IoT, new value chains and NZ opportunity

The Internet of Things (IoT) is one of those tech trends that over-promise in the short term, become annoying buzz words, and people tune out. Yet, in the long term, just like cloud computing, fundamental shifts are coming. The shift is critically important to the centrepiece of New Zealand’s economy- the primary sector.

Two IBM researchers have published Device Democracy, resulting from a “clean sheet” tech, business and consumer look at the IoT. It is a really good report and well worth a read. At least it moves the conversation on from those annoying refrigerator and toaster examples.

“Saving” IoT

More than a billion intelligent, connected devices already comprise today’s IoT. Each inflection point in the history of computing has triggered an explosion in the number of computing devices. The 10 billion connected devices today are projected to triple in the next 6 years and cross 100 billion by 2050.

The study concludes that today’s Internet of billions of Things won’t scale to the Internet of hundreds of billions of Things. Five challenges have been identified which will require fundamental tech and business shifts:

Internet of Things

 

Liquifying the physical world

The authors use the term, which doesn’t really sit that comfortably with me, to the idea of making the physical world as liquid, personalised and efficient as the digital one. Based on historical case studies of digital disruption, five compelling vectors of disruption are predicted to emerge. They will shift the IoT from technical curiosity to compelling business strategy:

1. Unlock excess capacity of physical assets

2. Create liquid, transparent marketplaces

3. Enable radical re-pricing of credit and risk

4. Improve operational efficiency

5. Digitally integrate value chains

Each of the five points above are explored in the report and have implications for the way we think about physical assets and services. There are new emerging value chains in relation to physical assets and services that will create new services and markets. Rather than be distracted by the IoT in relation to refrigerators or toasters, it is the fundamental shifts in physical value chains where opportunities and challenges lie.

Primary sector a big opportunity

New Zealand’s economy is critically dependent on the primary sector. For example almost three quarters of of all goods exported are primary products. The IoT presents us with a unique opportunity to build new value chains and markets. At the same time, if we don’t act and lead the world, the IoT could see us excluded from new global digital markets and value chains.

As the IBM report says:

After more than 50 years of gradually growing penetration, the majority of the global economy is still considered to be in industries that are not “IT-intensive.” Many of these industries – like agriculture, transportation, storage and logistics – have not historically fit well with personal computers that require desks and offices. The IoT will change all that.

Instrumenting and digitizing every step in the agriculture process could yield substantial returns from close collaboration among farmers, biotechnology companies, farm equipment manufacturers and capital providers.

One of the most beneficial ways the IoT will be used is through its ability to integrate value chains.

In the end, the IoT is expected to make the physical world every bit as easy to search, utilize and engage with as the virtual world… Just as large financial marketplaces create liquidity in securities, currencies and cash, the IoT can liquify whole industries, squeezing greater productivity and profitability out of them than anyone ever imagined possible.

 

(Hat tip to Colin Wallis for bringing the report to my attention)

 

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s