Last month, I heard two executives from leading companies talk about the new industrial revolution. Bill Ruh, vice president and corporate technology officer of General Electric, spoke about changes in the industrial business at Cloud Connect in Santa Clara. A few days later, I had the opportunity to interview Jim Hepplemann, the CEO of PTC, about changes in manufacturing industry.

Hepplemann spoke of the third industrial revolution as the digitization of products. The digitization of products means a product takes on a full digital existence before it’s ever built. Ruh discussed how the industrial industries, such as aviation, locomotives, and gas turbines are moving from analog to digital businesses. Over the next decade, Huff claims the Internet will create shifts in the industrial business that are on par with the transformations we’ve seen in other industries. He says machines will become intelligent, machines will get connected, and software will be available to analyze the information.

Rise of smart products

Hepplemann predicted the continuing rise of smart products. In smart products, the product is more about the software rather than hardware. The software can be upgraded after the product is produced. For example, in your car there are between 50 and 100 computer chips that run software every time you start your car. If your car doesn’t work, there is a 50-50 chance it is due to a problem with the software controlling the engine, suspension, ABS, or entertainment. Cars are now upgradable.

Integrating sensor data, cloud computing, analytics

According to GE’s Huff, integrating new technologies, such as sensor data, with cloud computing and analytics could help industries deliver new efficiencies with existing processes. For example, the airline industry spends $200 billion a year in fuel. Developing a new aircraft engine takes years, but having the ability to tune the engine and give the pilot insight into how to operate the engine can create huge savings. Even a 1% change would equate to $2B a year in savings. In every industry, GE sees that there are five to twenty key levers, such as fuel efficiency, and that if the industry could experience a 1 to 5 percent change it would equal tens of billions of dollars in savings.

Huff notes there are great opportunities, but there are also challenges. One sensor on a GE gas turbine generates 500 gigabytes of data per day and there are 20 sensors on each turbine. GE has 12,000 turbines globally, and its challenge is how to collect and manage this volume of data. GE would also like to perform real-time analysis on the data to decide if a piece of equipment is reaching a critical failure point, such as a blade breaking.

A time of change

We are at a time of unprecedented change in technology. Each layer of the infrastructure stack is being transformed. Increasingly, there is difference between a product and a service in the digital age. Many items that would have been considered products are now sold as services. Salesforce.com and mobile devices are excellent examples of this. A mobile device without connectivity and without applications is largely useless. However, when connectivity and applications are used with mobile devices, the device transforms into a product of services.

Software upgradable products, machine-to-machine communications, and insightful analytics will be the underpinnings of any successful business going forward.

How will you use machine-to-machine communications within your business? Please leave a comment here or connect with me on Twitter at @MaribelLopez.

 

Maribel Lopez is the CEO and mobile market strategist for Lopez Research, a market research and strategy consulting firm that specializes in communications technologies with a heavy emphasis on the disruptive nature of mobile technologies. AT&T has sponsored this blog post.