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  • Business Planning and Innovation

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    Tim Kannegieter

    Introduction

    Any implementation of the Internet of Things needs to have a commercial and a productivity-driven impact in order for it to be sustainable. This influences the conceptualization and the design of things and the systems they are embedded in, as well as how they're commissioned and deployed.

    Broadly speaking IoT business planning and innovation is divided into the improvement of existing businesses (see below) and the startup of new businesses based on an innovative idea.

    The Industrial Internet Consortium (IIC) has developed a Business Strategy and Innovation Framework  which covers:

    • an Industrial IoT (IIoT) strategy and goals
    • a structured framework to target and select the right IIoT opportunities
    • a system in place to identify, assess and initiate IIoT opportunities

    Business process improvement

    The aim is to determine how to best improve processes with X amount of dollars. What would that look like? What would the proposal look like?  

    In any business case you need to satisfy the requirements of accountants. To get your capital expenditure request passed, you need to be able to produce a cost-benefit analysis. The benefit is both is a function (feature set) and associated performance targets, expressed in terms of how the things act as a force multiplier for staff and equipment. The cost covers development and deployment plus ongoing expenses.

    The basic question is how to take an existing asset or some proposal and map that to an IOT system that is going to provide superior productivity but doesn't take an eternity to deploy and cost an excessive amount to develop? A good way to think of this is in terms of the system's impact on people, process, and plant. If things can improve productivity at those levels, then you know that your IOT system’s design and deployment models have a good chance of being sustainable.

    One strategy for improving productivity is to identify any general business rules and determine if these can be optimised using better sensing and control options. For example, procedures often require automatic changing of parts or consumables after a set period of time, based on average use. However, sensing the actual usage, performance or wear and tear, can enable operators to increase the time between replacements. 

    Beyond the utility of the product, key elements that influence a business case include:

    • Power options: e.g. tradeoffs between longer battery life versus cost of periodic replacement. This will be affected by the accessibility of the thing and the quantity of them.
    • Network requirements:
    • Data handling: 
    • Performance: Accuracy of measurement may or may not be important, and this will affect sensor costs. Similarly, reliability of data messages getting through may or may not be important. In some contexts, the occasional missed reading may not affect the overall performance of the system.
    • Size: Physical size and mass will affect design and unit cost. Miniturisation can cost more and increased mass may make affect functionality. 
    • User interface: The user interface can vary from web interfaces or smart phone apps through text messaging to custom screens. In some cases changing the user experience or providing input to human decision making is important. In other cases there may be no need for a user interface at all, particularly with "smart" system that make decision autonomously.
    • Environmental requirements: Requirements for robustness and effectiveness of enclosures will vary with environmental conditions, including temperature range and exposure to water. Geography and spatial considerations will also affect a business case, as this can influence the choice of technologies and network topology. e.g. is line of sight possible? What is the density of structures in the environment?
    • Installation and commissioning: For large scale deployments, ease of installation and commissioning is important. 

    Business planning IoT product, service or solution is very much a case by case issue. One of the key critical success factors is to accept this and to understand the commercial objectives, and also the technology limitations, so that a good compromise can be reached. 

    Over-specifying any aspect is likely to increase unit cost and risks making the project infeasible.

    It is also important to avoid being fixated on specific implementation approaches before understanding what the options are.  For example, many people automatically assume tracking solutions will require GPS but there are many other options.

    Examples of productivity gains can be seen in our Case Studies:

    Proof of value for customers

    A proof of value that helps businesses to understand how an IoT solution will enhance their operations can increase the chances of mainstream adoption. A key selling point for most customers is a solution that will reduce costs in the short term.

    Proof of value starts with the design process and building the business case, with a strong focus on how to scale up design concepts into large scale industrial settings.

    Matching a customer with a solution consists of three basic steps:

    • Identify and define: define what the customer really wants in a strategic roadmap
    • Test and Learn: test the value of an IoT use case through a turnkey solution and reactive support
    • Industrialise: scale-up to build an industrial end-to-end solution (with support)

    Solution developers should consider focusing their solution on a limited number of applications to speed up the development process and revenue generation.

