Measuring the true impact of IoT

#Discussion(General) [ via IoTForIndiaGroup ]

What drives IoT adoption
IoT has the same challenges, if not more, as marketing: impact is measured on multiple returns, mostly because IoT itself is adopted to address more than one opportunity. Let’s see, then, what are the main drivers that push enterprises to adopt IoT.

Brand
New Revenue
New Business Model
Cost Reduction
Cost Control
Compliance
.
A new indicator for IoT: Return on IoT Adoption (ROIA)
If this wasn't already complex enough, there's also the investment factor: in the majority of transformational journey, investments tend to be either based on capital expenditure (CAPEX) or operational expenditure (OPEX); in IoT we actually see more often an hybrid model, with investments that have both a CAPEX and OPEX component.
With these factors in mind we can start shaping a simple formula: the overall return, in terms of all up value, of an IoT investment for Digital Transformation is informing an index that we will be calling Return on IoT Adoption (ROIA). It looks like this:

“Initial investment” is the main differentiator of this index: as you can see it’s the only element in the function representing a point in time cost, whereas all other factors are recurring cost and/or revenue. This is meant to factor the impact of initial investment in an IoT project: if it is sufficiently low compared to cost and/or value and/or planned duration that it makes business sense

Numbers?
At this point the key is quantifying the impact of the “Initial investment”: fomer IDC Vice President and IoT Analyst Joe Barkai suggested an interesting approach in a recent blog post, using a methodology well known in management, real option:

Read More..