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What it takes for the internet of things to take off in ASEAN

Besides lowering adoption costs, an ecosystem of governments, technology suppliers and telcos is necessary for the internet of things to flourish in Southeast Asia

This article can also be found in the Premium Editorial Download: CW ASEAN: CW ASEAN: Growing the IoT

In the movie Fast and Furious 8, scores of connected vehicles parked on kerbsides and multi-storey carparks were successfully directed by a supervillain to block a government official’s motorcade.

While the adrenaline-filled scene was clearly fictitious, it did set off discussions in technology circles about the potential – and challenges – of internet of things (IoT), a broad term that refers to anything that is connected to the internet.

Connected vehicles are already here today. Scania, a supplier of buses and trucks, has been equipping its vehicles with a chipset from Norwegian telco Telenor that captures and transmits telematics data and other information such as fuel efficiency.

Today, Scania’s fleet of 300,000 vehicles that clocks 50,000 trips a month is widely used by bus operators as well as industrial and logistics firms. It can not only track vehicles using telematics data, but also incentivise drivers to minimise fuel consumption.

While such benefits are compelling, IoT’s killer app appears to be in predictive maintenance. By letting companies know when components such as brakes and drill bits are about to wear out, they can send their equipment for maintenance before problems occur, potentially driving down operational and maintenance costs.

In May 2017, Fortune 100 company Honeywell completed a trial with Cathay Pacific to demonstrate how IoT and the use of data analytics can improve operational availability of the latter’s Airbus A330 fleet.

By analysing IoT data from an aircraft’s auxiliary power unit, Cathay Pacific managed to reduce operational disruptions by 35%, with a false positive rate of less than 1%, saving the airline several hundred thousand dollars in operations and maintenance costs on a single aircraft system.

“Managing unscheduled maintenance events can be both costly and time-consuming for an airline, causing potential delays that put its on-time performance record at risk,” says Brian Davis, vice-president of Airlines, Asia-Pacific at Honeywell Aerospace. “The success of this trial programme demonstrates to airlines that being connected is more than just streaming video to passengers.”

Despite the allure of IoT, adoption of the technology is still in its infancy in Southeast Asia. In a survey conducted by Asia IoT Business Platform, 51% of organisations in ASEAN say they still need to better understand the benefits of IoT. Only 8% have implemented IoT, though the benefits are not yet clear to those organisations.

“That’s the thing about IoT – on adoption, companies begin to track and collect data which they never did before,” says Irza Suprapto, director at Asia IoT Business Platform. “It’ll take time to collect sufficient and correct data to set a benchmark to which future improvements or declines can be measured against.”

For now, Mark Cameron, Scania’s regional director for South Malaysia and Singapore country manager, admits that not all bus operators are making full use of the data that is being collected from their Scania vehicles.

“In countries where vehicles are traveling at high speeds with heavy loads, fuel consumption is important. A driver who is driving in an inefficient manner can cost the company a lot of money. But in Singapore, hardly any truck gets lost and fuel consumption is not necessarily a big concern as the country is relatively small,” he says.

That’s the thing about IoT – on adoption, companies begin to track and collect data which they never did before
Irza Suprapto, Asia IoT Business Platform

To John Lockhart, business development manager for OEM and IoT solutions at Dell EMC South Asia, the disparities in IoT adoption may be attributed to varying levels of IT infrastructure maturity.

“While advanced economies such as South Korea and Japan have robust IoT technologies in place, developing nations such as the Philippines and Indonesia are still in a pre-mature phase,” he says.

“Despite the slower pace of IoT adoption, they could be implementing IoT – albeit on a smaller scale – with examples such as traffic monitoring with IoT-enabled closed circuit cameras to keep congestion under control.”

Cost still a concern in ASEAN

That said, cost remains a key concern in IoT adoption, at least in Southeast Asia. Rolling out IoT initiatives can be expensive as organisations need to consider new technology investments and the opportunity cost of upgrading from legacy systems.

“We’ve seen the most interest from countries which are in the early economic development phases, as the burden of legacy systems is less for them,” says Suprapto. “However, interest has not translated into adoption yet, because of the requirement of a relatively large financial investment.”

Suprapto says the cost issue is being resolved by the evolution of partnerships and business models between connectivity providers, technology suppliers and enterprises.

Citing a recent example of a property developer that was looking to purchase digital signage for its newly developed shopping mall, Suprapto says a technology supplier had offered to install the signages for free, but wanted a share of the revenues from the advertisements displayed on the signages. This reduces the capital expenditure for the property developer while providing the supplier an income stream beyond its traditional business.

“From our conversations with most CIOs in the region, most feel that technology suppliers should offer to share the risks and investments in implementing IoT projects. Large enterprises will obviously have more leverage on their suppliers,” he says.

“However, SMEs [small to medium-sized enterprises] have the advantage of smaller legacy systems and can implement small scale IoT projects selectively before moving on to larger or more expensive ones,” he adds.

Ecosystem to spur adoption

For IoT adoption to take off, Suprapto says enterprises will need an ecosystem that encourages them to implement IoT, which isn’t the same as traditional enterprise IT purchase decisions.

