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The Middle East’s push towards economic diversification is driving innovation in internet of things (IoT) applications for emerging services sectors, such as transport and logistics, telecommunications, financial services and tourism.
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In fact, the IoT could become an important way for Gulf Cooperation Council (GCC) countries to diversify their economies away from a heavy dependence on oil sales.
“In the very near future, the IoT will become a key aspect of GCC economic diversification strategies and, ultimately, global and regional competitiveness,” said Wes Schwalje, COO at research firm Tahseen Consulting.
“The data gained from the IoT is the foundation for a range of emerging technologies, such as machine learning, robotics, automation, 3D printing, artificial intelligence and augmented reality,” he added. “Data is quickly becoming vital to the profitability and success of GCC businesses, as well as to the enhanced efficiency and effectiveness of government service delivery.”
The recognition of the IoT’s importance is evident in the Middle East, with the regional IoT market forecast to defy the generally moderate economic outlook by growing 19.6% year on year in 2017 to be worth $7.8bn, according to research firm IDC. It attributes the region’s robust IoT sector to “the proliferation of digital transformation initiatives as businesses and government entities strive to boost productivity and improve efficiency”.
Networking giant Cisco predicts that the IoT will become a $19tn market over the next few years, according to Fady Younes, deputy managing director at Cisco Middle East.
Younes said manufacturing and transportation are the verticals that are pioneering IoT investment in the Middle East. “Verticals like these use large datasets to optimise operations processes and extend the life of high-capital cost assets, while for sectors such as healthcare, IoT technology is used to produce benefits that improve the quality of life,” he said.
“In the oil and gas sector, budget constraints will push crude oil producers to improve and increase efficiencies in general by exploring ways to make oilfields smarter, such as introducing unmanned oilfields, and by leveraging IoT technology to digitise operations and benefit from big data and analytics, sensors and control systems.”
Potential is huge
According to Hatem Hariri, general manager, Middle East and Africa at Juniper Networks, healthcare is another sector that stands to benefit from IoT technology. “The potential is huge given the variety of application methods,” he said.
“It could range from medical machines that share images with a patient’s caregivers to real-time location systems that can track the dispensation of medicine. Advances in implants, prosthetics and wearables can also take advantage of the IoT, streaming data back to medical providers and enabling them to make adjustments as necessary.”
Denis Batalov, a solutions architect for Amazon Web Services (AWS), said healthcare is a rising vertical within his client base. “We believe that the IoT will impact every industry in some way, shape or form,” he said.
At a wider government level, public bodies in GCC countries have already launched ambitious IoT initiatives, with plans for many more. For example, the Dubai Electricity and Water Authority plans to install one million smart meters across the emirate by 2020, replacing all mechanical and electromechanical meters. The devices will provide automatic, detailed readings for consumers, enabling them to monitor their consumption for a specific period to better understand and manage their bills and improve the efficient use of electricity.
The Saudi Electric Company has embarked on a similar initiative, aiming to implement close to 12 million smart meters across the kingdom by 2025.
Smart transport strategy
Meanwhile, Dubai’s Roads and Transport Authority (RTA) has taken a big punt on IoT technology by announcing a smart transport strategy that aims to convert 25% of its road trips into autonomous journeys by 2030.
Cisco’s Younes said: “In the not too distant future, household appliances that use consumable supplies, such as washing machines, vacuum cleaners and refrigerators will, through IoT sensing and payment capabilities, be able to detect when they need to order new supplies. They will then place the order and execute the payment, with an alert message sent to homeowners so they can approve or cancel the order.”
Fady Younes, Cisco
While the IoT’s potential in the GCC region is promising, the shift to digitisation is set to radically shake up the jobs market. Automation and more efficient processes may eliminate some jobs, but the IoT will also create many new job opportunities, including data scientists, remote operators and application developers.
“As the IoT-based economy drives trillions of dollars in economic growth, some industries will merge and new ones will be created, which means there will be a worldwide scramble for the same IoT-capable workers,” said Younes. “Developing an IoT-enabled workforce is not an option – it is a must.”
As the IoT sector becomes more widespread, the effective management of data and information security will become ever more critical. Tahseen Consulting’s Schwalje said: “More effective, consumer-oriented laws and regulations on data in the GCC and throughout the Arab world are needed to address how data can be obtained and used, how long data can be kept, and limits on access by third or other government-related parties.
“A modern, harmonised GCC data protection framework is a critical requirement to maximise the benefits of the IoT.”
Data security will lag
Randy Roberts, CEO of Renodo Consulting, warned that market demand for new connected devices, apps and services would outgrow the ability to secure the data. “Users are willing to give up some level of security now to enjoy the benefits of the world of IoT around them in their home, car and office,” he said. “However, security of the data will lag behind demand for next five to 10 years, creating the risk of data breaches and system manipulation.”
Cisco estimates that cyber crime will cost businesses $2.1tn globally by 2019. As enterprises digitise their businesses and 50 billion devices come online over the next five years, cyber attackers are becoming more adept at exploiting security weaknesses and avoiding detection.
“In 2017, hackers will target IoT devices – from home cameras and smart watches to new devices that are flooding the market,” said Younes. “Adding to these challenges is the regional lack of in-house technology skills needed to maintain a strong security status to keep up with rapidly developing and evolving threats.”
Younes cited a new study by Cisco that shows 60% of IoT initiatives stall at the proof-of-concept stage and only 26% of companies have had an IoT initiative that they consider a complete success.
Gowtham Bandi, analyst in the digital transformation practice at Frost & Sullivan, advised GCC companies to think IoT strategies through carefully before taking the leap into the technology. “From an organisational point of view, many companies lack a digital roadmap and they try to implement new technologies because of market pressure,” he said. “In most cases, they don’t evaluate the requirements and the output, so they end up investing in non-crucial business segments.”