Businesses pursuing Internet of Things (IoT) benefits walk a fine line between caution and aggressiveness. Those who take an overly timid approach of continually dipping their toes in the water without committing to a course of action risk being left behind. Those who are too bold, meanwhile, risk the long-term consequences of making the wrong decision.In this context, the distinction between a project and a solution can help a business define the best way to justify investment in IoT, as well as inform its strategy around IoT partnerships.
A project can be defined as a one-time Proof of Concept (PoC) or exercise designed to address a specific need. Examples include assessing the performance of a line of production or gauging the cost of energy in a facility. Projects typically involve the engagement of third-party expertise for a specific timeframe and a defined scope of activity.
A solution, meanwhile, requires a commitment and investment designed to deliver value and returns on an ongoing basis. This category would include systems that manage utilities or the operational efficiency of production lines, and often involves software development and/or purchases of software licenses.
An effective IoT strategy should apply a mix of both projects and solutions. In many cases, projects are the default option – at least initially – because businesses lack clarity on potential benefits and risks. While this makes sense, ultimately the key to success is to recognize when a test-the-water project merits the long-term commitment of a solution. If a discrete project delivers results, and if a business case can be built to demonstrate value generation over the long term, taking the next step and investing in a solution makes sense.
For example, a company seeking to improve the efficiency of its lines of production and to find the best way to test IoT capabilities might choose to initially proceed with a “Project Approach” – this would allow for a “proof the concept” to assess the benefits obtained during a specific period of time. Once these benefits are confirmed and projected to an extended scope of operation, a compelling business case could be made to justify the required investment for a “Solution Approach.”
One challenge in assessing the project vs. solution equation and is potential bias on the part of providers and partners. Specifically, consulting firms will likely favor projects that can be scoped and billed, while software firms will lean towards solutions in the form of selling licenses. While neither approach is inherently right or wrong, organizations building a business case for IoT should focus on their requirements and view their provider’s recommended approach in the proper context.
The Minimal Viable Product (MVP) methodology can help businesses navigate their options and identify the sweet spot where the caution of a project gives way to the commitment of a solution. Characterized by early release, user feedback, adjustment and measurement of ROI, the MVP model enables a business to test an approach and to either “fail fast” with IoT or to recognize, justify and quantify the benefits of further investment.
On November 7th, Alejandro Nieto will be in Monterrey, Mexico, leading a discussion on the MVP model and other practical strategies for the Internet of Things at the World Manufacturing Forum.