Algorithms For Business Resource Optimization

Internet of Things – Green O.R.

With all the energy- and environment-related data now available through sensors, machines, and other equipment there are great possibilities for green O.R. and analytics surrounding the “Internet of Things”.

A blurb in Harvard Magazine by Stephanie Garlock discusses work of HBS professors Marco Iansiti and Karim R. Lakhani who found many businesses have undergone serious transformations by actively utilizing data from this realm.  The example of G.E. is mentioned in article:

The “industrial internet” is the term GE executives have coined to refer to these digital integration efforts. The corporation’s new approach to selling wind turbines exemplifies the opportunities and challenges that this connected future presents. Before the world went digital, the easiest way for GE to add value to a customer’s wind farm was to sell it more turbines. Now sensors wirelessly transmit data on performance and maintenance back to GE, which can replace worn-out parts before they break and adjust controls for torque, pitch, and speed in real time. By keeping the turbines running more efficiently, GE has created worth without selling more products—and a new price model allows the company to capture part of this value. Rather than charging for the turbine alone, the sales force can quantify the wind farm’s data-driven savings and charge a fee based on the value of that optimization. These new ways of creating and capturing value have gone hand in hand with fundamental changes in GE’s operations. The company has invested billions in GE Software, and retrained its sales force to focus on long-term contracts and pay-for-performance.


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