By Michael Rivera, PhD
Measuring the ROI for your IoT solution is crucial to the success of your digital transformation initiative.
There is advancement in IoT technology. Organizations across industries are leveraging IoT solutions to transform their businesses digitally. IoT solutions can help revolutionize your offers or processes with data-driven insights, automation, and innovation.
Investing in IoT is the way to go if you want to stay competitive and be ahead of the curve. That said, measuring the ROI of your IoT project is an integral part of the investment process. Calculating the return on investment helps you to adjust your strategies, get better visibility into your operations, and stay focused on your business goals.
If you are considering adopting IoT solutions and want to learn how to calculate the return on investment, this article is for you! Here are some tips for calculating the ROI of your IoT solution.
1. Set a Clear Objective
The first step here is to ensure your IoT solution solves a problem. To calculate your ROI, there must be some problems you want IoT to help you eliminate. Analyze your business needs and set clear goals with respect to the value you want to add with IoT. And measure the success or profitability of your investment for your objectives.
2. Estimate Your Costs
Once you have set your goals, you need to estimate the costs of your IoT project. This should include the cost of planning, setting up, and maintaining your IoT infrastructure – devices, platforms, networks, and software. Estimating the ongoing expenses of running an Internet of Things infrastructure is difficult since they are dynamic and subject to various external factors that are very difficult to predict.
3. Estimate Your Benefits
Estimate the benefits, including the expected savings, earnings, or value added by your IoT investment to your business – over a given period. Take note of benefits (in any form) generated by the innovation, whether small or insignificant.
4. Calculate Your ROI
Many factors determine how you calculate the ROI, including your industry, data availability, and goals. A basic or most common way to calculate ROI involves dividing net benefits by the total costs and multiplying by 100. Net benefits are gotten by subtracting costs from benefits.
5. Analyze and Communicate Your Result
Analyze your result and communicate it with your stakeholders. Check if what you have is close to or better than the industry standard figure or what alternative solutions could offer. Present your ROI as an official document that shows the value and impact of your IoT innovation for your company.
Improve Your Bottom Line and Boost Productivity With Thinaer
Adopting IoT with the help of a good vendor changes everything! The Internet of Things is an emerging field with many prospects and positive reviews. One thing that stands out is that you need a good vendor (with a team of refined experts) to analyze your needs and create solutions that suit your business. This is what you get with Thinaer!
Thinaer helps companies improve their bottom line and maximize productivity with innovative solutions. We can help you deploy IoT digital transformation at any scale.