method of
transforming business operational processes by using as feedback the results gained from
interrogating large data sets through advanced analytics. The business gains are achieved through
, operational efficiency gains and accelerated productivity, which results in reduced unplanned
downtime and optimized efficiency, and thereby profits.
Although the technologies and techniques used in existing machine-to-machine (M2M )
technologies in today's industrial environments may look similar to the IIoT, the scale of operation
is vastly different. For example, with Big Data in IIoT systems, huge data streams can be analyzed
online using cloud-hosted advanced analytics at wire speed. Additionally, vast quantities of data
can be stored in distributed cloud storage systems for future analytics performed in batch formats.
These massive batch job analytics can glean information and statistics, from data that would never
previously been possible because of the relatively tiny sampling pools or simply due to more
powerful or refined algorithms. Process engineers can then use the results of the analytics to
optimize operations and provide the information that the executives can transform to knowledge,
in order to boost productivity and efficiency and reduce operational costs.
The Power of 1%
However, an interesting point with regard to the Industrial Internet is what is termed the power of
1% . What this relates to is that operational cost/in-efficiency savings in most industries only
requires Industrial Internet savings of 1% to make significant gains. For example, in aviation, the
fuel savings of 1% per annum relates to saving $30 billion. Similarly, 1% fuel savings for the gas-
fired generators in a power station returns operational savings of $66 billion. Furthermore, in the
Oil and Gas industry, the reduction of 1% in capital spending on equipment per annum would
return around $90 billion. The same holds true in the agriculture, transportation, and health care
industries. Therefore, we can see that in most industries, a modest improvement of 1% would
contribute significantly to the return on investment of the capital and operational expenses incurred
by deploying the Industrial Internet. However, which technologies and capital expenses are
required when initiating an IIoT strategy?
Key IIoT Technologies
The Industrial Internet is a coming together of several key technologies in order to produce a
system greater than the sum of its parts. The latest advances in sensor technologies, for example,
produce not just more data generated by a component but a different type of data, instead of just
being precise (i.e., this temperature is 37.354 degrees). sensors can have self-awareness and can
even predict their remaining useful life. Therefore, the sensor can produce data that is not just
precise, but predictive. Similarly, machine sensors through their controllers can be self-aware, self-
predict and self-compare. For example, they can compare their present configuration and
environment settings with preconfigured optimal data and thresholds. This provides for self-
diagnostics.
Sensor technology has reduced dramatically in recent years in cost and size. This made the
instrumentation of machines, processes, and even people financial and technically feasible.
Big Data and advanced analytics as we have seen are another key driver and enabler for the
IIoT as they provide for historical, predictive, and prescriptive analysis, which can provide insight
