Covid-19 is having an unprecedented impact on our society and economy. Countries across the world are witnessing huge economic disruptions. Growth parameters are under threat. The World Bank in its ‘Global Economic Prospects’, June 2020 issue has warned that the global economy will shrink by about 5.2% in 2020, making it one of the four most severe downturns in 150 years.
“Per capita incomes of emerging markets and developing economies are expected to shrink this year, tipping many millions back into poverty,” the report has cautioned. The American economy contracted by 5% in the first quarter of 2020 and is projected to decelerate by 7% in 2020. The Indian economy is projected to decline by 3.2% in 2020.
The pandemic has spread with astonishing speed without any signs of recovery. The number of deaths is increasing and so is the number of hungry mouths. The medical fraternity is working hard to find medicines for the pandemic. The business community too is seeking a way out to save their businesses, many of which have been shattered due to the prolonged lockdown.
If the discovery of a relevant medicine remains uncertain till date, the global business community has found one solution to their problem in technology. Emerging technologies such as Internet of Things (IoT) are helping businesses to remodel their traditional operations, providing alternative business ideas and are opening up opportunities to cut costs and in reaching new markets. Enabled by the exponential increase in computing power and availability of large amount of data, machines are fast learning to replace humans in several areas.
The quickly changing dynamics of the Covid-19 pandemic and the inability to visit physical sites has led to the need for increased transparency regarding employee whereabouts and well-being, about goods in transit, marketing and about manufacturing. IoT does exactly that by creating a team dynamic within the business by connecting different sections and products. Connected products can boost consumer engagement and deliver substantial value for both consumers and businesses across industries. IoT has never been more significant, as more and more companies find themselves in desperate need to re-engage with consumers and stay relevant.
What is IoT and how does it work?
Businesses are looking at IoT as a possible saviour from the present mess. But what is Internet of Things? How does it work?
IoT is a technical concept of connecting multiple devices that can switch on and off, using the web, in order to use software and automation processes. It is a system of interrelated physical devices embedded with sensors and network connectivity that enable them to collect, process and exchange data.
In 2013, the Global Standards Initiative on Internet of Things (IoT-GSI) defined IoT as “the infrastructure of the information society, enabling advanced services by interconnecting (physical and virtual) things based on existing and evolving interoperable information and communication technologies.”
While machine-to-machine communication already existed, IoT goes beyond it by offering advanced connectivity covering a variety of domains, protocols and applications. ‘Things’ in IoT refer to a wide variety of devices like heart monitoring implants, weather monitoring sensors, biochip transponders, home appliances connected to the internet, automobiles with sensors or any other object with an IP address assigned to it and the ability to transfer data over a network.
Devices and objects with built in sensors are connected to an IoT platform, which integrates data from different devices and applies analytics to share the most valuable information with applications built to address specific needs. These powerful IoT platforms can find out exactly what information is useful and what can be ignored. This information is used to detect patterns, make recommendations, and to detect possible problems before they occur. For example, if a refrigerator manufacturing company wants to know which optional design – putting the freezer at the top or at the bottom – is more popular, it can find it by using data on consumer preferences from IoT.
How will IoT help industries amidst Covid-19?
As demand for products and services dries up throughout the crisis, two most important needs of the industries are to find out alternative selling channels and to ensure reduction of costs. The IoT helps the industry to find out new marketing opportunities by analysing the behavioural pattern of consumers and their needs in a defined situation.
IoT helps industries to cut costs in many ways. First, with the help of industrial IoT, companies can train employees to specific needs, reduce skill mis-matches and increase productivity. Higher productivity leads to the reduction in per unit cost of production.
IoT helps to improve inventory management as it keeps track of the inventory even in a remote location such as a warehouse. With inventory sensors, the entire inventory can be tracked. Executives can access real-time data on the material available, work-in-progress and regarding the estimated new materials’ arrival time. This ultimately helps managers to manage demand, optimise supply and reduce shared cost in the value chain. This in turn, reduces the working capital requirements. Similarly, IoT helps companies to monitor the finished product inventory and check them from piling up.
IoT reduces the cost of the safety network. With IOT, videos are connected to the internet and can be viewed remotely. Companies can track access to their building based on fingerprints and badges. This is inexpensive and easy to implement.
IoT helps to maintain product quality and thereby increases competitiveness. Aggregated product data from different stages of the product cycle can be collected by placing IoT sensors. These sensors can automatically detect inferior raw materials used in product manufacturing, product transportation impact, waste, environmental effects on the product and can help the company to maintain strict quality control.
While IoT generally revolves around efficiency, productivity and process monitoring, it also provides companies with information about their customers and their product preferences. This information also allows organisations to move away from conventional business models to new revenue streams based on emerging consumer demands.
IoT is set for an exponential growth globally, with the number of connected devices expected to grow to 20.8 billion and revenue expected to grow over to $3 trillion by 2020. According to a recent Deloitte-CII report titled ‘Harnessing the Power of Internet of Things in Industry of India’ the global IoT revenue is expected to grow from $0.9 trillion in 2014 to $3 trillion in 2020. Similarly, the installed base of IoT units worldwide is expected to grow from 3.8 billion in 2014 to 20.8 billion by 2020.
Manufacturing industries are the leading investors in IoT. Industrial IoT refers to a network of interconnected devices used for designing, maintaining, monitoring, optimising, and analysing industrial operations to gain real-time insights and make effective decisions.
The rise in adoption of digital transformation by various industries is supporting the widespread use of IoT in the industrial sector. Thus, the market for industrial IoT has evolved immensely owing to various factors and revolutions taking place in the industrial sector worldwide.
Connectivity within the manufacturing process is not a new thing. But the smart factory represents a leap forward from traditional automation to a fully connected and flexible system — one that can use a constant stream of data from connected operations and production systems to learn and adapt to new demands. IoT provides this connectivity ushering in a more efficient and agile system, less production downtime, and a greater ability to predict and adjust to changes in the facility or broader network, possibly leading to better positioning in the competitive marketplace.
According to a recent report titled “Internet of Things (IoT) in Manufacturing Market” by Fortune Business Insights, the IoT investment in manufacturing is projected to reach $136.83 billion by 2026 from $ 27.76 billion in 2018 - up by an annual compound rate of 22.1%.
The IoT is fast changing the way banking and financial services work. Since the banking industry deals with massive data transfer, gathering and analysing of data, IoT has a huge impact on it which benefits both the banking services and customers. IoT technology in the financial services helps a consumer to save time and work smarter. IOT for the banking and financial sector is still evolving but there is a huge scope for innovations.
The role of IoT is reshaping the working of the insurance sector as well. New technologies are redefining the insurance industry and creating new opportunities across life, health, auto and re-insurance markets. IoT is being used to streamline field operations, to predict risk, improve customer engagement, keep pace with compliance, and boost competitive advantage. IoT is also helping the sector to reduce costs on manpower, travel and in time.
The retail industry is also seeing a rapid transformation, with IoT solutions taking the centre stage. Having plenty of applications, IoT helps to increase customer loyalty, boost sales, offer a personalised experience and improve inventory management.
The largest disruption has been undoubtedly felt in healthcare services. This virus has overwhelmed local services and hospitals alike. In such a desperate situation, IoT devices may be able to alleviate some of the largest strains on doctors and nurses simply by making remote appointments possible and by making sure that high-risk patients do not have to leave their home to receive their usual treatment.
Even in agriculture, which is not conversant to technologies as much as other sectors, the impact of IoT is on the rise. Smart farming based on IoT technologies enables farmers to reduce waste and increase productivity.
As per a recent FICCI-EY report titled ‘Future of IoT’, global IoT connections are predicted to increase with 17% CAGR - from 7 billion to about 25 billion from 2017 to 2025.
India is fast leapfrogging the deployment of emerging technologies. Nearly 67% of digital workers in India are utilising emerging technologies such as machine learning (ML), artificial intelligence (AI) and Internet of Things (IoT). The ‘Gartner 2019 Digital Workplace Survey’ found that India is the most digitally dexterous country in the world due to having the largest Gen Z workforce which is keen to learn new skills using digital technologies in the workplace.
India offers an opportunity to deploy these emerging technologies at a largescale. Newer opportunities and ecosystems are developing every day. The IoT market size in India is expected to grow at rate of 62% CAGR and reach $9 billion by 2020.
The key sectors for IoT are likely to be utilities (water and electricity), manufacturing, transport and logistics, automotive industries and healthcare. With more and more Indian enterprises striving to go digital, the increased speed and bandwidth of the networks now is expected to drive a new round of transformation across India. The Indian IoT market will touch the $9 billion-mark in 2020 and is expected to capture at least 20% share in the global market in next five years.