While a good number of companies are taking advantage of existing Internet of Things (IoT) applications to save money and increase their operating efficiency, others—both large and small—are integrating the IoT into their existing products and services, creating new business opportunities. (Some are doing both.) Enhancing products and redefining business models based on IoT technology can be a smart way to grow if it is done thoughtfully and strategically.
If you’re considering developing a particular project, one of the most important factors to consider is the cost of IoT implementation. Different factors feed into the cost, one of which is the approach you take to development. Having worked with a number of firms just starting out in this area, I’ve learned something about what makes a project successful and cost-effective—and what can sink it.
The Cost Of IoT Implementation: 3 Keys To Developing A Cost-Effective IoT Project
An IoT system essentially has three layers:
- Hardware includes the range of devices that handle key tasks and functions, such as sensors, control devices, servers, etc.
- Software that receives, analyzes, and stores sensor data
- Application layer that enables people to interact with and manage the IoT devices
That said, in my experience, the most important thing companies looking to develop an IoT offering should remember is this: The old venture capitalists’ adage, hardware is hard, is true. So the first key is:
1. Don’t build your own hardware if you can help it.
There’s no shortage of articles online about how difficult it is to make a hardware product; every company that ventures to do so faces significant challenges and a myriad of lengthy stages, everything from designing and building to testing, packaging, and more. Few early IoT developers realized what a headache this whole process is. In addition, starting your product at this stage is costly—you should expect to spend tens of thousands of dollars just to get it into production.
A lot of companies think that, unless they build their own hardware, they’re not being innovative enough. But it’s not really about the specific technology—there are all sorts of ways to solve a problem. It’s about the customer base and the revenue. Anything you can do to fast-track your way to more customers and more revenue, the better. The easiest and most recommended way of doing it is to find an original equipment manufacturer (OEM) that’s already making the hardware you need and use that, even if it requires custom firmware.
2. Innovate at the application layer.
You still have to find the hardware and integrate it, but if you can find a way to avoid necessary innovation at the hardware layer you’ll be better off, especially as a small company.
For example, if you want to enhance your product with an asset tracker, find a manufacturer that already makes a Bluetooth tracker. There’s still plenty of opportunities to be really excellent at the software side: Figure out the gateway the tracker will talk to and write the software to handle mapping, workflows, alerts, etc. Ultimately, you’ll be in a much better position—both financially and competitively—than if you design and build your own tracker, gateway, and application software.
3. Have a realistic business plan.
When calculating potential returns against the cost of IoT implementation, start with a business plan that is brutally realistic about device development. If you still plan to start from stage 1—building your own hardware—for an IoT device, know that you’re in it for six figures. If your business plan doesn’t support that, you should reevaluate the project.When calculating potential returns against the cost of IoT implementation, start with a business plan that is brutally realistic about device development. Click To Tweet
Need an IoT partner for your project?
Our goal at Iota is to help businesses grow by leveraging IoT technology and connectivity. We’ve built a lot of the underlying technology blocks already—including a reliable and secure wireless network and low-cost IoT devices—so you don’t have to. Plus, we have an experienced team who can help solve your technical problems, helping you to get your device to market faster. If you’d like to talk with us about how our technology can be integrated into your potential IoT project, get in touch today.