In his Wall Street Journal essay “Why Software Is Eating the World,”¹⁸ Marc Andreessen points out software’s growing importance and disruptive potential to non-technology industries. As more products become smart and connected, software is emerging as the connective tissue for value creation, even for companies that sell physical goods. The convergence of the physical and digital worlds begins with sensors and sensory data, which automates and quantifies pattern tracking for both product distribution and customer behaviours in the physical world. Such data is becoming the currency of the Industrial Internet economy, and the foundation for new software-enabled services. 

Ongoing improvements in sensor technologies – including miniaturization, performance, cost and energy consumption – are making intelligent products more accessible. These sensors are increasingly being installed in industrial equipment, such as GE’s latest locomotives, which are equipped with more than 250 sensors that measure 150,000 data points per minute.¹⁹ As this level of digital infrastructure develops, companies will be able to take advantage of growing data streams to apply powerful analytics for insights that can enhance existing services, enrich customer experiences and create alternative revenue streams, not only through new products but also through entirely new business models.

With the Industrial Internet, manufacturers are already using new software capabilities to improve operational efficiency through predictive maintenance, and achieving results such as savings on scheduled repairs (12%), reduced maintenance costs (nearly 30%) and fewer breakdowns (almost 70%).²⁰ For example, ThyssenKrupp AG, which makes and maintains elevators in buildings around the globe, uses networked sensors for its predictive maintenance system designed to reduce down time and unnecessary trips by service personnel for elevator repair. Data from the sensors travels to the cloud, where analytics software identifies anomalies to determine what problems need immediate attention versus those that can wait for scheduled maintenance.²¹

Similarly, product companies increasingly rely on software to differentiate their products and customer experiences. For example, automotive supplier ZF Friedrichshafen AG’s intelligent transmission system continuously monitors and analyses a commercial driver’s behaviour, along with topographical data, to signal vehicle transmissions when to shift gears. As a result, truck transmissions last longer and use less fuel.²²