The ROI of IoT: Show Us the Money
The Internet of Things (IoT) is a growing phenomenon across home automation, smart cities, and a wide range of industries. If you have evaluated the idea of deploying IoT devices to manage processes you are currently handling manually, but have not yet moved forward, you may be wondering about the return on investment. Is it worth the initial outlay of cash, the business disruption and the investment of time and energy to do things differently?
The question of whether to jump into the arena doesn’t usually start with the question, “why should I get involved in IoT?” It starts with a question about efficiency, outdated technology, risk aversion or expense reduction. For example, business owners often ask one of these questions:
- “How can I work smarter?”
- “Is there a way to let technology do the work of inefficient manual processes?”
- “Are my wired systems at risk of failure due to aging technology or environmental wear and tear?”
- “Can we do all of this cheaper and faster?”
The answers often lie in the technologies available in the Internet of Things. Let’s look at some of the ways in which the IoT can deliver ROI.
IoT Solutions Can Save Costs
When you’re in business, avoiding expenditures can be as powerful as building out new ways of creating revenue. Turning to automation, for example, can support a predictive maintenance model that prevents unnecessary truck rolls for servicing machinery that is not in need of servicing. Think about an application that delivers data points from an industrial tank, such as temperature and liquid level, and provides alerts for any sudden changes or abnormalities. If service personnel can remotely monitor their installations, and rest assured that they will receive a notification in the event of any issues, those expensive and needless truck rolls become a thing of the past.
Reducing inefficiencies in your business operations can also improve output, reduce time to market, and even improve expenditures related to workplace injuries. As an example, imagine placing a sensor and a radio device in a dangerous location such as an oil well or mine to sense conditions and send data instead of requiring an employee to venture into that environment on a regular basis to manually gather data? That employee can be better put to use analyzing the data gathered, instead of risking injury.
Deploying IoT Solutions Can Provide Insights That Improve Business Decisions
IoT is increasingly used to support data gathering, analysis and reporting, and thus to make business decisions that enhance productivity.
Let’s say you have a business that services ice machines, ensuring that each machine is stocked and ready. This means your ice delivery trucks need to be well-stocked and must maintain the correct temperature for ice. It also means you need to know when to send drivers to each of your sites. You can potentially improve your operations via IoT technologies in multiple ways:
- Outfit sensors in your fleet that ensure refrigeration units are working correctly, and are serviced when needed to prevent loss of inventory.
- Install weight sensors in the ice machines that indicate the amount of ice contained in the units, then send that data to the home office to indicate when inventory is running low.
- Use GPS and fleet analytics to optimize truck routes for time and cost savings.
Whether you want to ensure machinery in your manufacturing facility is working optimally, determine when street lights should be turned on and off for optimal energy savings, or use IoT technology to detect the optimal angle and speed of a wind turbine for optimal efficiency, IoT solutions can support the gathering of analytics and resulting process improvements.
IoT-Driven Products and Services Can Enhance Customer Acquisition
We tend to think of the IoT as wireless devices and sensors talking to one another, but in fact it is so much more. Many companies today are improving operations and even growing their customer base by implementing IoT solutions. Some ready examples are wearables that provide tracking and monitoring services to the wearer, such as Fitbit technology. Creating a popular commodity is certainly one of the best ways to grow a customer base using IoT. But in fact the possibilities are endless, from smart carts for a rapid check-out and improved shopping experience, to sensors for water bottles that send a signal when it’s time to hydrate.
There are many more possibilities for IoT in this arena.
- What if you had a virtual greeter in your store front who welcomed new patrons and guided them to the day’s specials or ensured they were seated at the next available table in your restaurant? Prsonas asked this question, and then proceeded to develop the technology to do just that using Digi’s cellular routers. The company now provides holographic technology to businesses of all kinds, allowing them to provide a unique in-store experience, gather customer data to enhance their experience, and even conduct business.
- A golf course could seek to differentiate itself from local competition by becoming the first in the region to provide individualized data feedback on swing mechanics.
- Back to fleets and supply chain, if a delivery company can improve delivery times and service customers more efficiently, the customer retention and positive word-of-mouth feedback alone could be worth the IoT investment.
