Smart thinking: How an IOT strategy can boost the bottom line

The Internet of Things (IoT) has been on the radar for some time, but now with much lower costs of data storage and connectivity, business usage has become much more affordable. With the NSW government now writing its IoT policy framework, and 5g connectivity and new satellites and technologies deployed, Frank Zeichner, CEO of the IoT Alliance Australia, says now is the time for business to get on board or be left behind.

Years ago, deploying a business strategy based on The Internet of Things would have been prohibitively expensive. However the good news for boards and managers implementing a new data-led digital transformation and strategy is that the costs are now far cheaper.

“The base cost of doing it (an IoT strategy) now has utterly dropped to the floor,” Zeichner says. Not only is the cost of collecting data way reduced, the cost of storing the data is nothing. In 1980, one gig cost $250,000 – now 15 gig costs nothing.”

Devising a new data-led strategy which applies end-to-end in the supply chain is an effective way to cut production costs for business, he says. “It means you're completely changing the proposition to the end customer, to the environment, and you're making more profit.”

Defined as “the interconnection via the Internet of computing devices embedded in everyday objects, enabling them to send and receive data”, the Internet of Things is changing the ways we live and work and consume services and products.

In Australia, from agriculture to energy to water and retail, there are many success stories of innovative sectors and companies which are transforming and cutting their own costs – longterm, he says. They include the following:

Companies

The Costa Group, Australia’s largest horticultural firm, are completely IOT controlled through the growing process. “They use a quarter of the water (compared to usage before), the yield is higher, they can control the quality and they're graded accordingly all the way through to the retailer,” says Zeichner.

CHEP Australia, a division of Brambles, provides supply chain services including pallet and container pooling services to clients in the food, beverage and retail sectors. With about half a billion pallets, they have introduced sensors on the pallets which track motion, temperature, humidity and whether the pallets been dropped, if the pallet has been underwater, if it's been overheated. “Now they can hold their suppliers, their transport companies to account. And offer an end-to-end quality of service.”

A company called Beef Ledger has a blockchain supply chain of beef from Australia to Japan and it measures the data of the whole journey of where the cow came from - how the meat is refrigerated, all the way to the end of the supply chain. “It guarantees that it is chilled beef, which sells for three times the price of frozen beef.”

Sectors

Food and agriculture has been identified as the sector most rapidly transformed by IoT. The Victorian Government’s $27 million investment in digital agriculture has been a catalyst for IoT programs. KPMG has identified 300 agtech vendors in Australia and is launching an agtech finder to help farmers identify the right solutions.

Water. With a rich history in operational technology and SCADA (Supervisory Control and Data Acquisition) networks, the water sector understands the value of data. It is now grappling with the impact of IoT devices which can be deployed for a tenth or even a hundredth of the cost of more traditional sensor technology.

Intelligent transport. Market forecasts suggest that up to $16 billion will be invested in intelligent transport by 2025.

Barriers to IoT adoption

Significant advances have been made in the technology, security, standards and supporting infrastructure to aid the deployment of IoT solutions, but Australian business and government adoption remains patchy, according to Zeichner. Why?

A recent survey conducted by the IoT Alliance Australia shows the three main barriers to the adoption of IoT rollout are: trust and security, unclear business case, and unclear business model. However, the areas of collaboration and trust with partners and within industries “is really where we have a problem” says Zeichner.

“That is what is happening today in the supply chain theme. The shearing of the data across the supply chain requires a data across many, many companies who have never sheared data before.

“So, getting the sign-off along the supply chain means a level of collaboration that we are not used to. My thesis would be that Australians haven't yet demonstrated well enough that we are good enough at collaboration.”

The underlying question is whether business leaders are interested in the data they need to run their businesses and work with their partners and customers, says Zeichner. “The internet of things is what enables that data to be collected and processed and acted on.

“So, if you believe that data is important, more and more things are being recorded as data, because the cost of actually measuring things is dropping dramatically. It means data is now available on supply chain, on energy consumption, on water usage, on all of those things. So, if you're not actually measuring it and taking it into account, you're not actually improving your business. And, you're being gazumped by those who will.”

Messages for directors

Where company directors need to be way more alert is in realising that the Internet of Things is not just about optimisation in a life cycle, but also about understanding the relationship with the customer and realigning, says Zeichner.

The classic case of this process is the energy industry, which has had to adjust to radical changes in energy resources such as solar panels, electric vehicles and other elements and change its business models to understand it's all about the customer, not about the generator. “In 20 or 30 years’ time you will not recognise the energy market,” he says.

Interpolating McKinsey & Co research through to 2025, Zeichner estimates that IoT can deliver an economic kicker to the local economy worth up to $116 billion and a 2 per cent hike in national productivity.

The technology is maturing and proliferating. While there were 10 billion IoT devices in operation globally at the end of 2018 – that will double to 20 billion by 2022 and explode to 64 billion by 2025 as business accelerates to IoT impact.

Connectivity platforms are also expanding, offering greater choice to business and industry, and the arrival of 5G and Myriota’s low earth orbit satellites further expand user options.

IoT is to host a major conference in October in Sydney IoT Impact 2019 Conference & Exhibition. Successful early adopters will share their stories and insights, backed by local and international technology experts. Register here.