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How the Industrial App Economy Will Drive the 4th Industrial Revolution

The Industrial Internet is leading to the development of an industrial app economy that has the potential to have a bigger impact than consumer apps. Here’s how.

 

Thanks to disruptive technology, the world is changing more quickly than ever before. As a result, many industries — manufacturing, energy, healthcare, transportation — face an important mandate: identify as tech companies or become obsolete.

The Industrial Internet is a major part of this cultural transformation, bringing about a nascent industrial app economy that holds the potential to drive the 4th Industrial Revolution. The Industrial Internet will be the powerful enterprise counterpart to the consumer Internet of Things (IoT). It is transforming manufacturing — and the mindset firms need to succeed.

Welcome to Platformia

One major shift is from products to services. The number of wirelessly connected products in existence (excluding smartphones or computers) is projected to rise to 21 billion by 2020. The data output from these smart, interconnected products will be the foundation for new services that could be more profitable than the products themselves.

A second shift is the race to develop “platforms,” software foundations where applications can be built. One of the biggest challenges facing both the consumer IoT and the Industrial Internet is interoperability — smart objects will have to be programmed to synch on the same platform to communicate. Yet it’s likely that a handful of global behemoths will develop competing platforms that dominate this space — a world of Platformia — instead of one all-encompassing platform connecting every industrial and consumer object. This will merely be the next evolution of something we already see every day: competing smartphone and computing operating systems.

The Industrial App Revolution

The marketplace for consumer-oriented personal apps has exploded exponentially, and a similar app economy is now developing within the industrial app space. Systems, machines and products on the Industrial Internet will be guided increasingly by industrial apps. While consumers may not be aware of most industrial apps that operate “behind the curtain,” these apps could have an even greater impact on their lives.

Collectively, these apps will be one of the driving forces behind productivity and operational efficiency in the global economy of the near future. The global industrial app market should exceed $200 billion by 2019, according to research firm Gartner. That estimate might be conservative, if this higher-ticket marketplace follows the hockey-stick growth curve of the consumer market.

Perhaps the greatest driver behind the proliferation of industrial apps is time —increasingly the most important underlying value proposition in everything we do. How do we optimize time for customers and employees? How do we shave time off of production and distribution? How do we make more responsive, real-time decisions?

By leveraging time, industrial apps will revolutionize both supply-chain and customer service. Businesses will be able track products from the manufacturing floor to distribution centers and, ultimately, end users. This will help them prototype, iterate and customize products more quickly. As Michael Porter of Harvard Business School predicts, the rise of smart, connected products will unleash a “new era of competition” — with product makers gaining an equal footing with retailers and owners of technology platforms in vying for the consumer.

Not Your Typical App

There are several ways the development of the industrial app economy will look different than the consumer market:

Customization: Industrial apps will often be proprietary and specialized — either tailored to a particular industry or to one particular company.

Cost: Because these are more sophisticated solutions, industrial apps will cost considerably more. The cost will be offset by the fact that they’ll inherently have built-in economies of scale — allowing the organization to distribute the cost of that app across all employees — as well as the operational efficiencies that will impact the bottom line.

Quality: Coders will need to have an advanced skillset with regard to both quality and security. While there’s usually a higher tolerance of bugs with personal apps, industrial solutions will not have anywhere near the same margin for error.

Security: Cybersecurity is one of the costliest and fastest-growing areas of risk for large enterprises. The emergence of the industrial app economy will only exacerbate the potential risks, so developers will spend much of their time and energy securing the underlying code of these apps.

Big Data & Analytics: Perhaps the most important benefit of industrial apps will be the resulting troves of proprietary data companies will have access to. Data from industrial apps will ultimately become one of the most important and leverageable sources of intellectual property (IP) for companies.

 

Bottom line, in an era when all companies are tech companies, they also must view themselves as data-rich with valuable IP. And as more and more companies seek to optimize operations through the Industrial Internet, the industrial app economy will help power the next industrial revolution.

(Top GIF: Video courtesy of GE)

 

Jared-Weiner-HeadshotJared Weiner is Executive Vice President & Chief Strategy Officer at The Future Hunters.

 

 

 

 

All views expressed are those of the author.

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