In this article Robin Duke-Woolley, CEO of Beecham Research, explores how IoT solutions have moved from being largely dissociated from overall business objectives to being increasingly seen as a way of achieving them. However, recent research indicates there is still much to do. More about this can be found in Beecham Research’s free report – How to Measure IoT Success? – available at Beecham Research.
“IoT technology is very cool. But chasing the cool factor can lead to compromised RoI. If IoT partners focus on the business challenge, they will capture new levels of RoI” Harvard Business Review
Gone are the days when IoT was just a cool ‘nice to have’ – more vanity project than real operational benefit. IoT solutions are now increasingly becoming essential parts of business operations, used for active real time monitoring and control. As a result, there is an increasing need to align what IoT solutions are actually achieving in terms of their project objectives with the underlying challenges of the business – the need to meet key business objectives.
This alignment of IoT project objectives with business objectives has taken a while.
2020 vs 2023: Research findings compared
In early 2020 we measured how successful IoT projects were perceived to be by the companies using them. At the time, those who considered their projects to be fully successful was just 12%, with 30% considering them to be partially successful, while a further 58% considered them to be largely or wholly unsuccessful. In addition to that, the measure of success or otherwise was often not related to actual business objectives – it tended to be quite subjective and often not actually physically measured. Many projects were also proof of concepts (PoCs) with no clear idea of what they were supposed to achieve.
There has been a considerable change. In 2023 we have measured the success rate of IoT projects again and there has been a sharp improvement. In numbers, a 28% improvement. Yet this is not all good news. While IoT solutions are increasingly catering for some initial business objectives, key ones are still being missed.
Catering for change
One of our recent interviewees – an IoT solutions expert (CEO of a Smart Solutions Provider) – put it like this: “IoT is new for a lot of businesses. Migrating from a home grown infrastructure model to something that is cloud based, they have to adapt to a different mindset. They want to make sure they don’t lose the investment of legacy infrastructures and provide a bridge to the new IoT project. Their objectives often then change over time”.
The key point is that their business objectives change over time. If that happens, so must the IoT solution to support that. What sort of changes are happening?
A recent survey by the IMC (IoT M2M Council) gives an indication. This asked the question – how will you measure the success of your IoT deployment? A number of options were provided in the survey and can be summarised in the three categories as shown in the chart – reducing costs, adding value or ensuring compliance with (usually national) regulations.
These are essentially the three main underlying reasons for deploying an IoT solution. In this particular survey, the question was a forward-looking one related to IoT projects not yet deployed and it is notable that the expectation was for a higher level of added value (52%) compared with reducing cost (43%). For that particular sample, there was less attention to compliance issues (just 4%).
This is not what the survey would have found if conducted 3 or 4 years ago. It is often the case that initial IoT deployments seek cost reduction as a first stage, since this is quite often faster to achieve than adding new value. If a rapid Return on Investment is needed, this can often be achieved more quickly through initial cost reduction. As a result, successful early IoT deployments were far more geared to saving costs than adding new value. In line with this, research findings from a few years ago show that reduced cost used to score a lot higher than the add value score. Now we are in a transition, where business objectives related to adding new value through use of IoT are now taking a higher priority. This is not surprising – if a business wants to differentiate itself in the market, then almost always this requires adding new value in some way and often introducing a new business model.
A point to note in this regard is that if the business objectives of an IoT deployment change to that extent, then this will almost certainly need to be accompanied by changes in the IoT solution itself. This can be a key point of failure.
Adding new value is the big challenge
It is also noticeable that, in recent years, there has been a considerable drive towards simplifying IoT deployment and use of IoT solutions, while at the same time those solutions have become increasingly complex. Once deployed, can these solutions now cater for a change in business model?
Adding value most often comes in the form of creating new revenues, improving outcomes (such as higher quality), gaining higher customer satisfaction, and so forth. Such outcomes may require more planning and operational changes to achieve, particularly if a change in the unit’s business model is envisaged. Such digital transformations are usually a longer term objective.
Yet in spite of this, and returning to our latest survey findings, it is clear that adding value is where current IoT solutions are much less successful in delivering at the moment. Scores for achieving these objectives are noticeably lower than for achieving cost reduction, for example. This is the challenge for these solutions moving forward – how can they adapt?
To read more about the research behind this article and the technologies being used to deliver new value, the report – How to Measure IoT Success? – is available to download free at Beecham Research. This looks at a wide range of key questions beyond those explored in this article, including:
- What has been achieved so far?
- What do businesses really want from their IoT solutions?
- To what extent are business objectives for IoT changing?
- What part can latest IoT technologies play in delivering these?
- How to measure IoT success when business objectives change?
The author is Robin Duke-Woolley, CEO of Beecham Research.