    The diagram below shows the balance that IoT startups need to strike between business, usage and technical considerations.

    5ad05bddd4e8e_IoTselectiontriangle.jpg.ee35e7d0ab1bef6462acfbecb6587abf.jpg

    Diagram courtesy of Reginald Gallis, BP Ecosystem and Marketing

    On the business side, the IoT has the potential to connect billions of things, rather than small numbers. Therefore, keeping costs of individual devices will help customers to see the value of solutions for large volumes. The short and long term return on investment for the customer also needs to be clear. The biggest markets are often connecting large volumes of simple things in an industrial setting (the Industrial Internet of Simple Things in the diagram below).

    Technical capability should be balanced with simplicity to meet the customer’s price point. A simple solution is also easier to explain to customers during the sales process. The solution should not take too long to develop, as the customer will want to see a demonstration solution in action as soon as possible to understand the benefits.

    While an IoT solution might be developed for a particular application, it is worthwhile considering what other market opportunities exist to expand its usage. Customers also like to see disruptive solutions that expand services or increase their market share.

    The diagram below summarises some of the models that can be used in matching customers to solutions.

    5ad05bdd3106c_selectionmodels.jpg.3e5a4fa16b948c12c2b1c5e99b30aa3f.jpg

    Diagram courtesy of Reginald Gallis, BP Ecosystem and Marketing

    Planning commercialisation

    Emphasising cost savings rather than product features in the early stages of business planning can be advantageous.Typically, customer solutions are rolled out in a staged process beginning with a proof of concept (POC) as shown in the left-hand block of the diagram below. Because the usual scenario can take up to a year, IoT solutions should ideally be rolled out as quickly as possible as shown in the right block below.

    rollout.jpg.46bf7cf9d54a45939835efb79e3723f5.jpg

    Diagram courtesy of Reginald Gallis, BP Ecosystem and Marketing

    As all IoT solutions use sensing devices linked by a communications network and an IoT user platform offering data visualisation and analysis, it may be worthwhile considering whether your solution needs to be developed from scratch, or if you can can use or modify existing off-the-shelf components.

    Choice of communications technologies should also be based on simplicity of implementation as well as availability, range capability and cost. Security should also be considered.

    Customers may not need a custom developed end-to-end IoT platform. Developers should also consider whether integration of more data and or analytical capability into the customer’s existing platform or via API is a more suitable alternative.

    A comparison between the commercialisation of a solution based on custom-built and off-the-shelf devices is shown in the diagram below. More information about the custom process is on the project management for IoT page.

    commercialisation.jpg.10d1f3569ad7c58c5d9f6a1ef9ce7793.jpg

    Diagram courtesy of Reginald Gallis, BP Ecosystem and Marketing

    Scalability and industrialisation

    While not all start-ups or developers aim for industrialisation, business plans should consider the solution scalability as this can affect its cost and value to the customer. For example, components such as GPS trackers can be significantly cheaper in bulk, making a larger scale rollout more attractive.

    Most importantly, developers should be able to explain to customers the relative costs of the rollout of different volumes of devices, and how fast they can be delivered. Forming partnerships with suppliers early in the development process can be useful to ensuring supply.

    Barriers to industrialisation include:

    • cost of acquiring data is more than the value of the data to the customer (for example in efficiency savings or increasing market share)
    • insufficient build up customer trust in the solution. This can be bolstered by using established platforms or devices with a proven track record
    • lack of big customers
    • developers unable to deploy at large volume due to cost constraints
    • unclear communication of the unique value of the solution to customers. This can be due to lack of familiarity with the customer’s application or market

    If industrialisation is the goal, the following principles can be useful:

    • Technology: focus on the product and API, and use off the shelf components and integration to existing platforms where possible. Simple products with minimal updates requirements and low cost are ideal
    • Team: build the skill sets of the development team, or partner with external experts (see the project management page for more information on this point)
    • Traction: trial solutions with a real customer (on a small scale), then target big customers to prove the value of the solution on a large scale

    Links

    Sources: Material on this page has primarily been sourced from the following:



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