Measuring the value of IoT projects

Al Sisto

Blog by: Al Sisto - 20 / Nov / 2018

Measuring value is a key challenge in many areas of business. It is vital for procurement and strategy managers to be able to ascertain the true cost of projects – and the true return on investment they (should) generate. IoT projects are no different. Before embarking on an IoT procurement and deployment process, organisations need to ensure that the value they will generate from such a process is worth it.

But how do you measure the value of an IoT project?

Measuring value is a key challenge in many areas of business. It is vital for procurement and strategy managers to be able to ascertain the true cost of projects – and the true return on investment they (should) generate. IoT projects are no different. Before embarking on an IoT procurement and deployment process, organisations need to ensure that the value they will generate from such a process is worth it.

But how do you measure the value of an IoT project? 

What does the IoT produce?

First, you need to understand that the IoT can deliver two key things. Many IoT devices and applications can deliver an immediate action, automatically, by receiving that instruction over the internet. So, for example, a connected piece of equipment on a factory floor could be instructed to stop or start. A connected insulin pump could be instructed to deliver a dose of vital medication remotely.

IoT devices and applications also produce, above all else, data. They collect information which, in many cases, previously went entirely untapped, because it was too complicated or costly to do so. And because IoT devices such as smart sensors on, say, a factory floor are unobtrusive and cheap to implement, they can gather data in enormous quantities. In turn, that data can be analysed and used to develop intelligent business insights – and these, generally, are where the truly long-term value of an IoT project is derived. 

What problem are you trying to solve?

Having understood the two broad elements that the IoT can produce for you, next you need to think about what problem you can use either or both of those to solve. Is there a bottleneck in a current process that you would like to be able to control and manage better? Would it be useful to be able to track the location of particular items in real-time? Are there environmental factors that it would be useful to be able to measure and analyse?

This problem-led approach is crucial to being able to accurately project – and later, assess – the true value of your IoT project. Whether you are trying to develop an entirely new connected product yourself, or implement IoT technology within your own operations, the project should be approached with a customer in mind. What does that customer need, and how can you use the IoT to deliver it? 

Performing value calculations

Only from there can you begin to calculate the projected value of your IoT project – by benchmarking the current situation and predicting where the IoT can either reduce costs, increase revenues, or both. You must, of course, factor in the cost of actually developing and deploying the technology itself also.

These calculations can be supported and amplified by performing test scenarios. If you are developing a new connected product, you need to develop prototypes and test them with actual users. If you are deploying connected technology in your own environment, you need to pilot it in a small area. These live use cases are essential in order to be able to perform accurate calculations and also iron out potential problems before a mass deployment.

It is important to remember, however, that the value of an IoT project can go beyond pure financials. The data gathered by an IoT ecosystem can provide invaluable insights into customer or employee behaviour, for example, which ultimately leads to valuable product development or working practices further down the line. Don’t make the mistake of measuring the impact of the IoT in purelyfinancial terms – but don’t shy away from a finance-based approach in the first instance.

 

 

Topics: IoT, IIoT, sensors, smart manufacturing

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