Published on the 30/03/2023 | Written by Heather Wright

Local companies are rapidly embracing IoT – but they’re failing to see a quick payback in their deployments with IDC urging companies to work closely with vendors to strengthen business cases and overcome talent shortages.

An IDC survey which included 200 Australian and New Zealand companies – 100 in each market – shows that while most organisations have at least one IoT solution in place, just one-third say they’ve had rapid payback on their investment.

The remaining two-thirds said there was either a really slow payback or that it didn’t justify the investment made.

“When we have shift out of this economic environment there will be more focus on IoT for revenue generation and customer insights.”

Monica Collier, IDC Australia and New Zealand associate research director, says that’s not an indication of flaws in the deployments, but rather the initial upfront investment required in infrastructure for the first scaled IoT deployment.

“I don’t think it is that people are choosing terrible things to deploy or that their business cases just don’t add up,” Collier told iStart.

“Particularly for companies putting in their first scaled IoT solution there is a lot of one off investment that goes into it. Subsequent IoT deployments that can use that platform and architecture don’t have that additional cost involved and therefore will see quicker payback.”

Adding to the issue is a complex ecosystem with buyers finding it difficult to find vendors who can provide a holistic solution and manage the entire process.

Adding weight to Collier’s argument is the significant pipeline of organisations planning to launch IoT projects this year or next: Around half of the companies surveyed said they are going ahead with further IoT solutions.

Much like the current deployments, those new offerings are expected to be largely focused around cost optimisation, cost savings and cost management.

“That makes a lot of sense when you consider the current economic environment and that there are a lot of organisations very focused on becoming more efficient and cutting out costs,” Collier says.

There are plenty of examples of Australian and New Zealand companies reaping returns from IoT.

Christchurch City Council has deployed sensors on rubbish bins, allowing the council to optimise pick-up routes, providing cost savings in both labour and fuel, as well as the onflow effect of reducing carbon emissions.

Also in Canterbury, the town of Duvauchelle used sensors to track water usage. The town relies on water deliveries, via tankers during the summer months and wanted to track where all the water was going. The sensors revealed that 60 percent of water was going missing.

“They found a level of leaks in the network, which is expected, and IoT is a great way to find those and sort them out,” Collier says.

But using the Thinxtra solution enabled them to see exactly where the water was going missing, and meant they were also able to identify other, unexpected, issues, including people helping themselves to water in the council water tanks, and householders diverting pipes or removing data loggers.

“The sensors enabled them to find a number of problems they probably never guessed were going on, or might have thought of but didn’t have any proof around.”

Unaccounted water loss reduced from 60 percent to 30 percent in three months and there was a 50 percent reduction in costly water truck trips to deliver water for the town.

In Australia, CouriersPlease is using IoT to improve asset management of 3,500 parcel cages – each valued at AU$1,000 – to reduce loss and optimise distribution of the 30 million-plus parcels it handles each year.

Kiwi logistics provider Mainfreight, which operates across Asia, Europe, the US and Australia and New Zealand, has also deployed sensors on segregation bins used for hazardous materials. The accurate, on-demand bin location data enables Mainfreight to rebalance its network faster and fewer bins are needed in circulation at any given time. The company says its saved on costs of both employee time and asset utilisation.

“Asset tracking is a key area that has been taken up, and that’s because it can apply across virtually any vertical or sector,” Collier says. “It’s a relatively easy one to deploy and then you can do quite a lot with that data, rather than it being a very specific one like measuring the quality of water out of a stream or something like that.”

For now at least, it’s those simple, straightforward use cases that are gaining the greatest uptake and Collier believes its likely to stay that way for a while – at least until economic conditions improve.

“When we have shifted out of this economic environment into something a bit more positive, then there will be more focus on using IoT for revenue generation and customer insights as opposed to cost savings,” she says.

For now though, cases such as building IoT into products so a subscription-based service can be added providing a client with extra data – such as in the connected cars models – is still ‘a bit more nascent, particularly across Australia and New Zealand’.

“We’re not seeing them coming through much yet,” Collier notes.

For now, she says companies looking to deploy IoT should double down on their business cases to be very sure they’re going to get the desire payback.

“That’s the biggest challenge.

“Look for a vendor that has the existing case studies that look at the problem your organisation is wanting to solve that can then feed really good information into your business case so you can be sure you’re going to get a return on your investment.

“We’re seeing companies are getting much payback to start with and we’re saying that’s probably because of initial investment in infrastructure. But if they want to be able to keep deploying IoT solutions they have to be starting to get payback with them.”

Collier says spending more time upfront on the business case can help ensure the on-paper business case and real-life results marry up – and working closely with an appropriate vendor can aid that.

“If they have case studies and proof points around the type of deployment you are wanting to do, you can have a bit of faith that they will think of some of the things you might not think of because you haven’t done this particular deployment before.

“And make sure you run a good proof of concept or pilot,” she adds.

Australian and New Zealand businesses are also looking to the vendor to provide the necessary talent for deployments, Collier says. In fact the skills shortage was ‘the standout problem’ local companies are having when it comes to adopting and deploying IoT, along with a struggle to get holistic offers.

Technology issues didn’t feature in the survey responses, she says.

“We’ve had IoT around long enough now that people do understand the technology and there are a lot more solutions in place for things like security.”

While endpoint security remains a significant issue, Collier says there is better understanding now of where to get endpoints with better security built-in, and companies have security in focus more now.