The IoT landscape is continuously expanding, but an increasing number of industrial companies are facing new challenges with their digitalized products and services. Rising IoT costs and the lack of flexibility in first-generation IoT solutions are among these hurdles. The good news is that these shortcomings can be overcome sustainably.
The year 2023 is characterized by the consolidation of the IoT market. IoT platforms such as those offered by Google, IBM, or SAP are being discontinued, leading many to wonder, “Is the hype around the Internet of Things already over?” From our perspective, it is not. Instead, a development is emerging in the way we approach the technology, as confirmed by an article in the German Computerwoche. The focus of value creation has shifted from IoT platforms to IoT applications. Specifically, this means that providers need to have a broad technological foundation on one hand to integrate all the necessary and newly emerging features into their platforms and process data effectively. On the other hand, they also need to be capable of providing individual advice on the potential opportunities and business prospects in various user industries, determining what can be achieved through IoT and cloud technologies, and ultimately making economic sense. Some providers have already successfully embarked on this delicate balancing act.
However, many companies still possess first-generation IoT solutions and are now facing challenges. In our conversations with decision-makers, two main problems have repeatedly been brought to our attention: high IoT costs and limited flexibility in their respective applications. But don’t worry: Rome wasn’t built in a day either.
Often, the high operational costs of an IoT platform or on-premises hosting have a negative impact. Additionally, many companies face a vendor lock-in situation with their IoT providers. As the number of connected devices or asset fleets increases, there is a risk of operational and cloud costs spiraling out of control. This is often due to faulty architecture and a lack of cost efficiency in the design of the IoT platform from the start. As a result, it becomes impossible to implement and scale an IoT solution in a value-adding manner. The consequences are not only weakened competitiveness but also a significant threat to the entire digital business case.
To achieve sustainable reductions in IoT costs, there are various approaches available: For example, the architecture of an IoT solution can be designed from the outset with a focus on cost-effective scalability in data storage and exchange. We have found that more than 90 percent of IoT costs can be saved by leveraging cloud-native applications in our projects. We recommend building business applications on generic cloud platforms such as Microsoft Azure or AWS for this purpose. Not only are their services comprehensive, but they are also particularly well-suited for processing large volumes of data. In our view, monolithic platforms solely dedicated to IoT are becoming outdated models.
It’s not just increasing IoT costs that can cause headaches. Another challenge for decision-makers is often the lack of flexibility in an IoT solution. Specialized IoT platform providers typically have limited features on offer, and new features are often slow to be introduced. This is due to the lack of modularity in such platforms, which cannot be easily expanded. Rather than allowing a rigid structure to harm the competitiveness or even the reputation of an industrial company, we recommend transitioning to a fully flexible, modular framework that can adapt to the customer’s and the market’s needs at any time.
Our tip: Take an open-minded approach to which solution architecture is most effective for your IoT use case and put it to the test with a performance evaluation. Even if it ultimately leads to a complete migration of your IoT systems, with an optimized cloud and IoT architecture, the transition can be seamlessly accomplished within six to 12 months, as our experience shows. You can read about the details of how this works in our expert paper. By the way, for customers, a migration during ongoing operations is imperceptible, even with 10,000 devices or more.
Read our expert paper to learn how the right approach can reduce your IoT costs by 90%, while maintaining full flexibility.