How difficult is it to determine the return of a project? What factors come into play? “Knowledge of your own business is absolutely crucial,” says Olivier Gramaccia from Sirris, the non-profit R&D organisation that dispenses advice on subjects like the IoT.
Olivier Gramaccia is the head of Business Development Materials & Smart Products at Sirris, a Belgian non-profit organisation and technology innovation centre. With Olivier Gramaccia joined us to discuss aspects of the return on investment (ROI) of IoT projects.
1. Every company (and project) is different
One of the most striking aspects of IoT projects is the variety. “It’s difficult to compare different projects with each other,” says Olivier Gramaccia. “After all, the main question to ask of a company and its IoT project is: what is the problem I’m trying to solve? Sometimes it’s a small-scale project or the cost of the solution is modest. Other times, though, it affects an entire organisation.”
IoT may focus on operational efficiency, such as better machine maintenance, or on intelligence: making the organisation smarter. “ It’s never been easier to extract data from your applications or products,” Olivier Gramaccia remarks.
2. Know yourself (and your project)
An IoT project is not usually a typical IT or telecoms project. It touches on various aspects of a business. This is a crucial when calculating the potential ROI. “As with any type of investment, it is crucial to analyse whether the project in question can be profitable,” Olivier Gramaccia explains.
But perhaps even more than with other ROI estimates, the exercise starts and ends with your own organisation. “The better you are at evaluating the challenges, the better you understand and are able to assess the value of your business, the more accurately you can calculate the ROI,” Olivier Gramaccia explains.
3. Aim for measurable results
For your IoT project, it is important to base your method on measurable parameters instead of on desired results. Olivier Gramaccia: “The manufacturer of a specific machine, for example, can calculate the cost of certain components with reasonable accuracy,” says Gramaccia. “But calculating the business value and possible revenue this represents is a different matter entirely. It is best for a company to assess this return based on a well-founded estimate.”
4. Aim for the right partner(s)
Users are aware that most IoT projects offer a solution that cannot be provided by a single supplier. That is why it is advisable for IoT suppliers and users to work together, each from their own area of expertise. “As a non-profit organisation, we advise companies on the technological and R&D aspects of a variety of projects. Our ultimate goal is always to make companies more competitive,” Olivier Gramaccia continues.
5. Technology is just one side of the (ROI) story
Quite frequently, an IoT project is not primarily an ICT project. It doesn’t always account for the largest share of costs. Olivier Gramaccia remarks that “relatively speaking, technology is becoming cheaper and more accessible. In this respect, the threshold for some IoT projects has lowered considerably.”
But IoT often involves the revamping of a process or even a business model. “Today we see a lot of so-called proof of concepts, in manufacturing or in the construction industry, for example, but also in smart home applications,” GramacciaOlivier states. “At the same time, I have also noticed that businesses don’t focus public attention on their projects. In many cases their IoT project actually represents a competitive business advantage.”