Explore the most common mistakes when companies invest in connected technology: Broken schedules, excessive focus on technology – and spiraling costs.
Recently, the Swedish newspaper Dagens Industri published an interview with Niklas Agerhem, Head of IoT Complete at Telenor IoT.
Difficult to get the company’s IoT investment to take off? You are not alone. A survey conducted by Telenor among 100 Swedish traditional industrial companies that launch IoT technology shows that only one in ten companies reach 20 percent or more of their set goals within three years. So, it is much slower than expected for most projects.
“We have gone back to their goals and the volumes they planned to connect and compared those figures with the situation three years later. We interviewed some thirty companies in depth. There we realized that only three companies had managed to fully achieve their goals”, says Niklas Agerhem.
“The phase where you decide why you should connect your products is extremely important. Asking what customer value this provides is step one, and the answer to that question must then be anchored with the company management. They must give someone the mandate to carry out the mission. It may surprise some, but it’s about driving a business transformation”, says Agerhem and continues, “but it’s about driving a business transformation often involving cultural change and new ways of working. It is quite common to get stuck in technology discussions and that too large a part of the budget is spent on building “the perfect technology platform”. The risk is that you build the technology in isolation from the environment and that you develop something other than what the customer needs.”
Based on the survey, we can also conclude that the vast majority underestimate how long IoT investments will take – getting a working technical solution is just one of the steps to build the connected business.
“In the in-depth interviews, we discussed a lot with the companies’ business managers about return on investment and problems they had experienced around this. Even when strong customer value could be demonstrated, it was common to overestimate both the size and speed of new revenue streams. What was also common was that the projects cost more and took longer than expected. In several cases, solutions had been built to handle hundreds of thousands of products, but had only connected a fraction. The cost per product was then too high. When the technology also later required generational change and new investments, they were faced with difficult choices about how to proceed.”
“The most important thing is to find a clear customer value and a benefit everyone understands. Niklas AgerhemHead of IoT Complete
“Sometimes you just have to decide on a track and keep going. The most important thing is to have clear contact with the customers. If the venture solves their problems, you create customer loyalty and a better experience.”
Agerhem notes that many companies get stuck on the road when IoT investments do not really go as planned. Many times, you need new expertise in areas that lie outside the company’s core business. A simple solution may instead be to take outside help – which applies to both advice and services:
“We have extensive experience of working with customers who need to do exactly this. We can see the common problems that appear and deal with these. You get access to technology and connectivity without having to do anything yourself. It also means that you quickly get a solution in hand, the time before something goes out to the customer becomes significantly shorter.”
He gives an example with a forklift manufacturer that saw the benefits of connected technology, but did not really know how to approach the IoT venture:
“They chose to work with our fully integrated IoT service. The company didn’t have to spend time on development and make its own mistakes when building itself. Instead, they told us what kind of information they need to get out of their connected equipment, and we solved it. The team could quickly present the solution in front of the customer and get feedback. In addition to smaller investments, they can put more effort into driving the change journey with their customers.”
In conclusion, companies should avoid these common mistakes when investing in connected technology. By focusing on clear customer value, involving company management, setting realistic expectations, and seeking outside expertise when necessary, they can increase their chances of successful IoT implementations.