Look to Cyber-Physical Systems, Not Social Media, for the Data Revolution

Big data was a buzzword in Silicon Valley before becoming a bogeyman over concerns about privacy. But whether trumpeted as the next great information and communications technology (ICT) revolution or a harbinger of a dawning Orwellian age, big data too often goes hand-in-hand with a narrow focus on social media.

The social media dimension of the data economy is important; so too are the attendant concerns about privacy and security. But to see the importance and magnitude of the data revolution, it is necessary to turn away from social media and toward the physical economy.

In traditional industries, such as manufacturing, and new industries, such as telecommunications and software, we can see a deep transformation in the very economic mode of production. The change is not simply in how people communicate. It is not a consumer fad. Rather, what we are seeing is a fundamental economic transformation that is already underway.

The Internet of Things is a term used to capture part of this transformation, in which inanimate objects profit from the connectivity of the Internet infrastructure that has benefitted humans for 25 years. But as with big data, where an overemphasis on social media risks taking the trees for the forest, commentators on the so-called Internet of Things also risk missing the big picture.

A recent article comically sketches the skeptical argument against the world of the Internet of Things. The author likely speaks for many when he writes:

“Honestly, it creeps me out to think about my devices at home talking to one another, doing stuff without my involvement, and talking about my habits—good and bad—to total strangers (advertisers, service providers, or just more machines), behind my back. There’s nothing warm and fuzzy about this. At all.”

The author may be right to be skeptical about, even “creeped out” by, the alleged revolution in consumer devices. A smart toaster may or may not be personally or economically desirable; in any case, it’s hard to see how it will change the world.

But focusing too narrowly on the consumer side of things when assessing the current transformation is akin to focusing too narrowly on Twitter or Facebook when assessing the big data revolution. In both cases, skeptics are right that outsized predictions are a dime a dozen. And if smart toasters and the like—and, frankly, new ways of sharing our cultural preferences on the Internet—were all there was to the data revolution, then privacy and security issues might indeed trump the alleged benefits. Is it worth the security risk to share sensitive data, just so Amazon can suggest new products to me more effectively? Is it worth the privacy risk to have my entire culinary habits digitized, or the security risk to have my household appliances all connected up?

From this point of view, the author may not be wrong, and certainly isn’t alone in “feel[ing] suspicious, weary and a bit turned off by the whole idea.” At any rate, these are questions worth asking when considering adopting new tools in our personal lives.

But the data revolution isn’t reducible to consumer devices any more than the railroad age—which was facilitated by the new connectivity of the telegraph—was reducible to telecommunications. There were vexing questions, now long forgotten, about whether and how to integrate the telegraph and later the telephone into cultural life. Just as in-person communication retained, even gained, personal and cultural value in the era of telecommunications, perhaps some day soon un-connected, insensate, objects, and systems will retain, even gain, personal and cultural value in a new era of smart technologies.

But underneath these cultural worries, the data revolution is already transforming the physical economy. Google’s recent acquisition of Nest, Cisco’s Internet of Things architecture, and Intel’s smart technology, are all signs of a larger integration of ICT technology into more traditional industries.

GE coined the term Industrial Internet to capture the implementation of smart technology and wireless connectivity to industrial processes. Here smart sensors, real-time communications, and data analytics enable better maintenance of enormous industrial systems. According to GE, even a 1% improvement in efficiency from these new tools generates gargantuan savings. And that is only the beginning. 3D printing, as GE knows, portends dramatic changes in how manufacturing itself, not merely industrial maintenance, takes place.

Cyber-physical is the term used by tech illuminati to describe systems in which software, smart technology, and connectivity are embedded into a given physical infrastructure—smart vehicles and their supporting infrastructure, the smart grid, and the Industrial Internet being prime examples. Such systems may or may not be economically viable or culturally and psychologically desirable everywhere and on every level. But they are already transforming the way our physical economy—ever important even in the era of information—does business.

What is transformative about all of this is that the information economy, hitherto part of the communication sector, is merging with—no longer merely complementing—the physical economy. That is something which will change how we produce things and information in fundamental ways. Once we recognize that, we will be in a better position to assess more cogently how and to what extent these new technologies will change how we interact with things, information, and even one another.