By Kerry Topp
Globally the Internet of Things (IoT) is getting a lot of attention for its potential to transform major industry sectors such as agriculture, transportation, manufacturing, construction, and technology. It’s also projected to be a market worth US$7 trillion or more by 2020.
In addition, the number of connected things, from computers to household monitors to cars, is projected to grow at an annual compound rate of 23.1 percent between 2014 to 2020, reaching 50.1 billion things in 2020.
“80% of organizations have a more positive view of IoT today compared to a year ago. This reflects greater levels of attention from the C-suite and a better understanding of how the many different elements of the IoT ecosystem are starting to come together,” Computing Technology Industry Association
OECD figures show that New Zealand is positioned well to take advantage of IoT transformation, however, these figures also suggest that smart cities, homes and consumers are only just emerging here. Whilst it would be harsh to call New Zealand a IoT adoption laggard, the evidence is that we are not quite leading the way either. We need to do more, and here’s why.
Firstly, what is the Internet of Things?
The truth is, there is no standard definition for the Internet of Things. If you have heard or read about IoT, chances are you’ve come across a number of different perspectives. Despite how complex IoT seems, it essentially comes down to four areas:
- Physical ‘things’ such as line of business assets, including industry devices or sensors
- Those ‘things’ have connectivity to the internet, to each other, and/or to people
- Those ‘things’ collect and communicate data—this may include information gathered from the environment or inputted by users
- Analytics are then performed on that data that enable people or machines to take action.
In a recent study by the Computing Technology Industry Association (CompTIA), a non-profit IT-focused trade association, it was found that in the minds of business and IT executives, IoT is associated with “ever-greater levels of connectivity; more intelligence built into devices, objects, and systems; and a strong data and applied learning orientation.”
The image below captures some key words business and IT executives associated with the term Internet of Things.
What problem does IoT seek to solve?
The aim of IoT is simple; to take “dumb” objects that do not traditionally collect data or communicate (e.g. a freight container) and make them “smart” so that they can be managed more efficiently.
In 2014, as part of our annual innovation event, Datacomp, Datacom wanted to test how we could turn “dumb” everyday devices into “smart” objects that produced data, and with some smart analytics added, enabled us to draw insight into these items that improved our experiences of them.
In essence, we wanted to reimagine experiences of everyday objects by pairing them with sensors and analytics and see what insight we could gain on the potential for the technology and the likely use cases.
During Datacomp, we had teams hacking chairs, assembling doors and pulling apart beehives. The results, well, they were spectacular. But most importantly, we learnt that IoT, amongst other things, can;
- improve business processes around physical assets,
- optimise supply chain operations,
- build a “smart” retail product,
- reduce loss and downtime of assets in the field, and
- collect data for government regulation and compliance purposes.
The benefits of IoT certainly looked interesting to us at the time and based on our initial testing and use case validation, certainly worth exploring – particularly as global demand was increasing.
What is the current level of IoT adoption, globally?
According to the study by CompTIA, “60% of organizations have started an IoT initiative, 45% of which were funded by a new budget allocation. An additional 23% of companies plan to start an IoT initiative within a year. In another exploration of the state-of-IoT, about 90% of the 500 executives Bain & Co surveyed said they remain in the planning and proof-of-concept stage, and only about 20% expect to implement solutions at scale by 2020.”
How does New Zealand compare?
New Zealand is positioned well to take advantage of IoT transformation – having a large number of active machine-to-machine (M2M) connections. As you can see from the OECD published data (see graph below) – from late 2015 – it shows New Zealand is only second behind Sweden for M2M SIM cards per 100 inhabitants.
Unfortunately, this statistic often leads to claims that our wonderful country is an IoT leader, but as Shane Minogue, Senior Market Analyst at IDC, points out in his insightful article entitled, New Zealand is a leader in IoT but is not leading the way, it is worth digging a little deeper.
“We are too easily led by a headline grabbing statistic, that means we miss the truth that lies beneath. We are all familiar with the clickbait strategy in media and with statistics like this, research is at risk of going in the same direction. It’s important to look past the headline numbers to determine if New Zealand is truly an IoT leader.”
The OECD data shows that New Zealand has over one million M2M SIM cards, and as Minogue points out, with our population being less than five million people, the per capita ratio looks pretty favourable. Unfortunately, per capita measures do not reflect absolute size.
Minogue continues, “…the New Zealand IoT reality is very different from what the OECD figures suggest; smart cities, smart homes and smart consumers are only beginning to emerge in New Zealand. While it would be unfair to call New Zealand a laggard in IoT adoption, evidence on the ground is that it is not quite leading the way either.”
So why is New Zealand reported to be a leader?
Simple: smart metering.
Electricity company, Vector, has over one million smart meters in New Zealand (and each, or most of these represent a machine to machine connection). Minogue points out that, “This means that over 80% of M2M connections in New Zealand today are related to the smart metering use case.”
Minogue believes that, “Over the next four years, globally, the number of IoT connected devices is expected to balloon to 50 billion, and 250 million of those will be connected cars. But the growth of connected cars and M2M connections is just one aspect of the larger Internet of Things market, of course.”
But the future is bright.
Encouragingly, there are many innovative applications for IoT in development across many sectors in New Zealand. This activity suggests that New Zealand has a place in the IoT world and can become a world-leader in areas that match or domain expertise, like agriculture, horticulture, boat-to name a few.
Bold IoT steps being made in New Zealand
IoT is a fast growing market and its future growth will be supported by industries where New Zealand organisations already have clear points of difference, experience and expertise. Not surprisingly, IDC has identified the agriculture sector as one area for growth in IoT in New Zealand.
