The Internet of Things (IoT) has become a mainstream technology recently. Businesses of all sizes are integrating IoT solutions into their daily operations to leverage the power of data and connected devices.
This rapid adoption suggests stakeholders see a positive return on investment (ROI) from their IoT initiatives. The global Industrial IoT (IIoT) market is projected to reach a staggering $263 billion by 2028.
However, many organizations need help to quantify the ROI of their IoT investments. This article explores the importance of measuring ROI for IoT solutions and best practices for calculating it.
Why Should Businesses Care About the ROI of Their IoT Solutions?
ROI is a crucial metric for tracking the success of any initiative, not just a vanity metric. Here’s how businesses benefit by measuring ROI on their IoT projects:
- Improved Strategic Adjustments: Continuous ROI measurement allows businesses to assess if their IoT solution is on track. It helps evaluate the initiative’s progress and its effectiveness in delivering expected results. ROI simplifies the success of a complex project by condensing it into a single, easily understandable metric.
- Stronger Stakeholder Support for Future Investments: ROI helps answer a critical question: ‘Was the project worth the investment?’ While customer satisfaction and employee morale are important, they take time to translate into tangible business value. It can be challenging to convince stakeholders of project success without demonstrable ROI. By integrating ROI measurement mechanisms, managers can showcase how IIoT is driving growth and secure further support from executives and stakeholders.
- Enhanced Operational Visibility: ROI provides a clearer picture of an organization’s operations. Businesses can understand if their IoT solution is functioning as intended and generating the expected results. Executives can leverage ROI data to plan future actions and make data-driven decisions for their organization’s IoT ecosystem.
- Maintaining Focus on Business Goals: IoT projects can be resource-intensive, involving various personnel, processes, and equipment. Vanity metrics can distract teams. ROI keeps the project team focused on the organization’s core business goals, ensuring alignment with strategic objectives.
Challenges of Measuring ROI on IoT Projects
- Multifaceted Business Impact: IoT solutions often impact numerous business processes, not just a single department. For example, a predictive maintenance project affects not just maintenance teams, but also supply chains, customer support, manufacturing, and assembly lines. Collecting and analyzing data from all these processes to measure value delivered can be challenging and resource-intensive.
- Limited Scope of ROI: The success of an IoT project goes beyond just financial benefits. It can enhance customer satisfaction, employee productivity, brand reputation, and regulatory compliance with environmental or energy standards. Additionally, IoT solutions can improve product and service quality and ensure worker or even end-user safety. ROI calculations often overlook these qualitative benefits.
- Organizational Workflow Rethink: For optimal results, organizations shouldn’t simply “bolt-on” IoT to existing workflows. They should integrate IoT as a core component, potentially requiring workflow reconstruction. Manufacturing companies, for instance, shouldn’t just add sensors and call it a day. They should redesign workflows to make sensor data an integral part of the enterprise data architecture. This makes it difficult to isolate the return solely on the IoT system and not the optimized workflow.
Best Practices for Measuring ROI on IoT Deployments
- Go Beyond ROI as the Sole Success Metric: While ROI is important, it doesn’t encompass all aspects of a custom IoT solution. Consider other organizational goals like safety improvement, material waste reduction, or pollution management when building an IoT solution.
- Measure Baselines Before Implementation: Establish baseline metrics before implementing the project to understand the starting point and desired outcomes. This data empowers managers and employees to make data-driven decisions that drive progress towards those goals.
- Define ROI Measurement Mechanisms Early On: Define data collection methods and presentation formats before deploying the IoT project. Assign clear ownership for data collection and ROI measurement to ensure accountability.
- Continuous Monitoring is Key: ROI measurement shouldn’t be a one-time activity. Continuous monitoring and stakeholder access to ROI data empower organizations to adjust strategies and optimize their IoT initiatives.
- Factor in Ongoing Costs and Improvements: IoT solutions are not “deploy and forget.” They require ongoing iteration for optimal effectiveness. The project’s success metrics should be continuously monitored, and the solution updated regularly. Factor in maintenance, update, and modification costs when calculating ROI, alongside the resulting benefits.
The Role of IoT Development Companies in Maximizing ROI
Partnering with an experienced IoT development company can significantly enhance your chances of achieving a positive ROI on your IoT solution. Here’s how:
- Expertise in ROI Measurement: A reputable company will have a proven approach to measuring ROI for IoT solutions. This includes helping you identify the metrics that matter most for your specific goals, establishing baselines, and defining data collection and analysis processes. They can also advise on the most effective tools and technologies for capturing and visualizing ROI data.
- Focus on Business Value: Experienced IoT development companies go beyond simply building the technology. They partner with you to understand your business objectives and design an IoT solution that delivers tangible value. This may involve streamlining processes, optimizing resource utilization, or improving product quality. Their focus is on ensuring the IoT solution directly addresses your pain points and contributes to measurable business outcomes.
- End-to-End Development Expertise: Developing and deploying a tailored IoT solution requires a range of skills and expertise. A full-service IoT solution provider company can handle the entire process, from initial concept and prototyping to development, integration, deployment, and ongoing maintenance. This eliminates the need to manage multiple vendors and ensures a cohesive, well-integrated solution.
- Security and Scalability Considerations: Security is paramount for any IoT solution. A qualified IoT development company will prioritize robust security measures throughout the development lifecycle to protect your data and devices from cyberattacks. Additionally, they will design your solution with scalability in mind, ensuring it can accommodate future growth and evolving business needs.
- Cost Optimization: IoT service providers can help you optimize costs throughout the entire project lifecycle. They can advise on cost-effective hardware and software choices, efficient development practices, and ongoing maintenance strategies. This helps ensure your tailored IoT solution delivers a positive ROI without exceeding your budget.
Bridgera: Your Trusted Partner for IoT Development and ROI Optimization
Bridgera is a leading provider of IoT development services. We have a proven track record of helping businesses achieve their strategic objectives through innovative and effective IoT solutions. Our team of experienced developers, engineers, and data scientists is passionate about creating solutions that deliver real-world value.
Here’s what Bridgera does differently:
- Collaborative Approach: We work closely with you to understand your unique business challenges and goals. This collaborative approach ensures the IoT solution we develop aligns perfectly with your needs.
- Data-Driven Insights: We leverage data analytics to optimize your IoT solution and maximize its impact on your business. We help you identify and track key performance indicators (KPIs) that demonstrate the ROI of your investment.
- Future-Proof Solutions: We design and develop IoT solutions with scalability and future technological advancements in mind. This ensures your solution remains effective and adaptable as your business grows and evolves.
- Ongoing Support: Our commitment to your success extends beyond deployment. We provide ongoing maintenance and support to ensure your IoT solution continues to operate at peak performance and deliver value.
Contact Bridgera today and let’s discuss your specific requirements. We’ll help you leverage the power of IoT to transform your operations, gain a competitive edge, and achieve sustainable business growth.
About Bridgera: Bridgera effortlessly combines innovation and expertise to deliver cutting-edge solutions using connected intelligence. We engineer experiences that go beyond expectations, equipping our clients with the tools they need to excel in an increasingly interconnected world. Since our establishment in 2015, Bridgera, headquartered in Raleigh, NC, has specialized in crafting and managing tailored SaaS solutions for web, mobile, and IoT applications across North America.
About Author: Joydeep Misra is the Senior Vice President of Technology at Bridgera LLC, specializing in IoT and SaaS. He played a pivotal role in establishing and leading Bridgera’s IoT division, showcasing a dedication to innovation and excellence in the tech field. Additionally, he is an accomplished author and sought-after public speaker.