Tuesday, 16 December 2014

How the Internet of Things products can help Governments save megabucks - examples include smartlocks for public housing stock

Its no secret that many Governments around the world right now are trying to save money.

It doesn't matter what level of Government we are talking about, and where the Government is. Local Governments, State Governments, Federal Governments everywhere want to get spending down.

The theory is simple - we can't keep spending more than we can afford. In many instances, the Governments one-track mind to save money can have disastrous effects - e.g see here.

But on the other hand, in some instances the Government's mission to save money can create massive opportunities for IoT start-ups.

For example some start-ups have developed sensors to place in new bridges, which are connected to the Internet, with sophisticated cloud software, which can improve operational efficiency of the bridge, extend its life, reduce the risk of catastrophic failure, better manage regulatory compliance and improve sustainability.

In short the IoT products in bridges can bring massive money savings to the bridge owner. Often the bridge owner is a Government. The savings come as the IoT products can show engineers exactly what is happening to their structure. If they know exactly what's going on in the structure, then they can better manage it.

An IoT product in a bridge

But what if the only proven and 'best working' IoT solution in the world right now for some Government assets was developed by three hackers in northern Guatemala?

These three Guatemalan hackers are not going to bid on tenders to build bridges or install their products in Government assets on the other side of the world.

The three Guatamalen hackers are not going to apply for a tender to build a bridge over a river in the Ohio Valley for the State Government of Ohio. They're not going to bid on building new sluice gates for a new weir in a tributary of Sydney Harbour in Sydney's Western suburbs.

Even if our three Guatemalan hackers wanted to submit tenders for these jobs in Ohio and Sydney, the Government's there are not going to consider them. That's because the Government's tendering application processes can be quite stringent. Generally companies have to have a good local track record to bid on tenders.

So how can start-ups with innovative cost saving IoT products, like our 3 Guatamalen hackers, get among the Government tender action anywhere in the world, and save Governments tens of millions of dollars a year at the same time?

Have 3 Guatamalen hackers built the best IoT sluice gates on the planet which will save Governments tens of millions a year?
What about the IoT start-up joining forces with local companies who regularly tender on Government projects?

Well that idea sounds fine in theory.

But in practice the thing is, alot of these start-ups have products which could severely disrupt the established local player's business model. And by partnering with the little IoT start-up, the big tendering company could actually start losing contracts and revenue. A partnership with an IoT start-up could start a path towards bankruptcy. A classic example of this is smartlocks as the IoT product, and Government's public housing stock as the asset.

Currently many Governments around the world pay a locksmith to come out and replace the locks in their public housing whenever a tenancy ends. Otherwise the tenant that has just left could still use their metal key to let themselves into the house/apartment at any future date and time (and steal or attack the new persons in the house/apartment). In Western countries the expense to pay a locksmith to come out and change a lock is usually between $100-$150. That's around a $80-$100 call-out fee, plus say 10-15 minutes@ local tradesman hourly rates, plus the $20-$30 lock.

If Governments have thousands, possibly even millions of houses in their public stock, then hundreds if not thousands of tenancies could be ending on a daily basis.

And so those locksmith costs and new lock costs for Governments quickly adds up. And if you were say the Government of Hong Kong, where nearly half of Hong Kong's 7.8 million people live in public housing, then you would not want to get their monthly locksmith and lock replacement bill.

Nearly half of Hong Kong's 7.8 million people living in Government public housing stock.
Now if Governments were to install smartlocks (where you can use the Internet to change access rights, to give and remove digital keys) then you would never have to change the locks on public housing stock doors again - ever.

But why would a regular supplier of locks to Governments (and perhaps this supplier of locks has deals with local locksmiths too) want to partner with a smartlock start-up when this partnership would spell no more sales after one install? With smartlocks they would never be able to sell their existing products again.

So what are Governments to do so they can adopt IoT products and save them millions annually? Do they throw out their current tender processes? Do they employ workers to search the world over for IoT products and solutions? What happens if they find their perfect solution? Often one perfect IoT solution needs to interface others to have the maximum efficiency's. Should they just stick with the status quo?

And what about our 3 Guatamalen hackers product, will they be able to sell it?

Here's a thought - what about having some sort of world-wide Government database/store, where companies can list their products and solutions (and their API's, SDK's, their current research etc) and then Government's can make purchases from here, rather than calling for tenders in all instances?

Perhaps you have some idea's yourself about what Governments and/or start-ups can do to get money saving and life improving IoT products out there?

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