US$64bil potential for IoE in Malaysia: Cisco
By Goh Thean Eu October 8, 2014
- IoE expected to drive value of over US$64bil over next 10yrs in Malaysia alone
- Need to create more awareness amongst SMEs on benefits of technology
MALAYSIA’S IoT/ IoE (Internet of Things/ Everything) journey may be headed for a long and winding road, as many companies are still at the infancy stage as far as adopting new technology is concerned.
According to Cisco Systems (Malaysia) Sdn Bhd country head Albert Chai, many small and medium enterprises (SMEs) here are still relying on conventional methods to run their business.
“Today, we do not see SMEs using a lot of technology to reach out to their suppliers or customers. There are still a lot of physical face-to-face interactions.
“They are still depending on their mobile phones to run their business; they don’t use email or websites,” Chai told a media briefing in Kuala Lumpur last week.
The issue takes on greater significance when viewed from the perspective of lost opportunity. In a study conducted by Cisco, it was revealed that Internet of Everything (IoE) in Malaysia is expected to drive a value of over US$64 billion over the next 10 years, with US$53 billion of it coming from the private sector.
“I still believe that Malaysia can achieve the IoE milestone; it can be done,” said Chai.
Cisco’s IoE Value Index study defines the value above as including the size of the market, as well as the savings and additional profits organisations can achieve by implementing IoE – that is by capturing new value created from connecting the unconnected via IoE; and by gaining competitive advantage and taking market share from other companies less successful in transforming and capitalising on IoE.
To download a PDF of the IoE Value Index study, click here. In Cisco’s definition, IoT is a technology transition that is found within IoE. IoT focuses on things, while IoE adds people, process and data to that.
Budget wish list
Given that Malaysian Prime Minister Najib Razak, who is also Finance Minister, will be tabling the national Budget 2015 in Parliament this Friday (Oct 10), Chai said he hopes that the Government would provide further support and incentives for SMEs to adopt technology.
“The productivity of Malaysian SMEs is still very low. The adoption of technology is low. I think the Government needs to look at how it can further accelerate this,” he said.
Although Chai acknowledged that there are already various incentives available for SMEs, such as grants for research and development and intellectual property development, he stressed that there is still room for improvement as far as tax breaks to boost technology adoption.
“If you look at today's landscape, if an SME were to invest in personal computers or data centres, how much of it can actually go towards a tax break?” he posed.
Putting the pieces together
While things like tax breaks and incentives can help spur the take-up rate of new technology to some extent, Chai (pic) said effort in other areas is also required as many Malaysian SMEs are still at the infancy stage as far as technology adoption is concerned.
“I believe that it is a long journey where you need a few things to be in place.
“First, we believe that more can be done to increase awareness of the benefits of technology, including IoT.
“Once that is achieved, the SMEs will then need to have the willingness to adopt new technology, change their processes, business models, and the way they run the business,” he added.
Chai believes that it is critical that SMEs be aware of the benefits of new technologies, as they play a crucial role in the Malaysian economy.
Based on the 2011 Economic Census by the Department of Statistics, Malaysia, there are more than 662,000 SMEs in the country – that is, more than 97% of all businesses in the country are SMEs. They have created more than 3.66 million jobs.
The census also revealed that only 27% of these SMEs use some form of ICT in their business operations.
“SMEs are a key driver of the nation’s economy,” Chai said.
While technology awareness amongst SMEs may be low, Chai believes that it must not stop there.
And increasing technology awareness should not be restricted to SMEs, but should also be extended to the public sector.
“On the one hand, we have a few forward-looking agencies and ministries such as the Ministry of Science, Technology and Innovation; [national ICT custodian] Multimedia Development Corp; Agensi Inovasi Malaysia; MIGHT (Malaysian Industry-Government Group for High Technology) and more. This is a good thing.
“On the other hand, we have agencies related to the agricultural sector [that are not technology-savvy]. I believe a lot more work and awareness can be done to capitalise on the [IoE] potential in agriculture,” said Chai.
He said that with IoE, farmers would be able to use technology to “better align” themselves to supply and demand. That way, they are able to decide what crops to produce, adjust to the crops’ cycles so that they can produce at the right time when there is a high demand.
“This is one area which has huge potential that we have not tapped into,” he said.
IoE an ecosystem play
“You need to understand that you must have a strong ecosystem of partners. It is an ecosystem play.
“Cisco alone – or other members of the private sector – would not be able to capture the opportunity unless we partner with the Government and other ecosystem players,” he said.
To illustrate how wide the field of IoE could be, Bradley said that connected motorcyclist helmets could be something adopted by the masses in the future.
“With connected helmets, motorcyclists would be able to receive live images of what’s happening behind them; it could also allow them to entirely understand what is the best way, in terms of traffic, to get from Point A to Point B,” he said.
“The helmet could be tied in to a traffic management system so that the authorities can programme traffic lights for greater optimisation,” he added.
In Malaysia, Cisco is working closely with MDeC and [national R&D centre] Mimos Bhd to grow the IoT and IoE industries, Chai said.
“With MDeC, we are in an IoT embedded systems partnership where Cisco is a board member consulting and advising MDeC on catalysing new technology companies in the IoT field.
“We are also in the Mimos IoT working group forum, to help drive the standardisation of IoT for security and data protection.
“This is just the beginning – we think more agencies and ministries will come on board,” Chai said.
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