Industrial Internet of Things adds 14.2 trillion to GDP

The Industrial Internet of Things has the potential to add 14 trillion to the global GDP, new research by Accenture shows. According to the firm, this could only be reached if both governments and companies step up their game and increase investments in IIoT technology and enhance the IIoT enabling factors.

Accenture recently released its ‘Winning with the Industrial Internet of Things – How to accelerate the journey to productivity and growth’ report in which it researches the potential of the Industrial Internet of Things* (IIoT) for the world economy. For the report, the firm surveyed more than 1,400 global business leaders, of whom 736 are CEOs. The overall conclusion of the report: the IIoT will boost global economic growth, but governments and businesses need to take action to fulfil the potential.

Economic growth
According to the consulting firm, the IIoT helps to improve productivity and reduce operating costs and is arguably the biggest driver of productivity and growth in the next decade. The research shows that additional investment in IIoT and enhancing the enabling factors for IIoT, and the productivity gains that should follow, have the potential to increase the real GDP (adjusted for inflation) for 20 major economies with 1.5% by 2030. This translates into an additional GDP of $14.2 trillion. For the UK, the IIoT is set to lift its GDP by $303 billion between now and 2030 at today’s level of investments in IIoT.   But if the UK were to boost its current investment in IIoT technologies by 50% and improve the economy’s underlying enabling conditions, that figure could rise to $531 billion. In 2030, that would add an extra 1.8% to the UK’s GDP.

In its report, the firm argues that these potential benefits are at risk because neither governments nor companies take sufficient actions to ensure the wide adoption of new digital technologies.

The firm researched the extent to which the surveyed countries have “woven the IIoT into their economic fabric”. As a result of this, the countries are ranked according their ‘national absorptive capacity’ (NAC). A country that is ranked with a score of 100 NAC would be a top performer. The country that scored the best is the US, followed by Switzerland, the Nordic countries and the Netherlands, although none of these scored higher than 64. Russia received the lowest score of 21.3, followed by India (29.9), Italy (31.3) and Brazil (32.4). Weak enabling conditions are limited infrastructure, skills or institutional foundations required to support the widespread adoption of new technologies.

According to Accenture, companies are also not taking enough effort to ensure the full IIoT benefits. The research shows that while 84% of the C-suite executives say they are “ready to capitalizs on the IIoT”, 73% still has to make concrete plans for the IIoT, with only 7% having developed comprehensive Internet of Things strategy with investments to match, showing a big gap between the companies’ readiness and reality. “But its [IIoT] full economic potential will only be achieved if companies move beyond using digital technology to make efficiency gains alone and unlock the value of data to create new markets and revenue streams. That means radically changing how they do business: working with competitors, forming partnerships with other industries, redesigning organisational structures and investing in new skills and talent,” comments Paul Daugherty, Chief Technology Officer at Accenture.

Accenture concludes the report with the listing of three areas that companies need to address to accelerate the adoption of the IIoT:

• Re-imagine industry models: redesigning organisations, partnerships and operations.
• Capitalise on the value of data: establishing interoperability and security standards to ensure data can be shared with confidence between companies.
• Prepare for the future of work: setting up new organisational structures to allow workers to collaborate more creatively with counterparts in partner companies.

* The Industrial Internet of Things is defined as “a network of physical objects, systems platforms and applications that contain embedded technology to communicate and share intelligence with each other, the external environment and with people.”