“Enterprises need to invest a fair bit of resources to adopt IoT successfully. Having supportive government policies, strong connectivity infrastructure and leading edge technology minimises the risks business leaders take in adopting IoT projects,” he says.

Governments across ASEAN have rolled out national initiatives to build local IoT ecosystems and encourage businesses to embrace the technology. Malaysia, for example, has a National IoT Roadmap which targets RM 9.5bn (US$2.2bn) contribution to its gross national income by 2020.

“The execution of these programmes will determine how local adoption rates of IoT vary over the next three to five years,” says Suprapto.

Telecoms operators also have a vested interest in IoT, given that connectivity – whether it is low-powered wide area networks (LPWAN) or cellular IoT – is a key consideration in IoT projects. The extent of telcos’ IoT strategy, however, differs vastly across ASEAN.

“In Indonesia, for example, all major telecoms companies have specific IoT teams which are very active in building their internal IoT services offering – not just being a ‘dumb pipe’ – and are continually educating their enterprise clients about the potential of IoT solutions,” says Suprapto.  

In 2016, Indosat built its own IoT platform instead of paying for a third-party one. In other ASEAN countries, however, local telecoms companies are still too focused on their traditional business of selling mobile phone and broadband services, and have not pivoted quickly enough to take advantage of the IoT opportunity, Suprapto says.

Large technology suppliers such as Microsoft, IBM and HPE are chipping in too, by working with local technology firms to make a bigger push for IoT in the Asia Pacific region.

In March 2017, HPE announced that it is working with Tata Communications to build the world’s largest IoT network in India. Around 400 million people are expected to benefit from the network through public infrastructure and consumer applications.

In Malaysia, HPE also worked with Inmarsat to help a palm plantation in Malaysia improve productivity by placing IoT sensors to measure and track exact needs for water from each plant. The sensors also tracked humidity, air salinity and other critical data to ensure maximum growth. This provided insights to the business, which was then also used on a walnut plantation in California to enable water conservation. 

The security question

Security, both physical and virtual, continues to be a major concern for enterprises looking to adopt IoT in ASEAN, Suprapto says. However, security policy issues such as data retention is not on the top of the mind of these business leaders yet.

“The biggest concern to them is still the ability of competitors to glean valuable insights into their operations if a security breach is allowed,” says Suprapto.

Most IoT-related security breaches have been distributed denial of service (DDoS) attacks brought about by unsecured consumer IoT devices. In 2016, the high-profile Mirai botnet comprising hundreds of thousands of infected IoT devices struck telcos and internet service providers around the world, and is still active today in the form of a new variant that can mine bitcoins.

While enterprise-grade IoT devices are likely to be more secure, companies should not let their guard down before IoT security standards are worked out. There are measures they can take to prevent their IoT devices from becoming the weakest link in their IT infrastructure.

Read more about IoT in APAC

  • Australia is adopting an internet of things standard that was developed in the UK to help improve security, among other things.
  • Sigfox-based IoT network now covers 95% of Singapore, meaning enterprises can connect devices to the network nationwide
  •  Malaysia is exploring the use of internet of things technologies for agriculture in Asean, driven by collaboration between government and the private sector.
  • The internet of things may have benefited industries such as oil and gas, but issues such as connectivity are holding back adoption in Australia.

For a start, companies could consider putting multiple layers of security to ensure a level of trust in IoT systems, says Hugh Ujhazy, IDC Asia-Pacific’s associate vice-president of IoT and telecoms, at an industry event in February 2017.

“We’re reintroducing concepts of physical security at the end-points – you could use accelerometers, so if the devices have been moved from where they are supposed to be, you know something is wrong,” says Ujhazy.

Organisations can also encrypt data at rest and in transit, as well as constantly profile the connection between an IoT device and its gateway to pick up any anomalies, such as the volume of data transmitted. “A connected water bottle shouldn’t be giving me 25MB of data – it should only give me 200 bytes,” he says.

Tobias Puehse, vice-president of innovation management, digital payments and labs at MasterCard Asia-Pacific, says tokenisation services – which create tokens to enable specific uses and transactions – can also play a part in bolstering IoT security.

“Tokenisation is already used in payment services such as Apple Pay, Samsung Pay and Android Pay,” he says, noting that tokens, along with tokenisation standards, will help to secure IoT devices, which have a higher chance of being compromised as compared with networks.

Kwong Dim-Lee, executive director at Singapore’s Institute for Infocomm Research, says a multi-layer approach to IoT security is here to stay until quantum technology, which can provide higher levels of security than what is available today, becomes more widespread.

Meanwhile, one Google security researcher has called for the industry to build IoT devices that are capable of being defended.

“We should be building devices that allow us to enumerate all system code, and display a hash of everything that can run on a device including all firmware,” says Thomas Dullien, a reverse engineer and vulnerability researcher at Google.

“This would need to be part of a public ledger where device and software makers make their software publicly visible to avow that they have written and stand by their software. The hashes should not be updatable, so there’s no way of messing around with integrity checks.”

Read more on Internet of Things (IoT)

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