The Internet of Things: Making the Business Case

To better inform business leaders, myosh is conducting a 4-week article series that will take a broad look into IoT technology, and how organisations are using it to drive tangible business value:

• How does IoT work? (week 1)
• Making a business case (week 2)
• Common use cases (week 3)
• The future of IoT (week 4)

The Connected Workplace: Pros and Cons

In theory, IoT technology has the potential to address a number of key business objectives. But if organisations want to move beyond a proof of concept towards real-world adoption and deployment, then a robust business case is needed. It’s important to note here that IoT is not a quick fix IT solution, but rather an end-to-end solution that will likely affect all departments and processes. This is reflected in a 2019 CompTIA study that found nearly two-thirds of companies aimed to incorporate IoT technology into existing business processes – rather than treating it as an addition to business processes, or a standalone IT project.

So how do we weigh the costs of such a far-reaching investment against the ROI? This process starts with considering organisational priorities, and specific problems or pain points. Are you looking to cut costs? Streamline processes? Improve sustainability? Protect workers? Here, it’s easy for companies to fall into the trap of thinking about all the interesting things they could track if they stuck a sensor on everything. However, as always, organisations must look through the lens of a ‘business return’ when evaluating technology opportunities.

If you calculate that zero downtime on your packaging machines would increase production efficiency by 10 percent, then what is that increase in efficiency worth to your organisation financially? Once you have those numbers, you may find that a predictive maintenance IoT solution would save your organisation a considerable amount of money. And business leaders agree – the CompTIA study found 43 percent of companies expect IoT to lead to a reduction in operational costs.

However, lowering costs may not be the sole driver of IoT adoption. The CompTIA study found 38 percent of respondents expect to receive improved data for decisions. That’s because IoT, with its abundance of data, gives the right information to the right people at the right time. Additionally, 32 percent expect IoT to automate existing business processes – driving workforce productivity gains and generating new revenue.

What are the costs?

Financial cost is an obvious prohibitor for some companies exploring IoT solutions. Upfront costs include hardware and software, retrofitting, downtime, and training. Common ongoing costs include networking, connectivity, cybersecurity, and data-related costs. Despite this, sensor prices have dropped significantly in the last five years. Research from Banyan Hills found sensor costs to be declining 38 percent per year. The average sensor price is now $0.38 USD, compared to $1.30 USD in 2004. Digital storage prices are also dropping at approximately 100 percent per year.

However, advances in data collection do not come without their own set of unique challenges. How well positioned is your organisation to handle large influxes of data at a rapid rate? If not handled correctly, big data can lead to inaccurate analysis that results in bad decisions. Plus, organisations are likely to have their technology infrastructure tested as questions arise over data storage, database management, data access and sharing, and quality assurance.

There are also other considerations for businesses looking to implement IoT solutions that go beyond financial cost and technical ability. These include the availability of skills and resources, overall business agility, and scalability. Also, because IoT is a system of systems, its architecture can get complex. Organisations should be aware that designing, developing, and maintaining a system of complexity can take a considerable amount of time and resources. Ultimately, an organisation’s ability to navigate extensive technological transformation will depend on its collective capacity for organisational change.