Navigating the Challenges of IoT Implementation: Mistakes to Avoid
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.”
IoT Challenges and How to Avoid them
Underestimating the Complexity and Costs: Key Findings from the Survey on IoT Investments
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
How do you know when to invest or slow down in these IoT investments?
“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.”
Overcoming Roadblocks in IoT Investments through External Support
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.”
Four Key Pieces of Advice for the Success of an IoT Project
Value
- Define your target customer and user of the solution.
- Meet customers in-person to understand their challenges and what problem you can solve.
- Make the business case from the customer perspective.
- Decide 3-5 customers to work with initially and sell the solution early to confirm your idea.
Solution
- Anchor with management that the scope is to build a new business, plan like a start-up.
- Get your best people with business and technical expertise to drive the initiative.
- Give the team mandate to challenge existing processes and way of working.
- Move quickly and build on your company’s existing strengths.
- In new areas, evaluate how partners can help with speed and simplicity.
Market
- Decide early on the business model and prepare your first sales brochure and price list.
- Decide if to sell new functionality as a new product or as additional services.
- Think through the full process, from contracting and delivery to invoicing and support.
- Give the core team full responsibility to sell and deliver during the initial phase.
Operation
- Plan for scale from the beginning – avoid getting stuck in the MVP-trap with something the customer wants but you are not able to scale.
- Be clear about what your core should be, where will you outperform your competitors.
- For areas outside your core, consider partners that can deliver a larger part of the solution, so you can move faster and also demand a larger operational commitment.
The interview in Swedish can be found here.
Summary: Common Mistakes When Companies Invest in IoT
- Lack of clear customer value: Many companies fail to identify a clear customer value and benefit that everyone in the organization understands. Without a clear value proposition, the investment lacks direction and purpose.
- Excessive focus on technology: Companies often get caught up in technology discussions and prioritize building the “perfect technology platform” over understanding the customer needs. This can lead to developing solutions that do not align with what the customers require.
- Failure to align with company management: It is crucial to get buy-in from top-level management and have a clear mandate for carrying out the IoT investment mission. Without the support and backing of the company’s leadership, the investment may not receive the necessary resources and attention.
- Underestimating the time and cost: Many companies underestimate how long IoT investments will take and the associated costs. This can result in unrealistic expectations and financial challenges down the road.
- Building solutions in isolation: Companies sometimes develop IoT solutions in isolation from the market environment and customer needs. This approach can lead to solutions that are disconnected from real-world demands and fail to meet customer expectations.
- High cost per product: In some cases, companies invest in IoT solutions designed to handle many products but end up connecting only a fraction of them. This can lead to a high cost per product and make the investment financially unsustainable.
- Lack of customer contact and feedback: Without clear communication with customers, companies may fail to understand their problems and needs fully. Engaging with customers and getting feedback is vital for creating customer loyalty and improving the overall experience.
- Lack of expertise and skills: IoT investments often require expertise and skills that lie outside a company’s core business. Companies may struggle to navigate these challenges, leading to roadblocks in the implementation process.
- Insufficient planning for return on investment: Many companies overestimate the size and speed of new revenue streams from IoT investments. Proper planning for ROI is essential to manage expectations and make informed decisions.
- Hesitation in seeking outside help: Some companies hesitate to seek outside assistance, whether it be advice or services, to overcome challenges related to IoT implementation. Collaborating with experienced partners can accelerate the development process and reduce the time to market.
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.
