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May 9, 2016updated 06 Sep 2016 2:09pm

Addressing IoT market failure – How the UK government’s Digital Catapult is fueling IoT innovation

C-level briefing: Digital Catapult’s newly appointed head of IoT talks to CBR on how the government backed organisation will be searching for holes in the UK’s IoT market.

By Joao Lima

In 2017 the IoT market value is expected to cross the $1tr barrier, growing from this year’s $917.2bn to $1,130.3bn, according to Statista.

The UK is in a good position to take advantage of this and, according to Cisco, the nation’s IoT market will reach $28.4bn by 2020.

Yet, despite all the hype and huge numbers, there are still areas where the market is failing to enter and it is crucial that those are addressed to push market value even higher.

In the UK, the government has become involved in the IoT landscape, particularly over the last 24 months, with organisations like Digital Catapult launched in 2013 to “rapidly advance the UK’s best digital ideas”.

In addition to the appointment of Jeremy Silver as CEO, who replaces Neil Crockett, Caroline Gorski has also been named as the new Head of Internet of Things.

Speaking exclusively to CBR, Gorski said that her role is to develop and drive innovation in IoT, which is critical to Digital Catapult’s overall mission to develop breakthroughs for the UK’s data sharing movement.

However, the UK’s IoT economy is still trying to understand what it means to be an IoT economy, and areas of market failure need to be found and addressed.

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Gorski said: “The role of the Catapult is to understand where are the things that are not working well in the market place and in which it would be appropriate for a government funded organisation to actually take direct intervention.

“It is going to be a very active year for us making sure that we are investigating where are the areas whether it would be appropriate for us to seek to act, in order to address potential areas of market failure.”

This IoT market failure takes many different shapes and forms. From a small and medium business (SMB) not being able to participate and adapt to a world where connected services are key, to a more established player lacking ability to answer market demand with a given product/service.

In order to find these sort of barriers, Gorski said that Digital Catapult’s network of contacts is the key to the problem.

She said: “Clearly we have a very large network, spanning from academics to businesses, technology and technical corporate players, so a lot of [the research into finding these areas of market failure] is actually about talking to our networks and understanding what is working and what is not working.

“Talking to our small businesses, 5,000 in our network, so we can understand where they are finding restrictions in their ability for them to compete in the market place or what is it that they find hard to do. And some of those things can be the fact that they do not have exposure to a crucial market area.”

Gorski also said that the IoT industry is extremely complex and diverse and different players across the ecosystem are “all coming from quite a different place”.

That means that the degree of negotiation of these sort of topics needs to be conveniently merged together to help create consistency across the enterprise landscape.

“Then there are some areas where probably there is more of an infrastructural challenge which may be to do with market economics, it may be to do with the fact that IoT is by nature a systemic change programme.

“IT projects work on a system wide basis, meaning that actually getting involved with them can require some significant hurdles could be cleared before it is possible to get involved.”

Those hurdles might be cost inventory in order to participate in some technologies and infrastructure basis. They might also be challenges with regards to the scale a player might need to be able to participate in a programme in order to actually create use cases that show demonstrable benefits.

“There might also be challenges with the way the market, from the buying side, is still relatively immature, which leaves some challenges around risk management,” she said.

“Those are the sort of areas where we would look, facilitate conversations, in some cases help support programmes or demonstrations, testbeds that allow for direct action to happen, but essentially we would try to help remove some of those hurdles so that innovation can happen faster.”

However, being Digital Catapult, a government funded organisation, CBR asked Gorski if, in the case of more funding being needed to address an eventual market failure, how easy it would be to get that funding.

She said: “I am not sure it is about funding. In some instances there is a requirement perhaps to pull together resources that may already be in place, in some instances is about convening, bringing the right people together, the right subject experts together to create consensus.

“The Catapult itself is participating in projects where funding may be coming directly from the EU through Hoizon2020, the model it varies.

“Where there is consensus, when we understand a challenge needs to be addressed we build capacities around how that challenge needs to be addressed.

“If indeed such funding is actually required I am not sure that catapult aspiration should be to build enormous, great, very expensive testbeds for the sake of building enormous, great, very expensive testbeds. The point is to show places where intervention can help to stimulate the market.”

In order to stimulate the market, Digital Catapult is gearing up to open three new centres across the UK before the end of 2016, in addition to centres in London, Brighton, North East and Tees Valley, and Yorkshire.

The organisation has not disclosed where the centres will be located, and Gorski said the locations have not been audited yet.

She said: “One of the things Digital Catapult is very clear bout is our desire to maintain that localness, that ability to understand those people and businesses, where they actually are today.

“We are very much focused on the opportunity that exist for the UK and particularly for small businesses that exist across the UK in the data sharing economy.”

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