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The Internet of Things: A “Game-Changer” for Scotland’s Economy?

Updated: Jun 30, 2021

Iqbal Singh Bedi, director at Intelligens Consulting, discusses the benefits of IoT to the Scottish economy and how government can play a central role in support the roll-out of this transformative technology. 

If there is any doubt that IoT is more than a buzzword, then look at some of these statistics; which are mind-boggling to say the least.

It is estimated that there were 23 billion connected devices across the globe by the end of 2018. McKinsey estimates that globally, 127 new devices are being connected to the internet every second.

To put that into context, UNICEF estimates that there are 4.4 births every second. This means that the uptake of IoT devices is growing at a rate 28 times faster than the global population.

By the year 2025, it is expected that there will be 75 billion connected devices globally – that’s a staggering 10 connected devices for every person in the world and could even go as high as 18 per person when you take into account that some three billion people do not have access to the internet.

Many of these devices will include those that you and I are familiar with, such as smartwatches, connected TV, smart energy meters and doorbells. Looking at just these devices alone, it is easy to understand how the number of devices can begin to stack up in your every-day household.

Business Stand to Gain

Most of these devices are consumer-oriented, however. In fact, most IoT growth will come from business or industrial IoT (IIoT).

The figure below shows that the consumer IoT industry will only account for 19% of the IoT market as a whole, while the remaining 81% of IoT spend will be driven by enterprise, such as healthcare, government, construction and others such as transport, agriculture, food and tourism.

Businesses using IIoT can gather data that has never been available before about their products and their manufacturing processes and will enable them to interact with their customers like never before.

They also stand to benefit from reduced maintenance costs, improved efficiency and consistent product quality through the use of IIoT.

In explaining the business benefit, we take an example from one of Scotland’s most well-known exports – whisky.

The Scottish food and drinks sector is one of the fastest growing areas of the Scottish economy. For example, steam generators used in the whisky making process to cook barley use sensors to collect temperature and steam pressure data and also to detect any irregularities.

This proactive approach to preventing breakdowns before they occur prevents downtime and minimises expensive repair bills.

Additionally, carefully deployed sensors on production conveyor belts can collect data on the various production-to-packaging processes. Clever software can use this data to make the production process far more efficient and, therefore, speed up the time-to-market.

Around 106 physical food and drink related contamination incidents – involving foreign metals, plastics and pests – are reported every year. Six sensors and cameras installed on assembly lines can detect foreign materials, thus ensuring a consistently high-quality whisky is sold at all times without the risk of contamination.

Challenges associated with the introduction of any new technology need to be overcome in order to reap the benefits of IoT. Security is a concern in the wake of data breaches, such as those experienced by T-Mobile and Google in 2018, and as such, it is no surprise that the Forbes ‘25 IoT start-ups to watch‘ list is dominated by those focusing on security.

As IoT sensors gather a lot of information, business IoT should use a private communications network that does not rely on public internet or mobile networks. IoT Scotland, a national IoT network serving businesses across the country, has been built using LoRaWAN technology – which is both private and secure.

There is also a role to play for government. There is little point in having a shiny new secure private IoT network if nobody uses it. Governments should absolutely embark on demand stimulation activities to help raise awareness of the benefits of IoT.

The Whisky Economy

McKinsey estimates that IoT will have a total potential economic impact of $4 trillion (£3.01 trillion) to $11 trillion (£8.49 trillion) a year by 2025. At the top end of this, that level of value – including the consumer surplus – would be between 5-14% of the world economy.

If one were to apply this to Scotland’s economic output at the end of 2017, it would increase Scottish output by $4 billion (£3.01 billion) and $22 billion (£16.99 billion) annually by 2025.

For context, the whisky industry contributes around £4 billion (£3.01 billion) to Scotland’s coffers every year; IoT could be a game-changer for Scotland and its economy.

This article was first published in February 2019.

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