Building an ROI for the Internet of Things.
South African businesses are increasingly moving towards investing in the Internet of Things (IoT) because it can streamline work processes, reduce manpower requirements, and improve customer service.
According to Vodafone's IoT barometer results, 90 percent of South African companies felt IoT was important for future success; 88 percent saw value in IoT and that it required considerable financial and time investment; 48 percent planned to launch new connected solutions in the next year.
However, every IoT project needs a reality check to have a full understanding of the benefits and the risks. Just because all sorts of processes can be tagged and tracked using IoT, it doesn’t mean that every smart connection is worth the effort. A return on investment needs to be calculated for both the short term and the long term, including any costs related to compliance, and risks related to cyberattacks.
One Year Payback is Mandatory
Although there are ample opportunities to leverage IoT technology, there are also significant integration costs for systems to connect to vast networks of sensors, controllers, beacons, smartphones, tablets and other devices. There needs to be a mechanism to share data seamlessly between CRM, ERP, and back-end financial and manufacturing systems with the ability to scale up to process an increase in volumes of data.
An ROI within a year is a typical goal. As an example, an industrial company that introduced sensors into a production line system to warn of a potential upcoming malfunction to reduce downtime for an assembly line. The project included the automatic creation of rules based on historical data to predict potential equipment failures. The project was a success with a strong ROI showing immediate benefits.
However, to ensure that that ROI also continues in the long term, the system included the ability to continuously define and update business rules based on additional data sources. An IoT platform helped streamline the integration of data from smart devices and enterprise systems, with built-in IMDG to handle large volumes of data enabling the system to evolve with new requirements.
The Cost of Compliance
Last October, after the Mirai botnet attacked connected DVRs, CCTVs and routers to block access to several high profile websites, IoT security concerns became a burning issue. Several different organizations have published their own guidelines and standards to try to avoid these breaches. Each IoT implementation needs to address current and future policies to reduce risk and ensure compliance.
For example, the GSMA, together with the mobile industry, has delivered a comprehensive set of IoT Security Guidelines, promoting best practices for the secure end-to-end design, development and deployment of IoT solutions. The project IEEE P2413 , Standard for an Architectural Framework for the Internet of Things (IoT), has a sub-working group that has proposed IoT security standards for cryptography, devices and sensors, networking, and infrastructure.
The IoT wave is introducing new efficiencies with a fast ROI, but there are also considerable risks that need to be considered before making significant long-term investments. In addition to ensuring the infrastructure has the needed flexibility to comply with emerging standards, it also needs to make the necessary connections with Big Data, thousands of sensors, and all of the analytics that are needed for smart decision-making.
However, doing extensive planning for building the right infrastructure of IoT is well worth the effort. With all of the potential improvements in customer service and efficiency, it’s only a matter of time before IoT standards and best practices make IoT a more commonplace and an expected part of doing business in South Africa.
By Kerry Hope, Business Development Manager, Magic Software South Africa