There are a number of businesses creating innovative solutions in IoT in the agri-tech industry, already. Ballance Agri-nutrients, a Tauranga-based fertiliser and agri-nutrient company, utilise IoT for farm mapping and precision automation. The system, known as AgHub, provides farmers with an online farm management system that automatically collects and displays farm data, so that they can gain a deeper understanding of what’s happening on their farm.
Another example is Tru-Test, a farm management system provider. Tru-Test have recently released a smart Vat Monitor that updates farmers of issues, in real-time, with the storage of their valuable milk.
The expertise that New Zealand has in technology and agriculture (NZ’s Tech Sector is the third largest export sector behind dairy and tourism) suggests that New Zealand can become a leader in niche areas like farming and other core competency areas like horticulture, aquaculture etc.
Since better understanding leads to smarter decisions that drive productivity, ensure compliance and save time, it’s no wonder many are saying that IoT will fundamentally change how New Zealand businesses will operate in the coming years.
At Datacom, we agree fully and have over the last two years have invested in building up an IoT practice that at it’s heart brings together our best in breed security, integration, field service and support capabilities.
We haven’t invested in IoT without good reason, we firmly see the benefit for New Zealand businesses investing in this space.
Why should New Zealand companies invest in IoT?
At a high level companies that implement IoT within their business reduce costs and gain competitive advantage through more efficient and predictable business operations.
At a more granular level, and as illustrated in the table below, the top five expected business benefits associated with adopting IoT, are:
- Cost savings from operational efficiencies,
- New/better streams of data to improve decision-making,
- Staff productivity gains,
- Better visibility/monitoring of assets throughout the organization,
- New/better customer experiences.
As the CompITA results indicated, “While the expected benefits are roughly split between existing operations and new products or revenue streams, a majority of businesses (61%) report having their IoT initiative as “enabling and extending” technology as opposed to regarding it as a separate and distinct activity (37%).”
The benefits of IoT were also confirmed by Bain & Co who identified high expectations of the potential benefits of the IoT, including improving the quality of products or services, improving the productivity of the workforce, and increasing the reliability of operations.
Typical Use Cases
The typical types of use cases that we at Datacom see on a regular basis, are;
- Agriculture – for monitoring and remotely feeding livestock or crops to optimise health and reduce costs, or to adhere to government standards and regulations,
- Logistics – for tracking valuable objects (loss, theft, damage etc), estimating delivery times, real-time routing for traffic conditions etc,
- Field services – for monitoring worker health, machinery servicing etc,
- Public sector – for things like smart traffic lights, power/water meters etc,
- Retail – for retail store management and customer tracking solutions.
Security – a big concern
Unsurprisingly, when the research company, Forrester, surveyed 232 companies developing IoT products it found that 38 percent of respondents anticipated security to be the biggest challenge to IoT implementation, more than any other issue. 64 percent cited data and device security as the most important capability for their IoT product.
In a recent survey of 220 security professionals by Tripwire it was found that only 30 percent of respondents felt their organisations were prepared for security threats related to IoT devices.
Security around your IoT play is not an area to be overlooked and working with reputable brands in this space is the only way to go.
A 2015 study by investment bank Ocean Tomo calculated that in 1975, tangible assets—buildings, equipment, and so on—comprised 83 percent of the combined value of the Standard & Poor’s 500 Index. By January 2015, that number had fallen dramatically to 16 percent, meaning that today, 84 percent of the S&P’s value is made up of intangible assets—things like a company’s intellectual property, its customer relationships or its proprietary way of doing things.
The conclusion? The average company’s value today is largely the sum of its ideas and solutions. And those solutions increasingly come from harnessing digital technology to do things better and faster along every link of the value chain—delivering more convenience, providing supply chain transparency, shortening cycle times, and other intangibles that build stronger and enduring customer relationships.
Regardless of the promise of IoT, applying technology for technology’s sake is unsurprisingly, not recommended.
Rather, applying a strategic lens to your core activities and understanding costs and returns, is absolutely recommended.
It’s important to recognise that not every dollar is equal – to make intelligent and sustainable decisions, executives must understand which activities are critical to the health of the business and which are expendable because they don’t add value. Successful companies have a clear picture of what the core capabilities that deliver maximum value.
Where does your business stand? Can you afford not to be actively looking at IoT?
For more information on Datacom’s IoT practice or how to quantify which activities are critical to the health of your business, please email email@example.com.
- New Zealand is a leader in IoT but is not leading the way https://www.linkedin.com/pulse/new-zealand-leader-iot-leading-way-shane-minogue (Shane Minogue)
- Still Think the Internet of Things Is Overhyped? Check Out This Chart http://www.fool.com/investing/2016/06/22/still-think-the-internet-of-things-is-overhyped-ch.aspx (Chris Neiger)
- Internet Of Things By The Numbers: What New Surveys Found http://www.forbes.com/sites/gilpress/2016/09/02/internet-of-things-by-the-numbers-what-new-surveys-found/#31229b503196 (Gil Press)
- Tripwire Survey: Few Are Prepared for IoT Security Risks https://www.rtinsights.com/tripwire-iot-security-survey/ (Sue Walsh)
- Simplifying The Complexity of IoT https://www.xively.com/resources/simplifying-the-complexity-of-iot (Forrester Consulting on behalf of Xively)
- Datacom IoT Microsite – http://www.datacom.co.nz/iot
- Datacom IoT Product Blue Paper – http://www.datacom.co.nz/Datacom/media/Digital-Assets/Documents/Datacom-IoT-Brochure.pdf