The internet of things has become a mainstream technology in the last couple of years. It’s not just early adopters experimenting with the possibilities of the tech; enterprises all over the world are integrating IoT solutions into their daily operations.
Rapid mainstream adoption of the internet of things suggests that stakeholders and executives are seeing real ROI on their initiatives. In fact, the global IIoT market is estimated to reach a size of $263bn by 2028.
That said, most organizations struggle to put a number on the return on investment in their IoT initiatives.
In this article, let’s explore the importance of ROI on their IoT initiatives and the best practices to calculate it.
Why should businesses worry about the ROI of their IoT initiatives?
ROI is not just a vanity metric; it’s an essential metric for tracking the success of the initiative. Here’s how businesses can benefit by measuring ROI on their internet of things projects:
Measuring ROI helps businesses better adjust their strategies
By continuously measuring ROI, businesses can check if their IoT initiative is in the right track. It can help assess the status of the initiative and if it’s giving the expected results. It breaks down the success of a complex project involving the entire organization into a simple number.
Stakeholders can just take a look at the ROI and if it’s not looking good, they can dig in further to see what needs to be fixed. It serves as an alarm bell for stakeholders on an IoT initiative.
ROIs help build stakeholder support for more investments for future initiative
ROI helps managers answer a simple question: ‘Was the project worth the investment?’ While metrics like customer satisfaction and employee morale are certainly very important, it will be a while before they translate into business value. And it may be difficult to convince stakeholders of a project’s success if you can’t show the ROI.
But by integrating mechanisms to measure ROI within the project itself, managers can clearly showcase how IoT is helping the business grow and get more support from executives and stakeholders.
ROI helps businesses get better visibility into their operations
ROI helps businesses get a better picture of their operations. It helps them understand if the IoT initiative is functioning as designed and if it is generating the expected results. Executives can use ROI to plan the next steps and make data-centric decisions for their organization.
ROI keeps businesses laser-focused on their business goals
IoT projects tend to be complex and resource intensive. They involve a lot of people, processes, and equipment, and it can be easy to get distracted by vanity metrics. ROI keeps the team laser-focused on the business goals of the organization and keeps their goals aligned with that of the organization.
What are the challenges of measuring ROI on Internet of things projects?
IoT initiatives tend to impact many business processes
IoT projects rarely impacts just one aspect of the business. It affects the entire organization and how it delivers products and services.
For instance, the impact of a predictive maintenance project won’t be limited to just the maintenance and repair teams. It will affect supply chains, customer support, manufacturing and assembly processes, and many others.
So it won’t be easy to collect the information from all of these processes, analyze how they changed, and measure the value they are giving. Collecting and analyzing the data alone can be a resource-intensive activity.
ROI doesn’t fully showcase the success of an IoT initiative
The success of an internet of things project is not just about its monetary benefits. IoT projects can improve customer satisfaction levels, employee productivity, and the brand’s reputation. It can help the organization stay compliant with energy and pollution management regulations.
IoT projects can also improve the quality of products and services the business offers. It can also improve the safety of employees and in some cases, even the end-users. Return on investment doesn’t consider any of these aspects.
IoT initiatives require a complete rethinking of organizational workflows
To get the best results, organizations shouldn’t just ‘fit’ IoT into their existing workflows and processes. They should rebuild their workflows placing IoT as a vital part of it.
For instance, manufacturing companies shouldn’t just add a couple of sensors into their processes or systems and call it a day. They should rewrite the workflows and make the data collected from the sensors part of the enterprise data architecture.
But this means it is difficult to narrow down the returns to just the IoT systems and not the new and optimized workflow.
Best practices for measuring return on investment for IoT deployments
Do not focus solely on the ROI as a metric of success
ROI doesn’t reflect all the aspects of an IoT solution. It doesn’t take into any other goals of the organization such as improving safety, reducing material wastage, or managing pollution. When building an internet of things solution, make sure you consider all of its different aspects.
Measure baselines before implementing the project
To get a clear ROI, you need the baseline numbers before implementing the project. It will help organizations to understand where they are at and where they want to be in terms of their goals. It will also help the managers and employees to make decisions that drive these metrics.
Define mechanisms to measure ROI before implementing the IOT solution
Even before deploying the IoT project, the managers and the implementation team should configure mechanisms to collect the data. They should define how they will collect the data and showcase them. The team should also define who will be responsible for collecting and measuring the ROI.
Monitor the metrics continuously
ROI shouldn’t be measured just once in a while. It should be measured continuously, and the stakeholders and managers must have access to it. Without continuous measurement, the organization won’t be able to adjust its strategies to better reach its goals.
IoT is not a deploy-and-forget solution. ROI should take that into account
IoT solutions are continuously iterated to improve their effectiveness. The project’s success metrics are constantly monitored and the solution is updated regularly to meet the goals. ROI should take in the costs associated with maintenance, updates, modifications as well as the results from them.
Ready to build IoT solutions that deliver? Reach out to Bridgera.
Organizations all over the world struggle to find clear ROI on their IoT initiatives. They struggle to build solutions that help meet their goals and once deployed, to measure its success. With our expertise in developing cutting-edge IoT solutions, Bridgera helps businesses overcome these hurdles.
Bridgera works closely with the organization and its stakeholders to identify the pain points and build solutions that fix them.
Reach out to Bridgera to leverage state-of-the-art custom IoT solutions for your business processes.