Investing in Indian Smart cities for IoT – Show Me the Money
By: Ashok Kumar K
Tags: Roi, Smart Cities, Internet of Things, Iiot

Investing in Indian Smart cities for IoT – Show Me the Money

Investing in Industrial IoT(IIoT) technology for smart cities is clearly a strategic business decision.Governments or Companies should view the Industrial Internet of Things as a radical technology and business innovation aimed at business disruption rather than looking at it as one more technology add on. They should consider investing in IoT technology and ICT infrastructure to capitalize on the sweeping range of operations improvements, new opportunities, and innovative citizens -engagement models enabled by a network of smart, connected devices.

Show Me the Money

With such high expectation for significant business and governance outcomes, company leadership is eager to invest in IoT, but not before they see a credible cost analysis of the return on technology investment.

Indeed, many green-field early stage IoT projects require significant investments over an extended period of time: designing new connected products and retrofitting legacy assets, architechting a network infrastructure, and managing network security and data privacy.

No wonder many in corporate management believe the return on investment in IoT is elusive and the time horizon to tangible benefits makes IoT initiatives prohibitive. However when it comes to smart cities the value realisation is multi dimensional with connect assets and connected citizens.

Two major considerations are associated with any large technology investment: the irrecoverable cost of the project, and the uncertainty about the timing and the magnitude of the value returned.

Irreversibility, often described as sunk cost, of the investment stems from direct spend on hardware, software and the associated training and learning, and the cost of implementation, testing and deployment.

A cloud-based IoT platform reduces direct expenditure on hardware and software, training, and implementation. But at the same time, other irreversible costs such as employing consultants and systems integrators, and absorbing productivity losses during the business transition can easily dwarf direct capital expenditure.

Global IIoT Market Size

Real Options

Real options method considers the initial technology inves­t­ments, such as creating a proof of concept, a prototype or a pilot smart city project, as enabling multiple options of future growth. This investment forms a foundation to realize future benefits from subsequent deployments and redeployments of that technology or its derivatives.

The real options approach is a qualitative evaluation method that can help city managers determine the most strategically-valuable path to pursue and prioritize the different options enabled by the IoT platform. It encourages long-term strategic thinking and underscores the future value that will be obtained from early investments in technology.

Conclusion in short

Even when utilizing a traditional ROI method is mandatory or advised, a systematic and objective qualitative evaluation of future benefits will provide a solid framework to help identify, prioritize, and budget projects to maximize the potential for high option value.

Key Factors for Connected City IoT success

Good ICT infrastructure Sensors cost innovation Data driven city operations Citizens awareness and technology adoption Strong government policies to go digital

‘Smart cities can not be smart all by self without smart citizens’

References

1. Some of the contents are directly derived from hard work of