14 March 2018
Evaluating the loT Impact on Your Bottom Line
Once you have shortlisted the project(s) that are worth pursuing, you can begin to look at possible solutions in more detail to evaluate the business plan potential. While it is undoubtedly important to have a workable prototype in order to assess the viability of the solution, it is important not to focus too heavily on this. The prime objective of this stage is to assess the business value and validate the benefit that this new Internet of Things (IoT) solution is going to bring to your bottom line.
It is easy to get preoccupied with the production of a prototype. The excitement of having the physical device in your hands can be a distraction. As can getting bogged down in technical detail. At this stage, it is important that technology does not become the problem.
The technology can always be fixed, tweaked, adapted, or swapped out for something more effective. What you can’t swap out is the commercial proposition. And this is what you need to be prepared to test rigorously during this stage.
Sigfox loT agency consults and conducts IoT profitability assessment sessions for organizations. What follows is an overview of the four-step approach we take for any business value assessment.
1. Businesses need to build a functional solution
Although we do advise that the focus of this stage is not the creation of the prototype, it is important that organizations try to develop a solution as close as possible to what they will initially take to market.
In terms of product design, don’t waste time in thinking about the unimaginable: keep it simple as far as you can. Ensure you put the user experience at the top of your priority list.
To evaluate the user experience, you will need to develop a solution which can be used by real customers and users and not only by engineers in their lab. This will require you to work with technical partners who can build a pre-industrialised solution and not a prototype built in a workshop.
2. Test your solution with a select number of users (beta testing)
Having developed a solution which can be used by real customers, identify several users who can test it. Don’t look for the users who are going to simply reinforce your views. If this expensive initiative is going to deliver real value, you must choose those users who are the most representative of the market you want to address.
These users are not necessarily going to be convinced by the solution and that’s fine – what you’re looking for here is genuine feedback that can give you a real idea of the market potential. Be clear with the users regarding the scope of your solution: what it does, what it does not do and why. Seek similarly clear feedback from them.
During this process, you are also likely to uncover opportunities to further develop and improve your product. However, don’t get too carried away with collecting feedback. To maximise profit, it is important that you set a limit on the duration of your experimentation phase. You don’t need to spend years on this: you won’t achieve first to market status or maximum profit by spending too much time on it. Get what you need and move on.
3. Collect user feedback
Our experience guiding organizations of all kinds through IoT projects has taught us that there are three ways in which the IoT can deliver business value. These are:
optimizing operations/cost optimization
generate new revenues with new products/services
enhance customer satisfaction by improving existing products or services
From the feedback you secure from your test users, you need to identify which value proposition your new product or service answers. Undertake interviews with your customers to identify which value proposition they think the product delivers.
Most importantly, you need to discover:
Does your new product/ service offer deliver on the goals of the project?
What is the appetite of your customers for your solution?
4. Use the data
The value of any IoT device is the data you are able to extract from it; this is the value add of connectivity. Extract as much data as possible during the test phase so you can understand the performance of the device, and the way it is used by your test users.
At this point, you can make use of data analytics tools to run in-depth analyses. If necessary, go back to your test users and ask them more questions about their use patterns and their experience of the device performance, so you can build up a comprehensive picture of how your solution was used and why.
With this understanding, you may find new insights and identify new commercial opportunities to refine your product and service offering further. Ultimately, once you have tested the user’s experience of your new product and service offering, you should have a clear understanding of the commercial viability of your product – and be one significant step closer to taking it to market (if that’s what your research tells you you should do!).
Next week, we will move on to the next phase: Specifications writing. And in case you missed our previous article: