How do you measure the return on your IoT investment?

IoT projects can be standalone projects with a specific goal in mind or part of a larger Digital Transformation initiative. I look at the key drivers as: 1) New Digital Revenues - e.g. Servitization and Product as a Service 2) Competitive Landscape changes - E.g. non-traditional players emerging often with Asset-less models 3) Productivity gains - often inward facing or cost plays AND 4) Driving customer engagement / retention - Connected products or services leads to better understanding of customers needs, consumption pattern and alignment of pricing / cross sell etc. Based on one of these above scenarios, the ROI and success needs to be evaluated. Standalone IoT are easier to measure, but those part of larger project need longer time.

When thinking about IoT goals and ROI it crucial to understand the cost associated with the 5 C's of IoT. Connectivity - edge devices are going to generate a lot of data. What is the cost of storing that data in the cloud? What is the value of the stored data vs cloud cost? Cybersecurity - IoT devices are vulnerable to cyber attacks - if an IoT device is comprised what is that going to cost the business - reputation loss - data breach? Continuity of services - what is the cost of a device going down? What is the cost benefits of having undisrupted edge connectivity? How will your uptime compare to the competition? Cost of coexistence how harmoniously in crowded IoT environment will your edge device perform? And then comes compliance..

IoT investment is essentially buying an additional data source. Like any other data investment, the additional information doesn’t generate a return on its own, it only creates value to the extent that it enables a feature that customers are willing to pay for or improves operational decisions. A connected product that informs proactive preventive maintenance support can result in much higher uptime- a very valuable feature. Near real-time geolocation of mobile assets can enable much more efficient billing and logistics - big cost reduction. But the true ROI calculation demands operational context to isolate the incremental value. Knowing where every shopping cart is won’t reduce the cost of retrieving them from the parking lot.

Going back to the 5 C's of IoT - if your IoT device is running as expected the benefits should outweigh the cost. For instance - you add multiple edge devices to your infrastructure with little to no downtime, you are able to able to deploy faster due to consistent reliable connectivity - the apps running on your IoT devices are producing valuable data for and a reliable experience for your consumer. A happy customer = little to no customer churn - brand reputation increase - referral and a reliable revenue stream.