THE Internet of Things is getting plenty of hype because of what it promises — a smarter future where things, large and small, are connected via wireless technology to communicate with each other and with humans. It is also a future where organisations can be more efficient, realise new business models, tap new sources of revenue and disrupt competition.
IoT is already being deployed across many sectors, including manufacturing, logistics, automotive, healthcare, retail, security and infrastructure. For example, executives at a smart factory can access real-time data and analytics of what is happening along the manufacturing line and supply chain in order to gauge productivity, efficiency and predictive maintenance.
In healthcare, there already exist smart gadgets to track health indicators and facilitate telemedicine and digital record-keeping. Meanwhile, many cities around the world are experimenting with installing sensors for public utilities, such as flood, traffic and street-lamp control as well as energy consumption.
There are many more examples, yet for now, this future is still being fleshed out in the nascent stage of IoT adoption. Malaysia too is in the early stage of embracing IoT.
Those watching corporate developments in Malaysia will have noticed the sudden flurry of IoT deals announced to Bursa Malaysia in recent months. One of the bigger collaborations was between Axiata Group Bhd and Yen Global Bhd’s unit Atilze Digital Sdn Bhd to pursue IoT solutions in the region. Last September, Axiata and Yen Global said they would be working on pilot projects for connected cars and long-range LPWAN (low power wide area network) IoT in Malaysia, Indonesia and Thailand.
REDtone International Bhd, meanwhile, has been working on smart city innovations for a while now.
Last December, Sedania Innovator Bhd announced that it would partner Iscada Net Sdn Bhd to provide IoT solutions to the Fire and Rescue Department of Malaysia. The deal is to develop and supply integrated fire detection solutions for at least 6,300 designated buildings identified by the fire department.
In the same month, APM Automotive Holdings Bhd announced that it had bought a 52% stake in Omnimatics Sdn Bhd, a startup developing a telematics platform called CARdio to enable connected cars.
These are just some of the plans announced by listed companies. The smaller, unlisted technology companies too have been active in this space.
Nevertheless, the days of mass adoption are still far away and the world is not going to change overnight. McKinsey & Company associate partner Abhyuadaya Shrivastava sees the pervasive embracing of IoT across different sectors still at least five years away and that, too, with differing levels of adoption.
Indeed, some sectors are already seeing mass adoption, such as fitness trackers in the business-to-consumer space, and predictive maintenance of equipment in the business-to-business space.
There are many challenges in the march towards broader adoption of IoT in different sectors. There is a technology barrier, including affordability of the technology, cyber security risks and interoperability, or the ability of different systems and software applications to communicate, exchange data and use the information that has been exchanged.
Apart from the technology barrier, there are also other more business-centric barriers that are probably more challenging, Shrivastava tells The Edge via email. For one, there is the challenge of talent, which is at the heart of any sort of digital transformation.
According to Shrivastava, IoT providers have to also properly articulate the business case and the business model for IoT. “The more business-centric challenges include articulating the business case for IoT adoption. Providers struggle to explain the business benefits and investments required as well as an effective business model. Multiple business models exist but those that work have yet to be established.”
Broadly, there are three factors that determine the pace and extent of IoT adoption, according to Shrivastava. They are: economic value creation potential in the near to medium term; availability of a network of sensors or end-user devices; and interoperability.
Based on these factors, McKinsey believes business-to-business sectors like logistics and transport are moving ahead in embracing IoT while sectors such as manufacturing and oil and gas, while interested, are still held back due to interoperability issues.
Similarly, in the business-to-consumer space, personal use products such as fitness trackers and standalone smart home devices are aplenty in the market but broader adoption remains muted, says Shrivastava.
The potential for IoT adoption also varies significantly in developed and emerging markets. Simply put, it is not as easy as applying the technology and business model from developed markets to the developing world as e-commerce and financial technology startups have been able to do.
“For example, an industrial company in the US or Western Europe will want to use automation to reduce labour dependencies. For emerging markets, where labour is cheaper and more abundant, the focus is to improve asset productivity, such as production volume per machine,” says Shrivastava.
This is a reason why emerging markets have been slower to embrace IoT than the developed markets. Nevertheless, Shrivastava points out that there has been increased adoption by the governments, businesses and providers of Singapore and Malaysia. “Malaysia, specifically, is investing a lot in infrastructure and transport and we see strong interest in these sectors to adopt IoT-led solutions.”
Indeed, Malaysia has articulated plans to get in on the IoT game through a National IOT Strategic Roadmap aimed at nurturing a national ecosystem and make Malaysia a regional IoT development hub.
The roadmap reckons that Malaysia has a strong base to spur IoT domestically, given the well-developed telecommunications infrastructure, vibrant electrical and electronics industry, policy incentives and frameworks for intellectual property and cyber security protection.
Yet, the roadmap also acknowledges the many hurdles in Malaysia’s aspirations for IoT, including technological complexity and legacy systems, technology phobia and multiple public agencies working in silos on innovation initiatives.
One organisation that has been working at the forefront of promoting multi-party collaboration to advance IoT in Malaysia is the Penang-based non-profit organisation, Collaborative Research in Engineering, Science and Technology.
It brings together industry, academia and the public sector for R&D collaborations to help the electrical and electronics sector.
Two years ago, CREST launched Malaysia’s first IoT Cloud Data Centre and Research Laboratory to help individuals and organisations research and commercialise solutions for the local and global markets. It has been focusing on the five core areas of healthcare, transport, smart cities, manufacturing and retail.
“We have progressed IoT in five areas, so this year, we will drill down and enhance the ecosystem so we will be busy in the five areas,” says CREST CEO Jaffri Ibrahim.
Of the five sectors, Jaffri is upbeat about connected healthcare’s potential, having been at the heart of the research and collaborative initiatives in this space. He points out that there is a multi-party Telemedicine Development Group that collaborates on IoT solutions for healthcare.
And it is not just about coming up with ideas and prototypes but about how to help a product or solution come to life.
“Now, regulators are also on board to ease the journey. We are building an ecosystem. That’s our mandate. People can come and connect with others,” says Jaffri. “If things go well in, say, three to five years for connected healthcare, we will have companies in Malaysia creating their own solutions.”
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