Harvard’s Michael Porter, an economist noted for his work on competition stated that the last 10 or 15 years have been “pretty dismal” for the economy. The IT- and Internet- driven innovations over the past four decades or so have played themselves out. The rate of investment and innovation “has been slowing down,” he said. But that will change thanks to Internet of Things (IoT) technologies, which will deliver “tremendous” efficiency gains, he said.
“We’re going to drive waste out of the economy in ways that we have really never seen before,” said Porter, who sees the potential for a “bright era” ahead.
At the ThingWorx conference, organized by the IoT platform company of the same name, Porter put context around how the IoT efforts of many individual companies will lead to overall economic improvement.
Products that are connected can communicate their condition and how they are used. This data will be used to schedule maintenance when it is needed, and not against a schedule that requires maintenance whether the product needs it or not. Usage data will feed back into product design, and predictive analytics will be used to reduce failures and outages. All those things will improve efficiency.
Eventually, the IoT will deliver products that decide “what they should continuously do without human intervention,” said Porter. “We believe that this is going to give a real opportunity for a surge of growth — a surge of productivity, a surge of innovation,” he said.
The IoT will also change how manufacturers and services firms interact with customers. In today’s model, a business sells a product to a customer and “there is just silence until something goes wrong,” said James Heppelmann, president and CEO of PTC, the parent firm of ThingWorx.
Today, businesses are asking the customer “to be the sensor and monitor the thing” and then call if there is a problem, said Heppelmann. “This has led to a massive proliferation of call centers,” he said.