Making the Business Case for IoT

#Discussion(General) [ via IoTForIndiaGroup ]

With such a far-reaching initiative as IoT, the justification and ROI analysis will inevitably be more extensive than it is for standard IT projects. This, as with improved collaboration, is another hallmark of digital transformation.

Where IT projects used to be measured primarily on the cost benefits or efficiency gains, they are now often measured by the same standards as any other corporate strategy. They must show a positive impact on overall organizational goals, many of which have never included a digital component.

After identifying an area where IoT might be implemented, the next step is to fully understand the risks and hurdles. This step is critical at this point because so many technology projects underestimate the risks, leading to unexpected costs or problems. This is especially true when a line of business is driving the decision process. Companies are already concerned about IoT costs; 43% say that upfront costs are a major hurdle, and 34% cite ongoing costs as an issue. But if there is not a thorough assessment of other risks—such as cybersecurity (41%), interoperability (25%), or handling new data (13%)—those costs will skyrocket.

On the other side of the ROI equation are the benefits companies hope to gain from IoT. Cost savings lead the list, with 43% of companies expecting that IoT will lead to a reduction in operational costs. As with other emerging technology trends, cost may ultimately prove to be a lower priority, as businesses realize that IoT’s primary benefits may be improved data for decisions (38%), better asset tracking (34%) or automated business processes (32%).

Even if current technology ROI calculations should not necessarily give the most weight to the pure financial components, that is the typical approach to IT projects. In the past, IT served more of a tactical support role and was typically viewed as a cost center. IT investments were meant to provide more IT capacity at a lower cost or greater IT capacity at the same cost. Now, as technology plays more of a strategic role, investments are evaluated more in terms of a growth mindset, looking at the overall return to the business.

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