How to burn money with IoT

Table of Contents

With IoT projects amounts of money equaling a luxury car or even a private home can quickly end up in smoke. Do not make false economies! Pay attention not only to the purchase costs bus also to the running costs. As a warning we have collected some more or less hidden ways to burn very quickly a huge amount of money in your IoT project.

Choose the wrong partner

A wrong partner for your IoT or M2M project is the perfect starting point for a blazing fire where you burn lots of money. IoT experts spring up like mushrooms. Before you trust any of these “experts”, be sure to ask the IoT expert how he justifies this title. All too often they adorn themselves with borrowed plumes or copycat products. What projects has the IoT expert already implemented? Are they merely conceptual projects? Are there any products including the technology of the IoT expert on the market that you can buy or is it just pure theory?

Gaps between the individual building blocks

An IoT project consists of many individual components: sensors, modem, MCU, firmware, transmission technology and protocol, as well as the server or the cloud platform, the software and much more. Until these parts are all integrated smoothly and in harmony with each other, a lot time will pass by. When everything finally communicates with one another, there are always unforeseen events that cost a pretty penny.

Bausteine passen nicht zusammen

No rarity is a case, which was told us by a prospective customer only a few weeks ago: The server was no longer reachable and the IoT device tried to keep sending more data. The server does not send a response and so the device tried to send the data every second again and again. This quickly resulted in costs of about € 50,000, an amount which is extremely painful even for larger companies. For small start-ups or SMEs this can even mean bankruptcy.

This example shows how important the error handling and behavior of the systems is in exceptional cases. In the example above, the data is not lost if a transmission fails once. This cannot be taken for granted for the IoT solutions on the market. If the server is unreachable for an extended period of time, there must be appropriate mechanisms to avoid unnecessary costs.

Even a simple volume alarming could already be a safety mechanism in this case. Think of your private Smartphone. Although most providers offer such alerts, very few people use them.

Inappropriate tariffs

Another way to burn money with your IoT application is to have the false tariff. A lack of software architecture results in tariffs not tailored to your application. Think about how often you need the data and what data you need. This allows you to evaluate the data volume in a targeted way and to find a suitable tariff for your application. Again the choice of the right partner is significant. Pay attention to the billing options and tariffs offered by your IoT solution partner at the beginning of your project. In addition to classic volume-dependent (pay-as-you-go) tariffs, prepaid tariffs, monthly billing packages with fixed costs or lifecycle costing are maybe also suitable for you.

Cross-border applications

In many IoT projects there has already been a rude awakening, when the device has been operated close to the border. The IoT device booked itself into a “wrong” network and the costs rose to unimagined heights. A rollout in other countries can also create difficulties. This can lead to increased costs due to roaming or costly negotiations with providers in the respective countries. A worldwide uniform tariff is offered by only one IoT solution provider. Such a tariff is not always more expensive than other tariffs, which are limited to one country. According to the motto “Think big, start small” you are equipped with such a service for the future and your business can fully start.

Misuse of SIM cards

Another example from over 10 years of experience in the M2M and IoT area are SIM cards, which suddenly get a different or additional use. Smart people came up with the idea of simply plugging the SIM cards into their mobile phones and “saving” their own costs. For the owner of the devices and machines, this results in unexpected costs. However there is also a remedy for this misuse. A fixed soldered SIM chip on the circuit board represents a first hurdle, which should already be sufficient for many cases. However, in a perfect interaction of all components in your IoT application, such an abuse is automatically recognized and after a short help or error message the functionality is ceased.

The perfect product

Last but not least, you can burn more money with long development times behind closed doors and significantly increase the risk for the entire IoT project. This does not mean that you should bring unfinished products onto the market. A basic concept you should always recall is the 80/20 principle or “Done is better than perfect”. The MVP (Minimum Viable Product) is a great trade-off. The core functionality of your product is implemented at 100%. This version will be presented to a few people from the target group as quickly as possible. You can add additional features little by little to your product. This approach not only minimizes the risk but also the costs of your IoT project and shows rapidly first successes even in an early project phase.

In a nutshell, with the right choice of the IoT solution provider, you can already mitigate a multitude of potential incentives in your Internet of Things or Machine-to-Machine project. The interaction of the individual components (hardware, software, service) as well as an effective fault management is essential in order to avoid unforeseen costs. Traditional tariffs are rarely suitable for IoT applications. Define your exact needs and set great value on choosing an appropriate tariff for your Internet of Things application. The MVP minimizes costs and shows rapid success.

At Microtronics all these points are lived. With a complete solution consisting of hardware, software and service Microtronics assumes the responsibility for the entire system with a worldwide standard tariff. How you prevent risks in the course of your IoT project, we are happy to explain to you during a free, non-committal IoT Coffee.

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