Manufacturing Tomorrow


Six Factors That Determine IOT Implementation Costs for Manufacturers

May 22, 2018
By: Mark Stevens
Manufacturing and Distribution

Cost to Implement IoT 

Innovative IoT systems have helped many manufacturers digitally transform their operations by predicting needed maintenance and reducing unplanned downtime with the use of equipment sensors and advanced analytics and algorithms. For many, these results lead to significant cost savings, increased efficiencies, higher quality, and greater market share over time.

Some manufacturers have been slow to adopt IoT technology with the assumption that it’s not necessary, may be too disruptive to implement, or that there’s not enough return on investment. As have many technology solutions over the years, however, the costs to implement IoT within a manufacturing facility have actually fallen.

The price of IoT is more than just the initial hardware, software, and implementation. Other factors need to be considered as well. Let’s take a look at the top six factors that impact cost and some expectations you can have going in.

1. Hardware & Software

Companies 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 solutions.

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. The vast majority of equipment in facilities today isn’t inherently IoT ready and, 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 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. Consultation Services

While most workforces are highly skilled at performing their assigned tasks, most don’t have the in-depth knowledge required to plan and oversee IoT implementation. Transitioning to the IoT 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 will be generated. 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

Data security is paramount when it comes to cloud-based connectivity. Work with your provider to ensure proper security measures are in place and are routinely maintained and updated, 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.

While your initial IoT investment may not have immediate ROI, the potential benefits to your business down the road can give your company 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. Work with a reputable provider that is experienced in your industry, that will be upfront about all the costs involved, and can offer recommendations and solutions that are proven to bring results. Contact the experts at Wipfli to talk through your immediate and long-term business goals and how the IoT can help you overcome the challenges of today’s manufacturing landscape.


Mark Stevens
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