Monday, January 11, 2016

IoT Target Market - Reduce Operational Costs vs Increase Revenue

Recently I posted a discussion topic in one of the IoT LinkedIn group. Traditionally, IoT is seen as a monitoring technology such as tracking assets via GPS or reading meters remotely. Those are the days of using technology to optimise the operations and thus reducing costs is seen to be the primary focus. However, when all these data can give better insights than just understanding where we can optimise the operations - it can also provide ways to enhance our businesses, expanding into new horizons and create the new source of revenue growth.
If we were to compare both pains points i.e. to reduce operational costs or to enhance revenue, which one will be the most attractive proposition for IoT to solve and easily get the buy-in from the enterprises
Antero from Enkom Oy said that the energy sectors are more interested in costs savings. Al Hamilton, president of SignalFire Telemetry said,
"Cost Reduction is usually the easier sale because it is much more easily quantifiable and under much better institutional control. Getting to simple cost comparison and payback or ROI much easier than proving that you can increase revenue. If you can provide a compelling case for economic payback based on cost savings, then the sale is direct.
By comparison, while revenue increases are very compelling they come with a lot more issues associated with them. Competitive dynamics, customer perception, distribution, warranties to name a few. Further, the decision-making process is likely to include a much broader set of actors (marketing, management, sales force, customer service, etc.). "
What's interesting is regarding the decision maker for both implementations. Al Hamilton interestingly pointed out that," They are two different animals. The guy that can decide to save his company $100,000 a year by adopting an M2M application is different than the guy that decides he can sell $1,000,000 of an M2M application, and they go through very different approval and decision-making processes."
However, Sunalini Sankhavaram, Director Product Management from Motorola argued that "IOT is about visibility. Visibility implies data. Data to be meaningful requires Analytics. Analytics leads to actions that geared towards increasing the top line." She further commented that "the principal benefit of IOT needs to focus on the revenue increase. Otherwise, the ROI will not work out in the long term."
"Selling an IOT solution always means extra costs in the beginning. You have to build up the infrastructure, invest in the development of the end units (IOT's) and educate your customers and own personnel.", said Antero." Marketing needs to be done, as well. So when talking about quick wins, please keep this in mind. It is also mandatory to think about five years ahead; is my IOT solution still a sound investment or will there be something else, instead? If the IOT solution saves extra work (manual labor, travel, time), it will be profitable in the long run.", he further commented.
Capturing sensor data in "real-time" will be good for "efficiency", "optimisation" and cost reduction.But aggregating data from various sources will help in making a better decision and thus creating higher revenue. What do you think?
There are interesting points raised in this discussion that you can still continue here.
[It was originally published - “IoT Target Market - Reduce Operational Costs vs Increase Revenue”]



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