My 10+ years in the IoT industry has taught me that there is always an elephant in the IoT room – how much is this going to cost us? A reasonable question but depending on who you talk to the answers range from ‘non-answers’ to ‘$millions’ to ‘this is what we have to offer’ to ‘let us work together’ to ‘RFPs’. Other answers range from ‘what is it worth to you’ to the more mundane ‘our consultants cost $1,000/day’. Then there is also the ‘none of the above’ answer – we charge per connected device per month, and this includes the device – $20/month with a one year minimum – 100% outsourced – you get web and mobile applications.
In this blog we will focus on manufacturers or providers of IoT devices and/or services that want to own their unique IoT implementation and control the design and therefore make a strategic and competitive investment in IoT. The costs can be broken down into four major categories:
- Initial Technology, Development and Customization costs (fixed)
- IoT Devices and Gateways (IoT sensors, control panels, controllers)
- IoT Platform (data handling & management)
- IoT Applications (web, mobile, other)
- Set Up Business Costs (fixed)
- Technology (data center/cloud computing)
- Support structure & staff
- Ongoing Operational Costs (variable)
- Provisioning of new Devices/Customers
- Connectivity (Cellular, other)
- Computing (cloud or data center)
- Support, Enhancements, Upgrades, Evolution (fixed/variable.
- New Applications/Use Cases
- IoT device upgrades
- Technology Evolution
These 4 cost categories with 3 sub-categories each may seem daunting, but they are highly dependent on how you decide to implement your IoT solution. Let us look at them at some level of detail:
- 1a: IoT Devices and Gateways are probably a core part of your business and you need to put engineering staff on enhancing them so that they work with IoT. If you are offering a service/solution, you need to procure devices. There may be some learning curve associated with both but like with any new business initiative, that is the entry cost of the IoT business.
- 1b&c: IoT Platform & Applications make IoT devices usable – they are the reason you have decided to invest in IoT. Dozens of platform providers out there but also suppliers offering solutions based on the major IoT cloud computing offerings from AWS, Microsoft, IBM, Google and more. This may be a major cost whether you do it yourself (yes) or find a supplier (does not have to be yes)
- 2: Set Up Business Costs will always be there, but they do not have to be high and depending on the solution you select, they can be minimized and some even variable.
- 3: Ongoing Operational Costs are mostly variable and very dependent on the solution you choose. If the solution has operational support capabilities built in these costs will be lower.
- 4: Enhancements, Upgrades, Evolution are of course dependent on how much is required.
When budgeting for IoT it makes sense to look at these costs and assess them as you develop or procure your IoT solution. A good supplier will be able to provide cost assessments for each category and enough flexibility to support your current business model as well future IoT plans.
At Triotos, we focus on providing IoT solutions that meet your business model needs. Using ready built reference solutions and applications we can deliver the IoT you need for your business model in months instead of years and for <$100k initial investment instead of $ millions. To find out more, contact us now