Is Europe Ready for Another Industrial Revolution?

24 Jun 2013 | News
Europe could be on the cusp of a second industrial revolution in which advances in information and communications technologies (ICT) fuel a dramatic improvement in productivity. But the revolution may yet be stymied by inadequate education, privacy concerns and a lack of ambition

These were two of the main messages to emerge from a gathering in London of senior executives organised by conglomerate GE to discuss the "Industrial Internet" - the concept of an open global network that connects people, data and machines to boost productivity and slash waste.

Executives from airline Alitalia, power generator GDF-Suez International, conglomerate GE and energy distributor Northern Power Grid all highlighted how the analysis of the data collected by sensors attached to industrial equipment could be used to optimize machines' performance, anticipate failures, cut downtime and improve efficiency.  

"The capability to run our assets in a much smarter way is absolutely essential," Phil Jones, CEO of Northern Power Grid, told delegates gathered in London's derelict Battersea Power Station – one of Britain’s most well known industrial landmarks. Jones said Northern Power plans to use smart meters to monitor in real-time how much power each home is using, enabling it to better balance supply and demand and provide additional services. In future, your power company might even warn you that your elderly parents' usage profile has changed, potentially signalling a problem, Jones predicted.

Marriage of minds and machines

If companies across the European economy could harness data analytics to improve processes the overall impact could be significant. "Process innovation, here is where we have a great opportunity," said Nani Beccalli, CEO of GE Europe. "Europe has a very large industrial base, but it is not productive.... This marriage of minds and going to help us turn this around." GE has just released a new report arguing that the Industrial Internet could add €2.2 trillion to European GDP by 2030 (see separate news story).

Jeff Immelt, the chairman and CEO of GE, acknowledged that "industrial companies have been slow to harness the Internet...But Facebook, LinkedIn, all of those technologies are now being adopted in the industrial space." Immelt said that digital technologies are making GE's 20,000 field engineers far more productive (see separate news story for more from Immelt).

Some companies are already beginning to report significant benefits from analysing the "big data" being collected by connected sensors. In the past two years, big data projects have saved Alitalia millions of euros and 120,000 tonnes of CO2, said Alessandro Loddo, senior vice president of engineering & maintenance at Alitalia Servizi. He told delegates his airline is running more than 20 projects analysing data designed to cut fuel usage. "Big data is an integral part of our day-to-day running," Loddo said.  "Providing us with a lot of savings". Advances in ICT mean the aircraft Alitalia uses today are generating 100 times more data than those used 20 years ago, he noted.

Guy Richelle, COO of GDF SUEZ Energy International, outlined multiple opportunities for power generators. Data analytics could help his company respond to surges in demand, cut the cost of insurance and reduce the need for spare parts and employees monitoring equipment in the field. "Most of the time [these employees] do nothing," he noted. Richelle also described the ability to detect when equipment is likely to fail and, thereby, limit downtime as "extremely important."

The increasing availability of data and low-cost analytics systems is also enabling small companies and individuals, unencumbered by a corporate mindset, to innovate in many different sectors of the economy. "They see things that we don't see," said Joanna Shields, CEO and chair of Tech City Investment Organisation. She described how a start-up used a large healthcare dataset to identify a way to save Britain's National Health Service £100 million. Similarly, a teenage student in the U.S. recently used data available online to come up with a very low-cost, 100% accurate, test for pancreatic cancer. "It is important to connect the big thinkers on the Internet with the more traditional world to get this explosion of innovation happening," Shields noted.

Obstacles aplenty

However, there are several major barriers that might hold back the Industrial Internet. At a practical level, the "sheer amount of data being collected is staggering," said Emmanuel DeSousa, Deutsche Bank’s global head of Internet and new media banking. "The challenge is going to be analytics, that is going to be the will require cutting-edge thinking, but also lots and lots of talent," he predicted.

That implies European industry is going to need more software engineers and data scientists who can combine information from multiple sources to create insights. "It's not just about being a statistician, a mathematician or an engineer, it's about how you join up the dots,"  noted Iain Henderson, global account director at  consultancy Accenture. Indeed, in a vote, the majority of delegates at the GE event identified inadequate skills and education as the biggest obstacle to the development of the Industrial Internet. "The reality for young people today is a lifetime of learning," noted Joanna Shields of Tech City. "This space is moving so quickly."

Another potential obstacle is concerns about how the collection and analysis of large volumes of data will impact individuals' privacy. The majority of the audience identified "data protection and security" as the biggest policy challenge to be addressed. However, Russell Acton, EMEA ISR team leader at technology company Pivotal, argued that there should be a clear delineation between industrial data and consumer data. He also contended that consumers are prepared to share even sensitive data, such as genomic data, if they can see a clear benefit, such as a better health outcome, from doing so.

Some of the speakers said that realising the full potential of the Industrial Internet will depend on combining different datasets from multiple sources. Whereas academic researchers are accustomed to collaboration, "Fortune 500 companies tend to behave in a much more insular manner," said Acton. "If you look at the opportunities with the Internet of Things, to get the most out of it, we are going to have to learn to work together as companies." He identified regulation and an inability to see the opportunity as the main barriers to greater collaboration. "I don't think there is a "megacorp" out there now that can survive without an ecosystem perspective, working with others, even with the competition," added Henderson from Accenture.

Several speakers exhorted Europeans to adopt a more entrepreneurial mindset that will encourage innovation and risk-taking. The importance of cultural factors were reflected in an audience vote, which suggested the public sector faces the biggest challenge in taking advantage of ICT. "Culture is fundamental," stressed DeSousa at Deutsche Bank. "Risk should be rewarded and innovation cherished."

Never miss an update from Science|Business:   Newsletter sign-up