Proving The Business Value In IoT Projects Is Just As Important As The Technology Itself

As more C-suite executives see Internet of Things proof-of-concept deployments as key in their decision-making process, solution providers say that it's crucial to focus not just on the technology, but on the business value of what they're bringing to the table.

Jim VanderMey, chief innovation officer at Open Systems Technologies, a Grand Rapids, Mich.-based solution provider, said addressing both is what leads to IoT success. "We have to address proof-of-concept and proof-of-value simultaneously," he said. "We'll have a proof-of-concept that shows if the IoT solution is technically possible, but the second part is proof-of-value, and that's more of a design activity. We want to prove that the solution has enough business value."

[Related: Solution Providers Specializing In Building Automation Use Security To Start Conversations About IoT]

The challenge of proving business value to customers is a widespread issue in IoT, according to a report released in May by Cisco Systems, which surveyed 1,845 IT and business decision-makers. The survey found that almost two-thirds of IoT projects don't make it past the proof-of-concept stage.

To overcome this hurdle, Open Systems Technologies focuses on more than the technology pieces during the proof-of-concept phase, said VanderMey.

"Many IoT projects die at the proof-of-concept stage. … It's not that they failed – they could have a great idea – but they didn't have the business value," he said.

One of the solution provider's building automation projects began as a six-week proof-of-concept. The company paired with Johnson Controls to build out a platform that enables building managers to track and analyze how their buildings were being controlled, allowing them to plan their global control strategy and spending strategies, said VanderMey.

This project was carefully constructed to determine the business value behind the platform: saving energy and efficiency costs for building managers. Open Systems Technologies also worked with customer employees during the proof-of-concept phase, including product management and marketing teams and product engineers, he said.

Tolga Tarhan, founder and CTO of Sturdy Networks, an Amazon Web Services partner based in Irvine, Calif., said that the proof-of-concept stage is critical for solution providers to hammer out details with their customers.

"You need hardware, software, DevOps and the cloud all working together. It's a big step to get customers from that phase about talking about IoT to getting their feet wet," he said.

Daniel McCormack, CEO of Boston-based solution provider Blucloud, said it's easy for many customers to get caught up in the hardware phase in proof-of-concept and forget about how the project will increase efficiency in their business.

"With some of the vertical companies, one of the problems they've had is that people spend a lot of development time on the hardware," Blucloud's McCormack said. "IoT at the moment, in general, is about increasing the resilience of what you've deployed."

One aspect that solution providers need to understand while looking at the business value of solutions for customers, he said, is what phase of the IoT adoption scale their customers are in.

"Customers are in a lot of different stages," he said. "Some are in the middle of the adoption curve, others are in the late stage. It's something we've struggled with as we look at how to market the business value – do we deploy scalable sensor systems or do you go for the new-age brand?"

Open Systems Technologies has dealt with the proof-of-concept stage through looking at various teams within its business and reshuffling how IoT projects are carried out. The company now integrates pre-sales consulting as part of its design and proof-of-concept engagements to better understand the IoT solution's business value for end users.

"It's a sometimes daunting task … we've internally defined what our enterprise team does versus the business transformation team, and recognized that IoT crosses both boundaries," VanderMey said. "You have to show value on day one."