Part III: How Do You Justify an Investment in IoT?

July 7, 2016

How do you justify an investment in IoT is Part III of the “IoT… are we all doing it wrong?” series. Check out Part I and Part II, then come back next week for Part IV, why utilizing a layered testing approach is key in building an IoT platform.

The Wall Street Journal recently published an article about GE Digital. To quote that article, “But the busi­ness case is to sell the prod­ucts [with IoT enablement] to its in­dustrial cus­tomers–like air­lines, power util­ities and hos­pi­tals — that are strug­gling to wring greater pro­ductiv­ity out of heavy ma­chin­ery in a time of slow global economic growth.”

At the Evanta CIO event OST participated in Minneapolis in June, the CEO of Ecolab, Doug Baker, described how with the advent of IoT and broad-based data collection for a variety of products, that the total material costs in which a customer pays may actually go down, which means they will save energy, water, and buy less product from Ecolab. So how does a company justify an investment in IoT when it will result in customers buying less product?

Like GE, it means that you will provide higher value to your customers, and that you will use the data provided by the systems to justify continued partnership and investment, and demonstrate that while you might be spending more per unit, that you will be spending less overall. It also introduces new opportunities for service lines that have never been imagined before. That’s what Ecolab is talking about, what GE is doing, and what some OST customers are conceptualizing.

I had a conversation with Rob Siegel, a lecturer at Stanford, over lunch on Thursday. He stated that the new digital economy with the data exhaust of billions of transactions, users and devices will create new economic models for the sale, lease and consumption of the products historically purchased as capital or consumable products. Companies must be able to creatively think about how new technology creates the opportunity for new business models. Investing in IoT solutions is a way for organizations to provide value to their customers beyond what was once even considered possible. It likely means looking at their business in a new way, and adapting to accommodate new processes.

At OST, we are finding ways to help guide our customers through this journey of business transformation. Whether it is XaaS in the data center and cloud, or new business lines created around the solutions we build, helping the client envision this creates greater opportunity and differentiation for them.

From Design to Data Center: IT will work with our help.