Techtonic Shifts IoT Driven 4th Industrial Revolution

By Dinesh Chandrasekar, Director, Global Solutions & Innovation (GSI) at Hitachi Consulting

In the last century, electric power brought  machines and factories to life. In this century, software is bringing machines and factories to life in  entirely  new  ways. In the last century, we measured our machines by horsepower and their physical capabilities. In this century, we will measure our machines by Computing  & Analytical power and their  ability to  help  us make swift decisions. There has never been a better time to be in the Technology space. Over the next decade, new software  will ripple  through  every facet of industrial operations - manufacturing, deploying, and operating smart machines, and the ways we service those machines. Peter  Levine, a renowned  Venture capitalist, aptly said, "The entire world is becoming the domain of IT."  This is being driven by the Industrial IoT revolution and an increasing number  of intelligent machines that are operating out at the edge. These machines are generating massive amounts of data that will need to be captured, analyzed, and acted on.

Top 5 technology companies - Combined Manpower is 250,000 people but Market cap is 3 Trillion. The Value Creation is enormous. Apple rode the PC and mobile wave to  that spot.  Amazon is  number three today, and many people expect Amazon  to  ride  the   e-commerce and cloud  computing wave to  the top  spot  in  the next  few years. What  happened in the consumer & internet economy is now transitioning to industrial economy. Let’s look at an example. And this example  focuses  on  the  fact  that more and more value accrues to the consumer, and this is a phenomenon called "consumer  surplus",  which is  not   new - consumer   surplus existed even in the  prior  Industrial revolutions.  But  today,  platforms that  drive  scale  rapidly  and  take costs close to zero marginal cost are attacking  all kinds  of  sectors,  and they are actually creating the surplus. Let’s look at the Skype example. In the telecom industry, obviously, we know  all about  that  industry,  and we know about Skype - the fact that we can make calls at very little if no cost at all. So in 2013, for example, USD 37 billion in the loss was experienced by  this  telco  industry, and the question is: Where did that go? So if we look closer, we realize that that is consumer surplus that is a value that we've been able to accrue for no cost, and that's the reduction in the revenues experienced by that specific  industry.   And   Skype,  by the way, only made USD  2 billion, ad-supported   revenues  and  other, so basically, USD  35 billion of consumer  surplus  was  created  by this phenomenon.

The 4th Industrial & IoT revolution  is about  moving  from  a computer on every desk, a computer in every home,  and  a computer  in every pocket - to  a  computer  in every machine.  Going  forward, every machine across your enterprise will become a smart, connected machine. And, our expert IT teams will be asked to manage these machines - ATMs, warehouse robots,  construction  fleets, etc. The good  news is  that  what  we  have learned around  managing compute, network,  storage,  Applications & automated workflows in the enterprises can now be applied here. The 4th Industrial revolution is real. IoT, Artificial Intelligence, Robotics, Blockchain & other cutting-edge technologies are going to rewrite the business  models  across  industries and geographies. We have spent the last 70 years building and deploying software & hardware  that  connects and  empowers  humans.  We  will spend the next 70 years building and deploying  software  that  connects and empowers machines.

There is a paradigm shift happening today and it’s already triggered other revolutions. If you look at the future scenario, where it is heading towards is the technology and innovation solving real-world problems such as smart cities, smart health, smart transportation, Smart energy,  Money  2.0 and  finally the radical life extension to achieve immortality.  Our  kids   will  live to  90 or 100  as  the  default.  We are  gaining  8  hours  of  longevity per  day  -  one-third  of  a  year per year. Genetic  engineering  is  likely to eradicate disease, impacting longevity and global population. DNA editing is becoming a real possibility in the next 10 years, and at least 50 Silicon Valley companies and  Google  are focused on ending aging and eliminating death. One such company is Human  Longevity Inc., which was co-founded by Peter Diamandis of Singularity University. Today there are six to seven trillion dollars  a year spent  on  healthcare, half of  which  goes  to  people  over the  age of 65.  In  addition,  people over the age of 65 hold something on the order  of USD  60 trillion in wealth. And the question is what would  people  pay for an extra 10,20, 30, 40 years of healthy life. It’s a huge opportunity & enjoys the revolution ahead.

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