Organizations today are under a lot of pressure – both internally from management and externally from customers – to deliver a higher quality of products and services at lower costs, and to do so using existing resources. Companies must continually innovate in order to improve efficiencies, be more competitive, and drive profitable growth. They must invest in developing and adopting new technologies, like IoT, if they want to benefit from the new business opportunities these technologies promise to bring about. The decision over which technologies to pursue, when to adopt them, and how to manage the implementation process in order to harvest the anticipated business outcomes can be very overwhelming, especially if companies do not have the necessary in-house expertise.

Two major considerations are associated with any large technology investment: the irrecoverable cost of the project and the uncertainty about the value returned.

In other words, ROI is top of the investment priority list. Before a new technology is implemented, organizations may be concerned that they will not be able to exploit it effectively, or unsure of its final impact on the rest of the organization. They may also be worried about how customers and business partners will react, with no guarantee that they will adopt the new technology or processes themselves.

These questions cannot be effectively resolved before investment – although concepts like proof-of-concept are useful ways to solve this chicken-and-egg situation. Any expenditure companies make on IoT must deliver measurable ROI, and quickly. A lot of the time, ROI translates to “reduce costs”, although cutting costs is just one piece of the ROI equation. The ROI of IoT adoption is both direct and indirect. IoT should help companies to make direct cost savings and increase revenues, but it should also improve profit margins via more abstract benefits: improving customer satisfaction, increasing efficiency and competitivity, and improving long-term strategic planning.