Quantifying Return On Investment (ROI)
“In order for an organisation to invest in any technology, a solid business case needs to be constructed that details the costs and benefits associated with deployment. This is as true for a mobile phone operator specifying a 5G network as it is for a small to medium sized business upgrading its photocopier. The difference is that as the technology becomes more transformative, the equation becomes more complex”, writes George Malim, the managing editor of IoT Now
This is certainly the case with the Internet of Things (IoT), which has the capability to transform companies from being makers of products to being providers of services. The problem when attempting to construct a business case for an IoT investment is that there is unlikely to be an end-to-end greenfield deployment of IoT technologies in any organisation. Far too often, technology already in deployment is thrown away for new systems. Yet, in many cases, junking good infrastructure is completely unnecessary.
Therefore, ROI can only be calculated for individual steps on the path to the complete vision. The good news for the spreadsheet averse is that this can enable business cases to be constructed based on a single, relatively simple use case. That might, for example, be a deployment of sensors on waste bins that alert the local authority when they are full. In this example, the case is simple; the cost of the sensors and their connectivity is offset by reduced truck roll and greater efficiency in rubbish collection. The delta between the cost and the savings is the ROI.