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Building a Business Case for IoT Adoption
Considering IoT solutions in your business? Now might be the perfect time to take advantage of the growing prevalence of IoT technology. The utility of such technology is perhaps most evident when considering the growing global IoT market, which is projected to reach a value of 650.5 billion by 2026 at a CAGR of 16.7%. But before you commit to utilizing IoT solutions in your business, it may be wise to outline a business case to help you strategize this technological adoption. When beginning to build a business case for the adoption of IoT, it’s crucial to identify the specific problem you’re looking to solve with IoT solutions. Then you can decide what kind of IoT strategy is worth pursuing according to the unique needs of your business.
What Business Problem is Your IoT-Adoption Project Solving?
Let’s look at some different ways IoT can positively affect your business. IoT can help you:
Make money by increasing the value of your existing products
How can IoT increase the value of your products? IoT sensors can collect data from the product’s usage to identify areas in which the customer experience can be improved. Thanks to total product transparency like this, research and development can be accelerated as developers learn directly from huge data sets how to improve and add value to the product via adjustments.
At the same time, the expedition of the research and development process saves you time and money. The feedback loop between customers and developers via IoT insights also helps your team identify and predict customer preferences by combining real-time and historical data. Thanks to these actionable insights, the risk associated with rolling out a new a product model is decreased, and decisions can be made based on concrete data rather than assumptions or guesswork.
Save money by increasing the efficiency of internal processes within your business
IoT sensors and actionable insights delivered in real-time can help you asses the costs associated with internal processes, specifically the time spent on different processes. By continuously collecting this data, you can use IoT to help you analyze the areas in which you could improve your operation efficiency and cut costs.
Save money through improved resource management
IoT technology can help you better manage your resources by identifying the most efficient usage methods while simultaneously analyzing and managing your inventory to decrease waste and save you money.
Assessing the Costs
Once you’ve identified the specific ways in which IoT can help your business, it’s time to estimate the financial demands of implementing IoT solutions in the ways you require. Remember to include these demands in your business case going forward. Costs associated with IoT technology can include consulting, hardware, retrofitting, downtime, software, and subscription fees. By taking a closer look at each, you can gain a better understanding of the costs of IoT installation before weighing them against the ROI.
Identifying the unique ways in which your business can benefit from IoT is a much simpler process when hiring a consulting service. By building a feasible strategic roadmap alongside an experienced consultant you can address any business challenges that may get in the way of your goals.
These costs will depend on the types of variables you expect your IoT solutions to track and analyze. The pricing of sensors and smart boxes will vary based on their overall functionality, so it’s wise to ensure that you’re choosing the most cost-effective hardware for your needs. For example, a simple light sensor would cost less than a sensor that monitors light, humidity, temperature, occupancy, and more.
Retrofitting and Infrastructure
Costs associated with retrofitting and creating the optimal infrastructure for IoT solutions will also significantly vary based on the types of technology you already have in place. Unless your facilities are entirely up-to-date and ready for IoT implementation, you may need to look into retrofitting costs.
Retrofitting, hardware installation, and software setup may all require a necessary amount of downtime in your operations. You can plan for this downtime and find an optimal schedule for IoT implementation, but you could still temporarily lose revenue if your typical operations are affected.
Software and Subscription Fees
The software required to power IoT solutions, perform analytics, record data, and more will likely require a subscription service with costs that will vary based on the platform. A consulting service can help you identify the most cost-effective software for your needs. Your business will also need to consider implementing security measures to ensure that your interconnected IoT machines are safe from cyberattacks, which are typically available on a subscription basis.
These are the various costs associated with IoT implementation, to be considered when building a business case. But once everything is set up, what kind of ROI can you expect?
Predicting the ROI
Identifying and calculating the ROI of implementing IoT solutions in your business is the next step in presenting a strong business case. However, this may be a difficult process since the ROI of IoT adoption is both direct and indirect. For example, you can expect direct revenue increases and cost-savings, but your profit margins will also be affected by increasing facility efficiency, informing your strategic planning, improving the customer experience, and boosting your competitivity in the marketplace. Some of the returns-on-investment you can expect may look like:
By increasing the efficiency of your business operations and providing real-time data that can prevent accidents or equipment malfunction, IoT systems have the potential to save you significant money and time.
Business Insights and Strategy
The aforementioned real-time data is also crucial when it comes to devising innovative strategies and revealing novel insights into your business. With an unprecedented level of visibility into your business now available through IoT solutions, you can make data-driven decisions that can boost your business in the short- and long-term.
Improved User Satisfaction
Combining real-time and historical data helps you make proactive and predictive choices when it comes to your products and services. Knowing exactly when maintenance is needed or when customer satisfaction is waning helps you improve your uptime while reducing the financial penalties of downtime.
Competitivity and Differentiation
Using IoT to optimize your business operations, services, and products can completely revitalize user interaction. The kind of applications and processes available through IoT can make your business more attractive to potential customers and thus provide you with a competitive edge in the marketplace. Such an edge may look like the ability to perform predictive maintenance (noted above) which provides a seamless user experience and differentiates your product from others on the market.
After you’ve assessed the costs and ROI you can expect from IoT adoption, your business case should consider how your implementation project will affect your cashflow.
The initial costs of consulting services followed by the necessary downtime for installation and set-up can cause a temporary rift in your cash flow. At the same time, the cost savings and real-time business insights available once this set-up is completed have the potential to increase your cash flow as you make informed strategic decisions concerning your business thanks to IoT adoption.
An assessment of your cash flow will require an investigation into your own business since the potential costs and ROI are unique to the specific adoption strategy and industry. Whatever your cashflow fluctuations look like, be sure to include your estimations in your business case.
By assessing your cashflow, it’s likely that you’ll be able to identify any risks you’ll be taking by implementing IoT in your business. Accordingly, a strong business case undertakes a risk analysis.
Conducting Risk Analysis
Identifying costs and ROI will effectively highlight some of the inherent risks associated with IoT adoption. The financial risks associated with installation, subscription services, and downtime should all be accounted for in your risk analysis. Another risk involved concerns your own cybersecurity and the potential for cyber-attacks. As such, it would be wise to consider these concerns when conducting your risk analysis.
Outlining an Action Plan
Once you’ve taken the time to assess and analyze any predicted risks, it’s time for the final component of your business case: an action plan. This action plan is dependent upon the members of your business and includes identifying how decisions will be made within your company and who will be responsible for carrying out the project of IoT adoption. The action plan is all about bringing your business case to life and when it comes to adopting IoT, this begins with choosing an IoT consultant company to help you identify where IoT can strengthen your business.
To learn more about how your business can uniquely benefit from IoT adoption and how to craft a comprehensive business case for IoT adoption, contact us at Evolution Data where we specialize in innovative IoT solutions.