The ‘flat’ world and the disruption caused by the internet has dramatically changed how human beings and industry work. Modern industry represents a convergence of hardware and software to boost productivity and economic growth. By Albert W Nonto
M. Ari Kurniawan of Central Java firm D-Tech Engineering is an example of the trend towards a “global brain” as the disruption of the internet changes the ways in which we work and the future of work itself. Global jet engine-maker GE wanted to launch new models of parts for its engines. It partnered with the crowd-sourcing platform GrabCAD and challenged the community of engineers around the world to provide an alternative design for the bracket used to attach jet engines to an aircraft body. The bracket had to be lighter – contributing to lower fuel consumption – capable of being made by 3D printer, and stronger than existing models. Ari won the competition, beating 700 other participants from around the world. His victory is one example of the mega-trend now underway in which the industrial internet is becoming a reality. GE’s chief economist Marco Annunziata describes this as the global brain reshaping the nature of work. Annunziata outlines three interrelated and mutually reinforcing trends happening in the innovation of the digital economy that will reshape the future of work. One he calls the industrial internet, a merger of software and hardware, of big data and big hardware, through the integration of cloud-based analytics with industrial machinery. With the installation of sensors in an aircraft, an operator can modify the take-off and landing behavior of a pilot by conducting regular checks of terabytes of data and reacting appropriately to reduce fuel consumption. “In wind-power generation, industrial internet solutions allow the wind turbines on a farm to communicate with each other and respond in a coordinated way to changes in environmental conditions,” says Annunziata, who adds that the industrial internet will help companies to be more proactive in preventive rather than reactive solutions, fixing machines before they break. The second trend of advanced manufacturing is the digital network which links together design, product engineering, manufacturing, supply chain, distribution and remanufacturing (or servicing) into one cohesive and intelligent system. “This encompasses new production techniques like additive manufacturing, or 3-D printing, which allow us not only to create completely new parts and products with new properties, but also to accelerate the cycle of design, prototyping and production,” he states. US automaker Ford has started to print some parts of its vehicles, creating more business and social impacts, especially for labor forces. At GE alone, by 2020 100,000 parts will be produced using 3D printing The third trend is the “global brain” that connects all talents around the world to work together through digital communications platforms and cloud-based big data that allow them to easily exchange information design and models. The global brain, says Annunziata, is the collective intelligence of human beings across the globe, integrated by digital communication networks. A person can cooperate seamlessly with colleagues in different locations via email, cloud-based file-sharing platforms, tele- and video-conferencing. Today, open-source platforms and crowd-sourcing have accelerated these trends and made them a reality in the world of industry. Companies can collaborate with other talents from every part of the world, redefining work relationships between employers and employees. There will be a short-term cost, since some jobs may be replaced as they become obsolete. This situation will drive creativity and entrepreneurship to create new jobs. “Open-source platforms and crowd-sourcing are two of the most effective ways to unleash the creativity and entrepreneurship potential of the global brain,” says Annunziata.
Digitalizing industry The industrial internet revolution is occurring in the wake of the boom of the consumer-driven internet. Many companies, including US-based giant GE, see the value of implementation of the digital internet to industry in operations to assist corporate growth. Most modern digital economic thinkers believe that the industrial internet, or internet of things, is the next big thing despite its current infancy. Many platforms for industry have already been developed. Kaa is designed for industries in logistics, telecom, agriculture and automotives. In agriculture, the platform can plan and implement remote crop monitoring, climate monitoring and forecasting. Another giant in the internet of things is America’s RTI, which provides software and solutions for a variety of applications in the aerospace and defense industries, with plenty of other sectors also benefitting. While Google is best known as a search engine, the company also provides solutions for industries in consumer goods, retail and financial services, tapping into its vast store of data. OMRON provides sensors that specialize in food and beverage industries by working within industry operational systems. These companies all specialize in the emerging field of the internet of things, providing both software and solutions. GE, regarded as the largest single operator in “traditional industry,” has been transforming itself to become a digital industry company. It has developed its own industrial digital division that it is contributing strongly to corporate revenue. In just two years, the division has made $5 billion out of the digital industry business. By comparison, GE’s locomotive business, now more than 100 years old, “only” makes around $10 billion per year. “By 2020, GE’s industrial internet business is targeting about $15 billion in business,” says Indonesia GE chief executive officer Handry Satriago. The future of work, says Handry, will depend on the advance of technology that springs from the innovation of internet applications. With the arrival of the industrial internet, existing businesses like the manufacture of engines, cars, components and shipping lines will still exist, but the new applications will contribute strongly to efficiencies within those industries. By the nature of its business, e-commerce can boom and bust at any time. By contrast, with the incorporation of the industrial internet, digital solutions will create more value for existing industry by increasing efficiency, which in turn can increase productivity and provide increased revenue. “Digital solutions will be complementary to existing business, while the consumer internet such as the market place, e-commerce, is not complementary as it is a stand-alone business,” says Handry. He sees that, so far, each industry has its own operating system, and now GE plans to offer its open-source Predix platform where anybody can develop their own applications for their own specific purposes. With Predix, jet engines, locomotives, oil wells and other machinery will still operate normally. The internet platform will help all of them work efficiently with analytics from big data captured by sensors installed in the machines. Similar software can also help the managers of a power plant, for instance, to minimize unplanned outages that cause blackouts by predicting a range of factors including the weather, time needed for repairs and many more.
Dawn in Indonesia Industry in Indonesia, according to Handry, has no choice other than to join the digital wave, although at the moment the process is in its very early stages. Government and the business community already have a common understanding about the need to incorporate such platforms to make industry more efficient. But while there is already a clear road map for the consumer internet, the government now needs to make clear its plans for industrial internet implementation, he says. At this early stage, GE has approached state-owned companies in energy, oil and gas, transportation and airline business. To these potential clients, GE offers a total solution approach rather than selling software. “For example we offered PLN the level of efficiency that the platform can create. If the company can create higher efficiency then we must talk about profit-sharing,” says Handry. Already, GE has such deals with more than 18,000 power plants around the world which are already implementing its platforms. GE is in intensive discussions with PLN about the type of customized solution that is possible. This discussion is expected to take around six months, working through issues such as customization and business models. Most important is to identify a power plant to become a pilot project. As an open-source platform, Handry believes that Predix can help companies around the world that are now facing shrinking profits as production costs soar. The distinction between products and services is becoming blurred, he notes, with no separation between hardware and software. “For example, you don’t need to change your handset for your mobile phone for new software, you just update it online. Applications are a service while a handset is a product.” And, says Handry, the same is now true for a range of industries. A company will no longer need to replace machinery if it goes digital. Instead some minor renovation is needed, together with the installation of a sensor inside the machine that helps captures millions of units of data as it operates. This makes it easy for management to analyze the performance of the machine as an aid in decision-making processes. For developers like GE, selling big items of hardware like turbines, drills or locomotives is still important, but now there is additional business in the services that can be offered through platforms that have proven value for the company in increasing efficiency and revenue. In just one example, sensors have already been proven to help airlines to reduce delays and provide on-time service by providing real-time updates about the condition of every aircraft. American carrier Delta Airlines has started to implement the system to manage hundreds of its flight schedules and aircraft. In healthcare equipment, sensors can capture all relevant data about patients and help doctors to make sharp and clear diagnoses for every patient in a hospital. Research has found that nurses currently spend more than 21 minutes per shift searching for equipment, which means they have less time to take care of their patients. Implementation of the industrial internet will help electronically to connect and monitor patients, staff and equipment to produce optimal outcomes.