The Why, When and How of IoT Projects

February 21, 2019 JAYNA LOCKE, DIGI INTERNATIONAL

What do a cellular solution for an environmental cleanup project, a water optimization solution for farm irrigation, and a retrofit solution for smart city lighting have in common? If you guessed "Internet of Things technology," you are correct. You would also be correct if you guessed that these solutions were all developed in response to an expensive problem that needed to be solved. All of these IoT examples developed out of a strong business case around working smarter and improving efficiency.

In other words, the "why" behind IoT projects is not necessarily a quest to be a technology adopter. In fact, the terms "IoT" and "Internet of Things" may not even enter into early conversations. Instead, it comes down to business fundamentals: how to reduce waste, drive efficiency, increase visibility into complex or remote processes and off-load the burden of inefficient manual operations to wireless communications and automation. All of these goals can improve the bottom line by eliminating costs or reducing risks that can impact revenue.

Consider, for example, an IoT solution that senses when a refrigeration unit breaks down and immediately notifies an administrative professional via SMS message; the administrator quickly gets service personnel to the location, saving $25,000 in inventory that would have otherwise spoiled. The operations manager of the restaurant or warehouse whose inventory was saved may not have envisioned an IoT solution, initially, but may instead have asked "How can I reduce the risk of loss if one of my units fails?" Today, the answers to questions like these can often lead to a business case to invest in an Internet of Things solution. 

The numbers underscoring the idea that it may be time to create that business case are impressive:

  • Up to $11 trillion in annual savings and revenues are forecasted for 2025(1).
  • IoT is projected to boost corporate profits by 21% by 2022, and is expected to reach a tipping point of 18-20% adoption this year, and shown in the graphic below.(2).
  • Industrial IoT Devices are Expected to Add $14 Trillion to the Global Economy by 2030(3)

The Why of Internet of Things Projects

While adoption of IoT is rapidly increasing across every imaginable business environment, from transportation and supply chain to financial services, smart cities, medical facilities and industrial sites, those making purchasing and deployment decisions need to have solid answers to the questions around why, when and how to deploy these solutions.

The "why" has certainly come into focus for many organizations. As we have discussed, it typically comes down to efficiency, cost savings and even potential competitive advantage that would enable the organization to win new business. Nothing makes a business case more readily than significant dollars saved or an increase in revenue.

Establishing the "why" involves defining the business need and then demonstrating how technology solves that problem. For example:

  • Reduce redundancy and business complexity: Will the solution enable your city transit system to move to one full-featured router for all on-board data communications including dispatch, GPS tracking, security monitoring and customer Wi-Fi?
  • Reduce cost: If you put a sensor-based system in place to notify personnel when remote systems must be serviced, can you reduce truck rolls to those sites by 50%?
  • Increase efficiency: Can a cloud-based remote device monitoring and management system enable your team to remotely update device firmware of all devices at once?

A Cap Gemini report(4), provides a handy list of "whys" including those below. To build your use case, gather estimated percentages in improvement or reduction from your use case.

  1. Cut down on the amount of waste in production
  2. Improve fuel efficiency 
  3. Reduce the cost of occupational injuries
  4. Reduce product liability claims 
  5. Grow after-market sales or service
  6. Improve productivity
  7. Eliminate the cost of follow-up visits

Some organizations can create metrics around potential new business, whether through better customer service, value added services that attract new customers, or features that make the business more competitive. For example, one smart lighting solutions provider developed an IoT solution that can save their customers up to 85% of their lighting energy costs, giving them an excellent data-backed story for winning new customers.

The When of Internet of Things Projects

This question can be a bit more challenging, because there are many factors at play. For example, some IoT solutions (e.g. boxed products like routers) can virtually be drop-in deployment, whereas a solution that involves product design with radio modules, single board computers and antennas has a longer lead time.

The question of when to deploy is connected to the why. Consider an industrial site such as a water treatment facility using landlines for transferring data on flow rates and other measurements. The "why" may be the high cost of maintenance, or it may be the risk of equipment failure due to aging technology. The organization needs to evaluate the cost of upgrading to new infrastructure against those concerns. 

Additional factors in the project timeline will include choosing an IoT solutions vendor, sourcing materials, any design time that would be required, and performing a pilot.

The How of Internet of Things Projects

Developing a solution based on Internet of Things technology can be a daunting undertaking. Behind the how of IoT is a rapidly developing wealth of tools, technologies, devices, networks and applications – the intricate scaffolding of the Internet of Things. Defining an entry point into this complex environment is critical, as it is highly likely that multiple hardware and software components must come together in the final solution.

While each use case is somewhat unique, there are some key questions to ask:

  • How will you source the hardware and components you will need to complete the design, and where will you procure those materials?
  • How will you provide documentation or training to those who must install and implement that solution in the field?
  • How will you ensure that the solution is operating optimally, performing as expected, and providing the desired data or results?
  • How will you deliver data points to those responsible for monitoring and maintaining the solution?
  • How will you analyze the data and make it actionable so that it becomes a value proposition for your solution?
  • How will you scale the deployment to accommodate growth?

One of most effective approaches in determining the how of an IoT project may be surprising; it involves partnering with a provider that can deliver value above and beyond selling IoT products. By finding a vendor that takes a holistic, solutions-based approach to problem solving, organizations can get the critical support along the way to define and answer questions about the integration of multiple components, how to gather data points from devices across an IoT deployment, develop a successful solution design, complete the certification process and meet time-to-market objectives.

A November, 2018 Gartner report stated it well:

"CIOs should ensure they have the necessary skills and partners to support key emerging IoT trends and technologies, as, by 2023, the average CIO will be responsible for more than three times as many endpoints as this year."(5)

Likewise, a Forbes report stated:

"Many companies express a high sense of urgency in making their IoT programs operational. It is therefore no wonder that more than four out of five companies seeing the most success with IoT report using a vendor-sourced IoT platform as part of their initiatives."(6)

The journey of a thousand miles does indeed begin with a single step, as Lao Tzu is famously quoted as saying. This is certainly true with the decision to deploy an IoT solution. It all starts with an evaluation phase to clearly define the business need and the path forward.

Citations:

1) McKinsey&Company: Unlocking the Potential of the Internet of Things

2) Forbes Insights: The Internet of Things: From Theory to Reality

3) VXchange: 5 IoT Statistics You Need to Know in 2019

4) Cap Gemini: Thirty Measurable Business Cases for IoT with Connected Services

4) Gartner: Gartner Identifies Top 10 Strategic IoT Technologies and Trends

5) Forbes: 2018 Roundup of Internet of Things Forecasts and Market Estimates

Jayna Locke has an extensive background in content marketing, and loves storytelling as a way to share innovations, industry insights and thought leadership.

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