IoT deployments are happening everywhere, with different levels of success. Why is it happening and why do some IoT projects fail when others succeed? We have reviewed over 100 LoRaWAN IoT deployments to understand if there is a clear path to success with early enterprise IoT implementation.
Of course, it may be hard to guarantee the success of an IoT project as it relies on many different components, but there are certain elements that every successful IoT deployment shares that we outlined below.
1. Understand the Problem or Issue that Needs to be Addressed
A single IoT deployment can address several issues or concerns, reducing the overall cost per deployment. At the same time, any of the IoT initiatives should be analyzed individually to ensure they will meet internal ROI targets and effectively reduce the overall cost of IoT network deployment per each use case.
2. Define the Minimum Pass Criteria
It is necessary to identify the minimum pass criteria for a successful IoT deployment or specific use case to effectively communicate internally or externally with the IoT solutions providers and vendors what will defile Pass or Fail. When there is no agreement on what defines the use case Pass Criteria and business objectives, it leads to wasted time, effort, and cost, or outright failure in use case deployment.
Interestingly enough that while making our research on how companies implement the Internet of Things technology, we’ve found out that only some companies have a clear view of their business model before the trials occur.
3. Define the Minimum ROI (or IIR hurdle rate) the IoT solution Must Meet for each Use Case to Proceed with the IoT Deployment
To help make this process easier, it is important to define the minimum Return on Investment (ROI) or Internal Rate of Return (IRR) hurdle rate that the IoT solution must meet for each use case in order to move forward with the deployment.
The ROI or IRR hurdle rate is the minimum rate of return required to make a particular investment worth it. This rate is usually expressed as a percentage and it is used to determine whether a project or investment is worth pursuing. The ROI or IRR hurdle rate should be set for each use case for the IoT solution and should be determined based on the cost, the risk, and the expected return of the investment.
When setting the ROI or IRR hurdle rate, it is important to take into consideration the cost of the IoT solution and the expected return. The cost of the IoT solution is the total amount of money that needs to be invested in order to deploy the technology. This includes the cost of hardware, software, IoT components, and any other associated costs.
If there are multiple solutions, the cost of the IoT network could be shared across all of them and amortized over its useful lifespan.
4. Select the Most Suitable LPWAN IoT Solution
When stepping into the IoT space, it is necessary to choose the most suitable LPWAN IoT solution (LoRaWAN, SigFox, or LTE CAT-M) that meets technical and cost requirements and allows pre-deployment testing of the use case without significant upfront connectivity costs or efforts.
Primarily, all three technologies can address the same use cases, provide the same coverage and meet the same critical technical parameters. Still, they differ significantly in the initial deployment and operating costs, IoT ecosystem, readily available IoT devices, solutions, and suitability. All the difference lies in the way the network system allows for controlling business processes and tackling technical challenges.
5. Get in Touch with a Few IoT Solutions Providers before Full-Scale Deployment
Get in touch with a few IoT Solutions Providers or Vendors that can offer the solution of interest to test the actual use case (not the underlying IoT technology) to ensure it meets the Minimum Pass criteria discussed in Step 2
Instead of negotiating and signing long-term agreements with the IoT operators or vendors, first invest in testing the solution of interest or the use case on a small scale to ensure it works and addresses the issue of your company. If needed, invest in customizing the Application and Device modification to test the use case.
Don’t waste time testing the IoT technology — it’s very hard, expensive, and time-consuming to manage it effectively and reliably. Request the vendors to provide you with the technical data and test results to confirm that the equipment and solutions meet your deployment/monitoring specifications and needs.
6. Understand the Total Solution Cost
If the use case testing is successful and the Minimum Pass Criteria are met, proceed to understand the Total Solution Cost that covers the Network cost (if there is no public network to use), the Device and Application cost (including their IoT development or modification if needed), Deployment cost, and ongoing yearly Operating cost. Someone with experience generating Business Cases and Sensitive Analysis should perform this task, even simplified ones to calculate the operational efficiency of a project.
In our experience, ¼ customers run Business Cases before they proceed with the IoT deployment, and only some run a Sensitivity Analysis to understand which parameters affected the IoT product deployment and its operating cost the most.
It’s still the early days for IoT deployments. However, the Business Case and Sensitivity Analysis guarantee the best ROI for any IoT deployment and let the enterprise team focus on the correct cost drivers early on. It only takes 1-2 weeks of effort and provides a detailed picture of where to focus. No cellular operator deploys or updates a network without running a Business Case and Sensitivity Analysis.
7. Calculate IoT Deployment ROI or IIR to Understand if it Meets the Business Case
Once the cost of the IoT solution and the expected return have been determined, the ROI or IRR hurdle rate can be established. This rate should be set high enough to ensure that the investment is worth it, but not so high that it becomes unattainable.
Once the Total Solutions Cost and Sensitivity Analysis across a handful of key parameters are available, calculate the IoT deployment ROI or IIR to understand if it meets the business case. Use Sensitivity Analysis data to improve the overall business ROI and IIR and define the necessary items to pay constant and close attention to ensure the Business Case does not deteriorate over time.
Setting the minimum ROI or IRR hurdle rate for each use case of an IoT solution is essential for ensuring that the deployment process is successful. It helps to ensure that the investment is worth it and that the expected return is achievable. By taking into consideration the cost, the risk, and the expected return, organizations can make informed decisions about whether to invest in a particular IoT system or solution.
8. Consistently Follow the Steps
Define a handful of success steps to proceed to the next step, similar to a staircase from Start to Finish. Never expect to reach the Finish in one giant step or jump — it’s evident to everyone, but still, more than ½ try to do it.
Regardless of whether it is your pilot project or you are already a pro in using IoT services, it is important to stay consistent. You have to take into account all the potential risks, and make sure the IoT sensors you choose are cost-effective and will bring value to your business processes.
The Internet of Things (IoT) has revolutionized the way in which we interact with our everyday lives. From smart homes to connected cars and smart cities, the potential of this technology is endless. However, with any new technology, it is important to understand how to successfully deploy it and have the benefits of this deployment.
In this article, we’ve named the main steps to follow for effective integration. Interestingly, none of these named are new or specific to IoT deployments — many companies use similar frameworks to develop new products but still many businesses jump from step 1 to step 7.
We all like to get down to designing the solutions and solving the problems. Still, unless we spend time discussing and agreeing on the issue and what defines a practical solution, we waste much time, resources, and efforts and blame the market, economy, customer, and funding partners for slow progress and failures. We should be smarter than that and critically access any IoT device or IoT platform before using it, then success is inevitable.
If you want to discover more about the best ways to collect IoT data and deployment of hardware, make sure to get in touch with our sales team.