IoT Blog
IoT Blog

We have all heard that the Internet of Things (IoT) will fundamentally change the way we do business. It will create new business opportunities and change the way we live our lives. And it is expected that the IoT will fundamentally change the way organisations create value.

But how?

If you have been running a business for fifty years selling your products and services, where do you even start in this new digital world? I noticed the release of "IoT for Dummies." One might laugh, however, it is not a bad idea to have a simple manual that breaks down the basics for beginners.

In this post, I will provide some ideas to organisations that are in the phase of thinking about how to create value with IoT and which direction to take. I hope this will help you avoid expensive IoT failures in the future.

First, let me start with something a bit controversial: IoT value creation has little to do with technology, despite what solution providers might say. Certainly technology is important (more on that later), but it can distract you from one of the main reasons that organizations fail in IoT: they make it an IT project focusing on "How" before they even figure out "Why."

Let me give you an example. Let's say you run a business selling water tanks filled with fresh water. You might sell or rent the tanks but your customers will pay to refill the tanks when empty and that is how your business generates revenue. Now let’s  say you believe you need to ”IoT enable” this service for some reason. The technology-driven approach will be focused on:

  • Choice of sensors to read vital information from the tank
  • Ensuring  the cellular connectivity technology is future proofed (2G, 3G, LTE)
  • Building an IoT platform to host all that vital data over time and to get analytics data
  • Bringing in consultants to build this platform, as you might not have the expertise in house (also to determine the time to market)
  • Integrating CRM and ERP data via cloud connectors to your IoT platform
  • Building applications

At this point you have already lost the battle. You have only answered "How" (in the best case), which will remain the focus of the project life cycle.

The problem with this approach is that you might deploy expensive devices, utilize platforms that you need to maintain year after year, and services that you don´t even know how to charge for. Which means your IoT project will fail.

So, you might ask, what’s the right approach?

Let's take the "Why" approach to the same case used earlier. This allows you to plan strategically and think about a successful implementation:

  • Why do you need to connect the water tanks?
    • Limited visibility into when customers run out of water.
    • Why is that a problem?
      • Customers don’t call to refill fast enough so you get complaints.
        • Why does that have an impact on your business? It means you lose an average of 5 to 7 working days before you can invoice for new water. And, in some cases, you lack visibility into whether the water is even used at all.
You can increase both services and sales by getting information directly from the tank when the water runs out. You could even monitor water temperature, as you know customers complain when the water is not cold enough. If you refill faster and can plan capacity in real time (also improving logistics) and invoice faster, you create a better business and secure revenue. The customer will be happy, as the water is always cold and tanks are full.  In fact, you could create a market-leading SLA where you can deliver fresh cold water with 100% guarantee.

You can see now how the critical part of the IoT project is internal and external value creation. If your customers are not benefiting from your IoT projects, you won’t benefit either. It is always best to ensure that you have a clear view of what customer value really means.

Now that we have established the "Why," we can look at the "How." This is when technology comes in to support the business drivers. Here you need to consider things like:

  1. Cost for connectivity over the deployment life cycle vs. business value.
  2. Use of Bluetooth or Wi-Fi or cellular? What is the most beneficial in terms of cost vs. value over time?
  3. Which sensors to use?
  4. How much data will you be transmitting today and in the future? And what do you believe will be the best approach now and in the future (LTE, LPWA)?
  5. Can you quickly scale your IoT deployment to serve your new and existing customer base without having to invest upfront?
  6. What is the total cost of ownership (TCO) for this project, including maintenance and data management?
  7. Is there a partner who has developed similar solutions that we can work with to accelerate time to market and reduce risk?

With a clear focus on "Why" as well as value vs. cost in the decision-making process, organisations are much better equipped to ensure that IoT deployments deliver true value for you and your customers year after year.