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The numbers no one is talking about … the hidden costs of delivering IoT services

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April 13, 2016

by

Theresa Bui

I’m sure you’ve heard, right? We are in the midst of a digital transformation … and the Internet of Things (IoT) is leading the revolution.

In my role at Cisco Jasper, most of business leaders I talk to are ready to jump in and transition from the vision and possibilities, to the reality and practicalities of launching IoT services.  The question I hear most often: How much does it cost to run an IoT business?

As you plan your IoT initiatives, you need a clear understanding of the ongoing operational costs of delivering IoT services, the potential revenue from new offerings, the operational cost savings and the time it will take to achieve ROI from IoT. Yet these are the very numbers that nobody seems to be talking about.

Understanding the recurring operational expenses (OpEx) of running a connected service business enables you to make smart decisions. You need this baseline to ensure that you IoT initiatives run at the lowest cost, highest availability, and provide the best customer experience.

Understanding the cost categories for OpEx

As an introduction, you first need to understand the categories of OpEx and the average spend per category:

  • Network communication: costs associated with connecting devices to the internet, most often via wireless sensor networks, radio frequency identification (RFID), Wi-Fi or a mobile network.
  • Administrative labor: costs associated with the day-to-day management and operation of IoT assets and business processes.
  • Technical support: costs associated with identifying, troubleshooting and resolving old-reported issues with IoT assets.

In addition to these hard costs, you also need to consider the expenses that can impact your time to market:

  • How quickly can you roll out new devices and services?
  • How quickly can you generate revenue from those devices and services?

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In my next blog, I’ll deep dive into what makes up the cost of network communications and provide tips on how you can work with your operator to manage those costs.

Can’t wait? For specific numbers to understand the full cost of implementing IoT in different industries, download our white paper.

In the meantime, let’s help each other out and start talking about the real cost of delivering IoT services. How do you categorize OpEx? What else do you include in your cost analysis?

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