Internet of things makes the smart connection between efficiency and profit

The internet of Things (IoT) is a network of physical objects, from lights to locks and smoke detectors to motion detectors with embedded technology that enables them to communicate, sense, analyse and interact.

With the impending rise of smart cities in the Middle East, homes will move from merely being interconnected to becoming fully information and smart-enabled.

Middle East governments use IoT technology to track and monitor goods and assets as well as our everyday route to work, among other things. But there is still a lack of understanding about how IoT affects Middle East business.

While the benefit of interconnecting IT systems is clear, many businesses in the Middle East have yet to prepare for a world in which the physical assets (equipment and machinery that are critical to the core business activity) are also interconnected. This lack of understanding is a major hindrance for organisations from even taking the first step toward IoT – which is to understand how IoT might influence their businesses.

The important thing for organisations to understand is that IoT is not a technology initiative – it is a business improvement initiative. Behind every IoT project there is a business priority. It has very broad applications and supports a wide range of business models, although most applications are rooted in four usage scenarios:

Manage – connected things can be monitored and optimised. For example, sensors on an asset can be optimised for maximum performance or increased yield and up time.

Charge – connected things can be monetised on a pay-per-use basis. For example, cars can be charged for insurance based on mileage.

Operate – connected things can be remotely operated, avoiding the need to go on site. For example, field assets such as valves and actuators can be controlled remotely.

Extend – connected things can be extended with digital services. For example, connected healthcare equipment can receive software upgrades that improve functionality.

These four usage models help organisations tackle two sets of business priorities – the internal priority, which is essentially to do with reducing costs, improving productivity or efficiency and optimising resource utilisation and the external priority, which is essentially to do with growing sales, finding new growth markets and enhancing customer satisfaction.

The challenges that Middle East organisations face when it comes to embracing IoT include the lack of infrastructure, relevant business use cases, product ecosystem and awareness and lack of willingness to commit investments in an emerging technology area that is yet to prove business returns globally. There is a misplaced understanding that IoT will require fresh investments in technology, rendering the existing technology investments redundant. Further, security issues related to connecting critical physical assets to the internet, and also play their part in dampening IoT adoption.

But by 2020, we are likely to see investments from large end-user organisations that are currently at the initial stages of undertaking some pilot projects. Government departments (especially from the traffic management and water quality management perspective) and organisations in the energy and utility sector (that are adopting smart grids to manage power supply and demand, and to study customer’s power usage behaviour), and other manufacturing industries such as oil and gas, cars, FMCG, pharmaceuticals, etc, and service industries such as retail, health care, hospitality etc, are currently identifying various pilot projects in IoT.

The pilot projects are meant to leverage the IoT to help optimise the performance of large assets, such as usage-based billing, leading to reduced operating costs such as lower energy bills, enhanced customer satisfaction, and improved availability from reduced downtime from failures. As more success stories emerge, both globally and locally, Middle East businesses will discover that IoT can transform every facet of their organisation – manufacturing, supply chain, sales and marketing, the management of customer relations management, and product development.

For successful IoT implementation in the Middle East, businesses will have to focus on the immediate opportunities and smaller pilot projects. the alternative is business and IT leaders committing to grand and expansive plans that demand big leaps of faith to justify investments and long-term growth, and may not deliver the expected results. Success will also depend on aligning the IT resources, processes and people carefully, experimenting and learning from other industries as sources for innovative uses of the IoT.

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