6 factors that determine IoT price for manufacturers
Internet of things (IoT) systems have helped many manufacturers digitally transform their operations. Through the use of equipment sensors and advanced analytics and algorithms, IoT systems predict needed maintenance and reduce unplanned downtime. For many, these results lead to significant cost savings, increased efficiencies, higher quality and greater market share over time.
However, some manufacturers have been slow to adopt IoT technology because they believe there’s not enough return on investment. But like many technology solutions over the years, the cost of IoT implementation within a manufacturing facility has actually fallen. For example, the average cost of IoT sensors was $1.30 in 2004, but only $0.38 in 2020.
Of course, IoT price involves more than the cost of the sensors. Let’s take a look at the top six factors that impact the cost of IoT and some expectations you can have going in.
1. IoT software and hardware
Manufacturers that may have explored various IoT technologies in the past likely experienced sticker shock. But many solutions have come down significantly in price.
For example, some sensors and smart boxes that are installed on equipment to measure vibrations, temperature and other potential indicators of equipment failure may cost less than most tablets.
Some devices can extract data in real time to pinpoint opportunities for improving capacity, start-up times and the quality of parts coming off a machine. Of course, the greater the functionality, the higher the price. But don’t let the price tags of the past stop you from exploring current IoT platforms.
2. Infrastructure and retrofitting
Manufacturers that have been in business for more than a decade likely have equipment they acquired in those early days that wasn’t designed to connect with the internet, and many startups rely on used or refurbished machines. While some machines can easily be adapted for IoT, it can be expensive to retrofit some of them.
It may be worth your time to explore the cost differences for replacing equipment versus modifying it to accommodate IoT technology. You’ll also need to make sure you’re equipped with high-speed internet and a scalable cloud-based network infrastructure to ensure reliable connections.
3. Planned downtime
While everyone wishes IoT implementation merely involved the flip of a switch, the reality is that installing meters, retooling machines and making other upgrades will likely involve some downtime, which translates to some revenue loss.
Work with your technology provider to schedule implementation so that installation can take place during times when disruptions and potential lost revenue can be kept to a minimum. Additionally, account for training time for workers to familiarize themselves with the new systems.
4. IoT implementation and consulting services
Your workforce likely won’t have the in-depth knowledge required to plan and oversee an IoT implementation. Transitioning to an IoT system is also not a once-and-done proposition; it requires ongoing monitoring and adaptations to scale with your business.
Plan to rely on the expertise of a consultant to ensure ongoing success and smooth operation, and expect ongoing costs for future upgrades and maintenance.
5. Subscription fees
As part of an IoT solution, you’ll need additional storage capacity and processing power to perform analytics, run reports and house the vast amounts of data that IoT tools generate. Invoicing for these capabilities can vary — from a fixed monthly cost to metered billing — so make sure you understand the pricing model to better anticipate cash flow.
6. Security measures
Cybercrime continues to rise and grow more sophisticated, making data security paramount when it comes to cloud-based connectivity.
Work with your provider to put proper security measures in place and routinely maintain and update them — including setting up safeguards to only allow authorized internal access and firewalls to prevent outside digital threats from holding data hostage by installing ransomware. Discuss protective measures with your provider and the role they play in ensuring data security.
IoT price is worth it when you make the right investments at the right time
While your initial IoT investment may not have immediate ROI, the benefits to your business down the road can give your manufacturing business a major competitive advantage. Not all IoT solutions are alike, however, and many cheaper options won’t provide the functionality you need or have the capability to scale with your business, meaning you may need to rework or replace the system down the road.
It’s best to get it right the first time and to look at IoT solutions as part of your long-range planning, not a quick fix — especially as the world continues to grow more digital-reliant, and customer experience becomes more important and essential. Work with a reputable provider that is experienced in your industry, who will be upfront about all the costs involved and can offer recommendations and solutions that are proven to bring results.
Wipfli specializes in IoT implementation. Contact us to talk through your immediate and long-term business goals and how IoT can help you overcome the challenges of today’s manufacturing landscape.
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