In any business, numbers matter. That’s why you may have already heard some pretty impressive figures about the Internet of Things being batted around. It’s estimated that by 2020, there will be 25 billion embedded devices and intelligent systems, and by 2024, the global IoT market will have reached $4.3 trillion.
That probably sounds like IoT is something to get in on as soon as you can—but there’s some more facts and figures you need to get familiar with first. These are the key things you need to ask yourself in order to make an effective IoT strategy—and make a strategy you must, if you want your organization to remain competitive in the years to come.
1. Who needs to get involved?
An IoT initiative can be a very large and involved endeavor, and the CFO can’t do it alone. Inevitably, decisions will need to be made that require expertise from other stakeholders, such as HR, IT, the COO, or even the CEO. Figure out what players will be key to your IoT initiative, get them on board, and tell them what issues you need them for.
2. What is your goal?
It’s not enough to invest in IoT simply for the sake of investing in IoT. You need to consider what, exactly, your organization is hoping to gain from your specific IoT project. Are you looking primarily for gains in financial metrics, such as revenue or reduced expenses, or perhaps for increased operational efficiency in, say, the customer or product life cycle? Or are you simply looking to improve a product? Whatever the case, keeping your priorities in mind will help in deciding where and how to allocate funding.
3. How will you measure the ROI?
Always make sure you can find some way to measure and quantify your success. What are the crucial KPIs for your IoT initiative? In part, how you measure ROI will depend again on what your goals are—if your IoT is targeting operating metrics, then overall revenue should not be your yardstick. Identify how you will measure your efforts, and what numbers you’re hoping to see.
4. How will your efforts be taxed?
It’s easy to let this one slip through the cracks, but there’s no reason not to plan for something as inevitable as taxes. Taxation will affect your revenue, but services are not going to be taxed the same way as product sales. Plan for your income taxes, and keep track of documentation that might be needed for audits and reviews.
IoT is an exciting new field, but only if you address the practical concerns first can it reach its full potential for you and your organization.