ROI - Motivation for Investments IIOT
03-04-2022 491
The Internet of Things (IoT) is increasingly seen as the next trillion-dollar opportunity and solution to many business problems.
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The Internet of Things (IoT) is increasingly seen as the next trillion-dollar opportunity and solution to many business problems. With the implementation of IoT solutions, industries are getting smarter day by day, however for any project it is considered a success if it gives a commensurate return on the investment made. Also, after project completion, desired goals need to be achieved such as added value, transparency, improved performance, scalability, security and much more.
There can be multiple goals behind an IoT project and should be evaluated only after project completion, however, most of the time while working on an IoT project, it becomes a dilemma when ROI assessment, this is because once the primary goal is to be completed by the project, there may be an enhanced need to complete the secondary objectives which are often later than the desired goals due to most of the time.
The project period is considered unsuccessful. Often such a situation is caused by unclear and unprioritized goals. In addition, due to the fact that there are no general rules or guidelines available to assess the potential return on investment (ROI) for an IoT project because for different business scenarios the IoT solution is different. in many aspects such as using technology and available resources.
IoT can bring business transformation and involves many technology expertise such as Information Technology, process technology and operations technology to implement it, however most organizations do not have the right team. employees have a deep understanding of these technologies and thus they turn to third party support.
Usually third party IoT players and their solutions add to the confusion. Each one seems to have strengths in one or two of the areas mentioned above and approaches IoT from this angle. Their solutions showcase their strengths but do not scale or integrate with other platforms or products.
There can be many goals but the main goal must be unique to accomplish the desired business goal. For example, what problem are you trying to solve or what opportunity are you trying to exploit. Are you trying to cut costs? Increase revenue? Expanding service offerings? New line of business?
Every goal has to be unique which means it has to have a unique starting point and ending goal. Each objective comes with a desired cost and risk, which helps to calculate the overall cost and associated risks of the project. This helps stakeholders to prioritize according to the desired goals, ensuring benefits from the proposed solution.
IoT solutions can fundamentally improve core business processes with the ability to deliver business transformation, high-level benefits, and long-term forecasts that provide transparency and help with growth planning Future policy developments may justify IoT solutions.
The best approach of IoT investments are phased investments that can minimize risk. Stages allow you to tweak and refine your small-scale deployment before expanding to your entire enterprise. They also reduce the risk of failure, unusual or unforeseen failure during full production and having to redo every connection and integration point.
Calculating ROI for an IoT solution includes not only initial cost and savings calculations, but also new opportunities available from the connected solution. With proper justification, we can track ROIs and measure them against investments
Most stakeholders typically compare potential savings with planning, purchasing, and configuration costs, but there are other factors that can directly or indirectly affect the investment that need to be considered, consists of:
Implementing IoT involves a lot of expertise and complexity. However, there can be simple steps to get started and work towards the desired goal according to predefined priorities. As a result, prior understanding of ROI and resulting business benefits greatly simplifies ROI assessment while a phased approach of implementation ensures transparency for stakeholders.
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There can be multiple goals behind an IoT project and should be evaluated only after project completion, however, most of the time while working on an IoT project, it becomes a dilemma when ROI assessment, this is because once the primary goal is to be completed by the project, there may be an enhanced need to complete the secondary objectives which are often later than the desired goals due to most of the time.
The project period is considered unsuccessful. Often such a situation is caused by unclear and unprioritized goals. In addition, due to the fact that there are no general rules or guidelines available to assess the potential return on investment (ROI) for an IoT project because for different business scenarios the IoT solution is different. in many aspects such as using technology and available resources.

Indicators measuring the value of IoT solutions:
- Increase revenue
- Reduced downtime
- Reduce operating costs
- Increase productivity
- Streamlined business processes
- Faster time to market
- Minimum customer service response time
- Improved visibility
- Effective understanding of equipment usage
Invest in Traditional IT and IoT
IoT can bring business transformation and involves many technology expertise such as Information Technology, process technology and operations technology to implement it, however most organizations do not have the right team. employees have a deep understanding of these technologies and thus they turn to third party support.
