Beginning of a business case for IoT

Ultimately what is the business case that drives IoT? One of the initial arguments I’ve heard is that cloud drives IoT. I actually don’t think that is true. Cloud represents the connection and communication components of IoT. The reality of Automation and control are more the outcomes of that, so not really a business case either.

There is an ongoing reality of cost-avoidance for many organizations considering IoT implementations. But cost avoidance, while a good business practice is not a business case. In fact, the business case is interesting when you consider it, as a standalone business case. The easy case for IoT can be made in the managed data and security spaces. Our business case as to consider the cost of the implementation, the cost of the devices and the value of the information produced to the organization. If we break implementation down into its three components we have design, implement and operate. The cost of devices includes acquisition, maintenance of hardware and replacement cost for components. Finally, the last component is operations where we include the cost of security updates, infrastructure to manage and operate the devices and the cost of failed device replacement. Oh yeah and operate also includes the cost of someone walking around replacing 100 billion batteries.

The value is often an easier and a harder equation at the same time. What is the value of automate lights? Simply in unoccupied space managed lights reduce the cost of electricity. But you can do a better job of reducing electricity by adding solar panels to the roof of the building. Both by the way are IoT systems managing your building. The value of combining them is significant. This first example falls under the concept of Green Computing, or reducing the impact of your organization on the environment.

Value can be extended further with IoT devices; smart buildings include reducing time wasters or productivity drains in your systems. Elevators can be huge time drains in your buildings. People waiting for elevators are not as productive as people actually functioning in conference rooms, cubes and offices. IoT automation of elevators allow for managed flow. A companywide meeting on the first floor means the elevator should pay attention not only to getting people to the first floor, but also which elevator waiting areas have the most people. Move the most people the fastest and you reduce the wait times quickly. An elevator on the 4th floor taking 1 person down to the first floor is fine, as long as you are catching the other 22 occupants on the 3rd and 2nd floor. Although you would hope people on the lower floors would use the stairs.

Smart buildings can also manage water cost, electricity (solar and wind generation on the roof) and as stated above elevator flow. These reduce wait times, cost of energy consumed and cost of water wasted. Watching floor occupancy can help you. If you have an outbound group in your organization and they sit on every floor of your building, move them to the same floor and reduce the heating and cooling cost of that floor.

The business case then takes into account the value of automation, the value of managed resource allocation and the value of deployed asset management. We stay away from the always negative “productivity” gains as they are soft dollar value propositions that most organizations avoid like the plague. With the hard dollar value targets, we can begin evaluating the true value of IoT for our company.

If we have more than one building (campus) we can consider even more effective use of the space. Solar arrays on roofs or wind generation systems on roofs allow us to reduce the cost of buildings and power. We can use the management of resources to put people in locations that benefit what they are producing. I realize this is a mix of hard dollars (reduced energy costs) and soft dollars (increased productivity) but at some point you do have to create a work environment that allows people to feel like they are adding value.

The initial development of a business case for IoT doesn’t actually involved technology. It involves evaluation of how the organization can reduce the cost basis. The value of smart buildings is a reduced cost. Yes, there is an initial cost of deploying the technology (solar panels/wind generators) but the cost reduction is effective right away. Add batteries that can store enough power and reduce the cooling or heating of the building at night, and you can effectively take your company off the power grid, only paying the maintenance cost of your power lines.

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IoT dreamer