Four Steps for Building a Profitable IoT Product
Here are four quick and easy steps to building a profitable IoT product.
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Over the last decade, there has been a substantial amount of hype around the Internet of Things (IoT) and how it can be a strategic game-changer for businesses. However, it is important to establish that simply investing in IoT is not a winning strategy.
Building an IoT product that provides continuous, recurring value requires strategic planning and a focus on solving the right problems in your business.
According to a Cisco survey, over 60 percent of respondents admitted that they substantially underestimated the complexities of managing their own IoT initiatives. Even more alarming, the same survey also found that 75 percent of self-initiated IoT projects were considered a failure.
While there are many ways to build an IoT product, we have found that companies that succeed in taking their connected products to market accomplish four key steps. While this list is by no means comprehensive, we hope it gives you a starting point or new piece of information as you look to develop your own strategies and build your IoT products.
1. Understand Your Business Problems and Challenges
Before building an IoT product, you need to develop a basic understanding of how IoT can benefit your company. Too often, businesses start with an “intent to connect” instead of focusing on their business model. Companies that are just looking to create a connected version of a product fail to solve actual problems that are affecting the business.
Companies should first understand the problem they want to solve. Does a factory machine break too often? Are you losing business to a third-party service provider to fix your equipment? Once you establish the problem, you need to make sure every product decision is driving towards solving that business problem.
At this stage, companies often misdiagnose the real business problems they are facing and try to build an IoT product to solve minor problems that don’t deliver real value. IoT products only prove economically viable when they deliver continuous, recurring value for your business and your customers. While there are multiple ways companies can create value through IoT, we’ve found that there are five primary methods companies make money off of their connected products:
- Preventative maintenance — Manufacturers can connect machines and equipment with sensors to receive proactive alerts about maintenance status.
- Asset tracking — IoT technologies allow manufacturers to monitor their constantly moving assets (like equipment or vehicles) in real-time. With increased visibility, they can solve problems before they occur.
- Compliance reporting — By remotely monitoring sensitive assets, IoT devices are allowing manufacturers to dramatically reduce the costs associated with regulatory compliance.
- Supply-chain management — Companies can connect their supply chain operations to increase visibility and optimize services
- Environmental monitoring — IoT sensors can be used for commercial farming, water monitoring, and more. By protecting valuable resources, companies can deliver recurring value for customers and their business.
2. Assemble the Right Team
Companies must bring together the right domain experts with the right skill sets to build a successful IoT product. This is where many companies go wrong because they don’t assess the actual experts they need to build a connected product. An IoT initiative requires new types of teams that traditional org structures don’t support or are not familiar with. To build a successful IoT product, companies typically require the expertise of firmware engineers, electrical, mechanical, hardware . . . and the list goes on.
Not only do teams fail to bring in the right experts, but they also fail to build the right teams that make these experts initiatives worthwhile. The best IoT teams are collaborative and span business decision-makers and technical experts (such as c-suite executives, operations, IT, engineering, marketing, and support). For example, product and marketing teams need to build a long-term vision of the product and a short-term executable roadmap together. These teams ought to live under one roof for effective planning collaboration. Decisions cannot be made in isolation.
3. Decide Where to Invest Resources
The infrastructure needed to build an IoT product is often underestimated, and thus, many companies don’t make good decisions on where to invest resources. For instance, companies tend to heavily focus their resources on the software layer, but forget that a significant portion of the infrastructure also runs on the hardware and networking layer.
The infrastructure needed to build an IoT product is often underestimated, and thus, many companies don’t make good decisions on where to invest resources.
These three components need to be tightly integrated together in order to build valuable features that are needed for your IoT product. While integrating these three disparate components may sound simple, there are many components underneath these three buckets that can be complex and confusing. Many of these components need to be built within the first week to avoid re-engineering work.
When building an IoT product, you should first assess your own organization’s skill sets, experts, and resources. By doing so, you’ll be able to increase your own knowledge on the gaps in your organization and be able to properly educate stakeholders on how to assemble the right team for your IoT project.
4. Research and Find an IoT Partner
The IoT industry is highly complex and fragmented, which can make it confusing to choose the right platform for your IoT product. What doesn’t help matters is that every provider markets IoT differently, but inevitably, will try to explain that their solution is best for you.
To choose the right partner, you need to thoroughly understand how their solution and expertise would allow you to capture value. For instance, if you are looking to build a fleet management solution for trucks, there are many factors you should consider, such as hardware, device management tools, connectivity stack reliability, flexibility, and more. You need to consider if you can build a flexible application on top of their infrastructure.
One way to understand which IoT platform may be best for you is to develop a connected prototype with their platform. Developing a prototype that can reliably connect to the Internet and perform the minimum parameters of your intended product is of utmost importance before making any decisions about your IoT implementation/strategy. If it takes longer than a few days, you’re missing critical pieces of infrastructure.
Published at DZone with permission of Dan Jamieson. See the original article here.
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