Usually third party IoT players and their solutions add to the confusion. Each one seems to have strengths in one or two of the areas mentioned above and approaches IoT from this angle. Their solutions showcase their strengths but do not scale or integrate with other platforms or products.
Identify key IoT investment areas
There can be many goals but the main goal must be unique to accomplish the desired business goal. For example, what problem are you trying to solve or what opportunity are you trying to exploit. Are you trying to cut costs? Increase revenue? Expanding service offerings? New line of business?
Every goal has to be unique which means it has to have a unique starting point and ending goal. Each objective comes with a desired cost and risk, which helps to calculate the overall cost and associated risks of the project. This helps stakeholders to prioritize according to the desired goals, ensuring benefits from the proposed solution.
Actual implementation of IIoT solutions
IoT solutions can fundamentally improve core business processes with the ability to deliver business transformation, high-level benefits, and long-term forecasts that provide transparency and help with growth planning Future policy developments may justify IoT solutions.
Invest in stages to improve ROI
The best approach of IoT investments are phased investments that can minimize risk. Stages allow you to tweak and refine your small-scale deployment before expanding to your entire enterprise. They also reduce the risk of failure, unusual or unforeseen failure during full production and having to redo every connection and integration point.
- POC stage
At this stage, you can choose a small objective from your business case and work on implementing the proof of concept (POC). It may include only a handful of devices that can detect and resolve issues for you while scaling.- Stage of scale production
Once the proof of concept or pilot is successful and we achieve the target business outcome. The next step underway is scaling up here, which we typically see as the cost savings from the solution, such as reduced equipment failure or lower fuel consumption, starting to offset the costs. previous investment. Once the solution goes into production, tuning can achieve a higher ROI.ROI assessment
Calculating ROI for an IoT solution includes not only initial cost and savings calculations, but also new opportunities available from the connected solution. With proper justification, we can track ROIs and measure them against investments
Potential factors for IoT investment
Most stakeholders typically compare potential savings with planning, purchasing, and configuration costs, but there are other factors that can directly or indirectly affect the investment that need to be considered, consists of:
- Deployment downtime cost
Many times, while installing new equipment or retooling the factory floor requires maintaining production, increased downtime, associated downtime and loss of revenue.- Equip extra cost
Not all machines can be directly connected to an IoT solution, and retrofitting existing machines can be costly. In most old SPM systems or silos there is no possibility to connect and so replacing the existing machine with a new one is the best option instead of trying to retrofit the old machine.- Consultancy costs
Mainly IoT solution requires integration with many technologies like PT, OT and IT, every industry that wants to use IoT solution may not have enough skills to successfully implement IoT solution in house, so they will looking for partners who can be part of their entire IoT journey. This will add fees for implementation and ongoing consulting services.- Platform cost
Any IoT solution has an ongoing cost to store, process, and analyze the data involved. Each provider may use a different pricing model — some offer a flat-rate subscription while others charge a flat rate for each service, or have no machines connected to it. system. The company pays a fixed monthly price, which includes the use of the platform and the partner's consulting services.- Continuity of operating costs
IoT solutions often reduce overall operating costs, but they also add their own operational costs. All IoT-enabled devices and sensors require power and Wi-Fi, cellular, or other forms of connectivity; each of these increases operating costs. There are also ongoing costs for operating, maintaining, and updating the solution itself.- Security costs
Connected devices need to be secured to ensure data integrity and prevent unauthorized access to devices.Conclusion
Implementing IoT involves a lot of expertise and complexity. However, there can be simple steps to get started and work towards the desired goal according to predefined priorities. As a result, prior understanding of ROI and resulting business benefits greatly simplifies ROI assessment while a phased approach of implementation ensures transparency for stakeholders.
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