Show me the money: Measuring the ROI of IoT Initiatives
Organisations today are under tremendous pressure from management and customers to deliver a higher quality of products and services at lower costs, and to do so using existing resources. Any expenditure companies do make to help them achieve this goal is expected to deliver a measurable, hard-cash ROI—and to deliver it quickly. For product manufacturers in particular, ROI has traditionally translated to “reduce costs.” However, cost is just one piece of the ROI equation.
Today’s market leaders understand that ROI is multidimensional and that, in many cases, the cost-savings component can be secondary to other returns such as improving customer satisfaction, brand differentiation, and the collection of accurate data, all of which can also drive increased revenues.
As companies do everything they can to retain and expand relationships with existing customers—their most valuable assets—new business models and value-added services are coming to the forefront, and with them comes significant new opportunities for the enterprise. The IoT is creating new opportunities for companies to enhance their services, gain business insights, improve business processes, and differentiate their offerings. In fact, connecting machines is bringing companies closer to their customers while delivering real ROI and payback.
Where to start?
Start with your goals, and the goals of your company as they dictate where the best metrics can be found. What is most important to you and your company? Some connected product-related goals that can be converted into metrics include: revenue, First time fix rate (FTFR), Time to innovation etc.
It is important to remember that collecting metrics is an ongoing process. Metrics for individual projects can be combined to quantify bottom-line goals such as profitability, market share, and time to market.
Each time a workweek is finished or a project is completed, you gather metrics. Metrics are not static, so you need to be aware of these dynamic changes and their impact. Begin collecting metrics before you begin a project.
Once you have obtained the raw information, you will need to perform some calculations to quantify your achievements.
Finding the value
Every product requires some level of service and support. To provide world-class service, organisations are increasingly adopting service solutions that identify, diagnose, and resolve issues remotely. A connected product strategy helps to deliver proactive services that improve uptime and decrease the number of field visits or the length of support calls. At the same time, it increases the first-time fix rate (FTFR) and slashes service costs, paving the way for value-added services to be developed based on the data that is being returned from the devices.
Moreover, to get greater value from the data beyond improved service, you need to analyse the data and utilise the tools and applications that provide insights into the devices providing the connected product data. Organisations that were early in bringing their products online are now realizing that the real “gold” in IoT is taking that data and integrating it with enterprise systems such as CRM, ERP, PLM, or data warehouses—optimising critical business processes, reducing service call times and warranty claims, and enabling an efficient product recall process. IoT data from connected assets, in collaboration with other enterprise systems, can provide not previously possible visibility and automation across organizations. For example, product data flowing through a CRM system can also be sent to billing or into a supply chain management system— helping to eliminate error-prone manual steps and providing new sales opportunities for things such as consumable replenishment or warranty renewals. Additionally, integration with quality assurance or product lifecycle management (PLM) can help enhance product features based on real-world data that shows usage patterns or equipment issues— helping to improve customer satisfaction and streamlining beta programs.
The ultimate goal for product manufacturers is to have a highly differentiated product offering, transforming your business and increasing customer loyalty through innovation. By providing more value to customers who purchase your machines/equipment, you can increase sales and loyalty and reduce churn.
The bottom line
The bottom line is that connected products offer companies the ability to provide better service at a lower cost, minimise response time, and maximise the use and reach of their resources. At the same time, they are looking to improve revenue, margins, market share, and most important, customer satisfaction. Connected products can be the key to providing worldclass service, gaining business insights, improving business processes, and differentiating your offerings.
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Quantifying the Business Case for the IoT
Companies today are under tremendous pressure to deliver a higher quality of products and services at lower costs. Any expenditure companies do make is expected to deliver a measurable ROI. For product manufacturers in particular, ROI has traditionally translated to “reduce costs.”
However, cost is just one piece of the ROI equation. The IoT is creating new opportunities for companies to enhance their services, gain business insights, improve processes, and differentiate their offerings. In this ebook, you’ll learn;
- Metrics for integrating smart, connected product data,
- Translating product data into value,
- Connecting data and business process efficiency,
- Differentiated products that change the customer experience.