Companies generally design their IoT solutions first to reduce costs and expenses, but it’s also important to explore how that solution can generate new value beyond its initial intent.
Mapping out plans to extend and evolve a new solution before the initial investment can help lower costs down the line. At this stage, identifying other benefits of the solution beyond cost reduction often will have a calculable financial impact that can help support the solution’s overall business case. Even benefits that are not easily defined by dollar amounts can still be big contributors to the organization overall and should be considered.
Here are some examples of the types of additional value an IoT solution can offer. Companies should also be aware that their unique business model or industry may offer other areas to explore beyond these general themes.
Extend the solution to other parts of the business
Once the underlying infrastructure is in place, it can be a lot simpler to add new capabilities and extend to other processes. Extending the solution will also factor into its overall cost savings because the cost of the initial implementation is being spread over multiple scenarios.
If the intent of your original solution is to monitor machine maintenance, for example, look at how the information provided by the sensors and connections involved can be used in other ways. Can they monitor power consumption? Peak usage times? Beyond creating efficiency in maintenance cycles, you may be able to optimize inventory and supply chain processes or save in other ways.
Identify potential new revenue streams
While reducing operations costs is a major focus of IoT solutions, these same solutions may also be able to generate increased revenue. As data is collected and analyzed, new trends may reveal new revenue opportunities. These opportunities may include personalizing offers to customers, scaling based on user demand, or providing new services like preventative maintenance.
The manufacturing industry offers several exciting examples of this approach. Whether it’s truck tires or oil pumps, using sensors to offer preventative maintenance to customers is not only a valuable service that can save customers a great deal of time and money, it’s also a new revenue-generating service that can transform the business: Now you’re not just selling a product, you’re selling uptime.
Turn customer preference data into a valuable resource
The information you collect may be beneficial to other companies as well. A car manufacturer that tracks anonymized vehicle information could share aggregate customer data to insurance companies, creating data monetization opportunities and generating new revenue from an existing IoT solution. A vending machine company could identify customer buying preferences at different seasons, locations or times of day and market that information to other businesses with similar interests, such as its suppliers.
Examine other qualitative benefits
An IoT solution may also provide soft ROI, such as improved customer satisfaction, greater worker safety and increased business flexibility. Adding value for the customer through lower prices, increased security or faster delivery of care can improve brand loyalty, for example. While these often do contribute to revenue, it’s difficult to calculate the specific impact, but there’s little question that the long-term effects of improving brand loyalty are a net positive that can more than justify the investment in IoT.
When developing a business case for IoT solutions, it is often best to start simple, using basic ROI calculations to develop a general indication of the value the solution can provide for a specific business scenario. After that, however, it’s important to look at these type of new possibilities. With each new possibility, the business case for the IoT solution becomes stronger.
To better understand how an IoT solution can create new value for your business, check out our latest whitepaper “Addressing ROI in Internet of Things Solutions”. And if you’re looking to get started with IoT, visit www.InternetofYourThings.com.