Related white paper — Digi Field Guide: Five Tips to Improve Your IoT Designs
IoT and ROI: Examples from Digi Customers
Let’s look at a few examples from Digi customers who have found cost savings by implementing IoT solutions.
ElectriCities: Huge Cost Savings From IoT Deployment
ElectriCities is a non-profit organization that provides customer service, safety training, emergency assistance and government advocacy to 90 member municipalities and 1.2 million customers throughout North Carolina, South Carolina and Virginia. Additionally, the organization maintains a complex network covering thousands of square miles, and collects data from meters and telemetry equipment to provide communications and management services to its member utilities. They needed to find a cost-effective way to communicate and transfer data.
The traditional method of installing copper 56k circuits to each site was cost-prohibitive and increased the risk of lightning strike damage. An alternative communications method, such as fiber optics, would reduce the threat of lightning strikes but still be prohibitively expensive. And it was overkill for the relatively limited bandwidth needs of each site. The organization turned to Digi for a reliable LTE solution for frequent meter reading that would support communications with a range of different device types. Working with Digi, they identified the Digi TransPort® WR31, an intelligent 4G LTE router, as their solution of choice.
The cost savings were massive. Yearly lightning strike costs were decreased by $20,000 per site by using wireless routers. Meanwhile they were able to dramatically reduce the hours spent troubleshooting and repairing equipment. That improvement coupled with reduced maintenance contracts, resulted in an additional savings of $30,000 per year, per site.
AFCEC: Enormous ROI From Conversion to Wireless
The Air Force Civil Engineer Center (AFCEC) performs a range of industrial services, including facility investment planning, design, construction, environmental compliance and restoration. At Joint Base Cape Cod (JBCC), an AFCEC team manages the soil and groundwater contamination sites under the Superfund program. JBCC, a 22,000-acre military base on Cape Code, has been holding military training on the site since 1911. Contamination from chemical spills and fire training activities led to identification of the site for the Superfund program, and a required cleanup.
The challenge was that AFCEC was paying $2,000 per month for landlines to support data transfer from the restoration equipment. Also, certain circuits had hardware problems that created frequent service interruptions. They turned to the Digi WR21 cellular router, a versatile product for both commercial and industrial environments. The Digi WR21 can provide primary and backup WWAN connectivity over 3G/4G/LTE with RS232/422/485 serial support and dual Ethernet, as well as flexible options for connectivity and power, along with extended temperature ranges that can handle the harsh deployment environment. Additionally, Digi Remote Manager®, a cloud-based network management solution, supports fast cellular router configuration, secure firmware updates and monitoring.
When we spoke with the AFCEC team, they fully anticipated rapid and impressive ROI, with an expected 100-percent payback for the hardware in less than six months. The eight landline connections they planned to replace cost AFCEC a total of about $1,300 per month, and the replacement wireless connections would only cost $355 per month, resulting in an excellent ROI.
Schréder: Cost Savings Passed on to Cities That Deploy Smart Lighting
Owlet Nightshift, developed by Schréder and located in Mainz, Germany, supplies intelligent tele-management systems to monitor and control outdoor and roadside lighting. The company sought to provide an IoT-based street light management solution that improved lighting management and saved maintenance costs. And there was a critical need. Lighting maintenance can account for a full 40% of a city’s energy expenses.
Schréder’s Owlet Nightshift solution incorporated Digi XBee Zigbee modules and ConnectPort X4 cellular gateways. Each intelligent light is equipped with a high performance LED array and a Digi XBee Zigbee module. The radio modules allow groups of lights to form a Zigbee mesh network that connects to a cellular WAN through the cellular gateway. Every node can then be centrally monitored and the lighting program can be changed by a technician via a desktop or handheld smart device using Owlet web-based management tools.
As a result, municipalities using Owlet Nightshift can save up to 85% of their lighting energy costs:
- Energy saving methods are already integrated into the software to make the most efficient use of LED technologies for savings of 8% to 10%.
- Instead of a traditional constant state of full output that consumes a great deal of energy, Owlet can dim LED arrays to levels appropriate for the conditions, for savings of 25%.
- Customers can define dimming profiles to reduce light levels on roads at night when it is quiet, and then increase light during peak times, such as during rush hour, for an additional savings of 30% to 40%.
In summary, the time has come to evaluate the Internet of Things for its benefits in cost reduction and other ROI metrics.