Business Strategy and Innovation Framework
by connected devices to create new value-adding information can lead to the creation of new services . Any investment decision must consider this potential .
5.3.2 BUSINESS CASE CHALLENGES
Organizations developing an IIoT business case are likely to encounter several challenges that may not be obvious at first glance .
Firstly , enterprises should not underestimate the fixed costs for hardware development . Many assume that recent advances in low-budget hardware such as Arduino and Raspberry Pi have changed the laws and economics of hardware development , but the costs of creating reliable hardware for deployment are still high . They include the initial design , prototyping , testing , and certification phases , as well as integrating IoT capabilities into existing hardware . Many IIoT business cases require significant initial investment before any revenue generation , and business models often rely on economies of scale to achieve acceptable unit costs . This is risky .
Secondly , IIoT-enabled connected products require a backend infrastructure that has ongoing operating costs . One option for covering them is to introduce pay-per-use or subscription-based models , but these models usually encounter severe customer acceptance challenges , especially when hardware is involved . A more attractive option is to build the operating costs into the sales price and implement a variety of risk insurance tactics , such as planned obsolescence . 1
These are just two examples of the complexity of IIoT business cases , yet they illustrate the effectiveness of a structured process for business case development , and clarify why these business cases take time to reach a certain level of maturity .
5.3.3 IMPACT & RISK ASSESSMENT
Business cases are a good starting point for sensitivity analyses , which generally involve the systematic modification of important quantitative assumptions to assess their effect on the outcome [ BD1 ]. Since future value streams are subject to uncertainty , the assumptions underpinning the business case should be documented clearly and linked to the business case calculation . This allows the impact of any changes to the parameters to be reflected in the ROI .
IIoT business cases typically follow the same procedure as traditional business cases for sensitivity analysis . Assumptions that have a high impact on business success can include technology risks like device errors , risk that partners will change their minds , that may not be in the business case calculation . As such , enterprises should invest significant time in identifying and profiling a more extensive list of risks . This should include operational , technology , execution , implementation and security risks and identify any pitfalls or lessons learned from previous projects , potential suppliers and ecosystem partners . There is a wide range of recognized risk management frameworks available to support this kind of analysis .
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For further information and specific examples , please refer to Felix Wortmann on Enterprise-IoT . org [ FW1 ].
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