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The Internet of Things – Accelerating a Connected New Zealand was launched on 29 June in Wellington by the New Zealand IoT Alliance. Read the Executive Summary or the full research report.
The Internet of Things is a collection of real life things that are connected to the internet. These connected things collect and exchange data. Data from a connected world enables us to make better decisions, problem solve and improve productivity.
While IoT has been around for many years, it has been the subject of heightened interest in more recent years. Much of the current IoT hype is driven by consumer devices such as fitness trackers and smart white ware. However, the real value for IoT is in enterprise and government. Research by IDC, a specialist global technology research firm, found that there is much interest in IoT in New Zealand but very few deployments of substance. New Zealand was also found to be ranked highly as a nation in terms of IoT readiness yet a lack of understanding of the economic value appears to be holding back investment. The economic value that accelerated uptake of IoT could bring for New Zealand economy appears significant. Economic analysis by Sapere, an economic consultancy, estimates a potential net benefit for the New Zealand economy over 10 years of $2.2 billion in present value terms across a mere nine common IoT applications. There are many ways to stimulate the uptake of IoT with most stemming from an increased awareness of the potential value that IoT can bring.
New Zealand has a Vibrant IoT Ecosystem
In New Zealand, the IoT ecosystem is fragmented, many vendors solve some pieces of the puzzle but few provide end-to-end solutions. However, there are a growing number of positive signs that interest and awareness of IoT is improving. Some of the more significant IoT projects underway include:
- A number of local councils are planning or deploying ‘Smart City’ initiatives.
- Many solutions are being developed for the Agribusiness sector, although few have reached scaled deployment status.
- Universities are undertaking IoT research within health and wellness, facility and building management, and early childhood education.
- Telecommunications companies are using their cellular connectivity to deliver IoT deployments.
- A race is underway to implement low powered wide area networks (LPWAN), designed specifically for IoT data. Kordia and Kotahinet are currently building LPWAN’s across New Zealand and Vodafone Group have been trialling its version called NBIoT (Narrowband IoT) which is expected to be deployed in New Zealand in the future.
- Several startups or niche vendors developing IoT solutions, enabled by commercial models such as crowdfunding.
- Several international technology organisations offering IoT services in New Zealand, for example, Huawei, NEC, Cisco and IBM. NEC has formed a partnership with Wellington City to use the city as its IoT laboratory, while the city receives the benefits of the solutions.
There are a number of drivers and enablers spurring awareness and interest for the Internet of Things in New Zealand. These can be placed in three categories:
- Technology. New Zealand has world class internet connectivity with the rollouts of the Government’s Ultra-Fast Broadband and Rural Broadband initiatives, plus cellular networks and LPWAN.
- Business/Economics. New business models including innovation centres, business incubators and crowd funding models are enabling entrepreneurs and start-ups to quickly prototype new IoT concepts.
- Culture. New Zealanders have always been renowned for their pioneering and innovative ways. Our approach to solving problems and a highly-connected culture is driving experimentation with the Internet of Things.
Local IoT Uptake is Slow
While all of these projects indicates an active IoT supply in New Zealand, the demand uptake is slower. The research found that only 14% of New Zealand enterprises have deployed an IoT solution.
While many trials and proof of concepts are taking place across the country, scaled deployments are rare. Investment is currently inhibited by:
- Executives within organisations lack understanding of how IoT can benefit them.
- Buyers concerns over becoming tied to proprietary systems, the choice and longevity of connectivity solutions and standards.
- The fast moving pace of change in technology drives fear that by the time an organisation brings an IoT product or solution to the market, it could be redundant.
- A lack of clarity over how privacy and security of IoT data should work, including data ownership, accountability and sharing with third parties.
New Zealand is ready
The research found that 70% of organisations that have, or are planning to implement IoT, believe that IoT will be transformational or strategic to their business. This suggests that once organisations understand what IoT can do for them, it becomes increasingly important.
New Zealand, as a nation, is well prepared to take advantage of the opportunities IoT brings. According to the IDC G20 IoT Readiness Study, despite having a relatively small GDP and population compared with other G20 nations, New Zealand scored well on measures such as ease of doing business, government effectiveness, regulatory quality, innovation and education. New Zealand has the right ingredients to be ready for the growth of IoT. However, now it needs to put those ingredients together to create a winning formula. Central and local governments should work with each other and the industry to grow knowledge, design and implement sound policies that continue to cultivate innovation, maintain adequate technology infrastructure and sustain the environment necessary for the IoT’s growth. The key role for government is as a catalyst for this growth.
- The key opportunities for using IoT to generate economic growth in New Zealand are:
Agribusiness. As a significant contributor to the New Zealand economy, IoT can improve productivity and efficiency. For example, IoT could be used to ‘reduce environmental impacts’ and potentially help ‘add value to volume’.
- Across Cities. IoT can reduce operational costs and make cities more desirable for citizens. Cities can also benefit from sharing data, leading to new business and revenue streams by third parties.
- Utilities. IoT metering reduces costs for both the supplier and the consumer. Opportunities include better network load management, early identification of leaks, automatic meter reading, and accurate billing.
- Asset Tracking. Tracking location and usage of equipment, cargo and vehicles drives efficiency and reduces maintenance.
The Potential is Significant
An analysis of the economic benefits of IoT across nine significant IoT applications estimated a potential net benefit for the economy over the next 10 years of $2.2 billion with a plausible range from $1.1 billion to $3.3 billion.
The economic analysts derived this number from the productivity and efficiency benefits of a mere nine applications of IoT across agribusiness, cities, utilities, asset management and manufacturing. The potential benefit to the total economy could be significantly greater.
To benefit however, the key change required is creating awareness, education and improving knowledge while managing challenges, such as security and privacy of IoT data. Vendors should seek to turn discussions from technology led to business led. Buyers need to better understand that data is the value of IoT, not the technology itself. Data should be considered a strategic asset. The industry needs to collaborate and build alliances to create the momentum to enable scaled deployments.
The Government can be a catalyst for growth by using Government tools to increase awareness, educate, create policy frameworks for IoT security and privacy, and make it easier for startups and innovators to negotiate commercialisation. A cohesive Government vision and strategy for the IoT will help New Zealand to deploy unified city initiatives throughout the country. Government sponsorship of one or more flagship IoT initiatives would also accelerate New Zealand’s transition into a Digital Nation.