Part 1 of 3: Constructing the Optimal Industrial IoT Proof of Concept Aligning For Success

Juan Muldoon | Principal
September 24, 2017

Our goal with this series is to help the sales and business development teams of software companies structure proof of concepts that lead to higher likelihoods of success with industrial and energy companies. In this 3-part series we will cover aligning for PoC success, identifying the optimal PoC budget, and transitioning from PoC to contracts.

Despite the promise of Internet of Things technologies, actual adoption of solutions remains frustratingly low. Especially in industrial and energy companies, we have seen that this is partly due to a mismatch between the technology / solutions offered and bona fide business value-building applications for customers. A crucial element of the IIoT sales process, executing a Proof of Concept (PoC) can help bridge this gap. Essentially, a well-designed PoC allows the vendor to demonstrate the viability of the product, confirm the ease of integration and deliver results that substantiate the potential value of the solution for the customer. It’s all about showing the business value of the technology.

Executing a PoC is exciting for the vendor, for the customer, and for potential investors. Although it may sound simple, executing a PoC can be daunting. According to a recent survey conducted by Cisco, 60 percent of IoT initiatives stall at the Proof of Concept stage. Furthermore, only 26 percent of surveyed companies have had an IoT initiative that they considered a complete success. Perhaps more telling, 33 percent of all completed IoT projects were not considered successful.¹

Defining success — and how it will be measured — from the outset is crucial. To get it right, companies need to start with defining the needs of the customer and understand what matters most to them for the specified use case and for the long term. Here are a few points to keep in mind as you design and implement your PoC:

1. Pick a persistent problem. The greater the pain point, the greater the likelihood that your customer will value (and be willing to pay for) your solution if it addresses the issue. Focus more on the business case for the solution than on showcasing features in the technology. While you want the customers to think creatively about how your product could be used after the pilot, you need the pilot’s results to convince them to keep going. Timing and timelines are important: find timely, actionable projects that have the right balance of immediacy / urgency and give you sufficient runway to deliver.

2. Understand the stage and setup. Get to know your customer’s current tools and processes, their strengths, and their limitations. Make sure you have commitment on resources, data, and timelines that will be required.Larger companies may have built systems in-house with legacy solutions, or they may be struggling with a patchwork of different providers. Know that your pilot will rely on your customer’s infrastructure and may be competing against your customer’s in-house tools.

3. Two (IT + Biz) is better than one. You must absolutely align success with both key stakeholders: IT decision makers and Business decision makers.Too often, vendors forget that IT and the business side must both see value in the solution to lead to broader implementation. The IT team may deem the project a success if it proves the technological point or satisfies their technical curiosity (and, based on Cisco’s data, they are more likely to), but nothing will matter if the business side can’t see real value today.² Similarly, if the potential for value is there but the implementation or deployment is too complex, your concept is not likely to get the support it will need. Aligning with both parties will also help ensure that both IT and the business side are ready to commit the resources, time, and attention required. In a perfect world, both sides will want to take ownership for success. Have many champions, and know what will make them look good!

4. Select the proper “upside” metrics. “Upside” metrics (i.e. improvements in revenue, uptime, throughput) are powerful — they help make the case that the customer’s business warrants more investment to create more value, thereby supporting future growth and resulting in career upside for your champions. However, understand that meaningful cost reductions can be diamonds (and low hanging fruit) in industries with thin margins and often outdated systems or processes running on legacy assets. For example, revenue from the installed base of wind turbines may not be expected to grow, but meaningful cost reductions in maintenance flow to the bottom line. Trick of the trade: if a “lower” metric is the best fit, identify a related metric such as increased throughput or uptime within the asset base that can be elevated as an “upside” metric. Either way, make sure your metrics are objective and tangible (with real P&L consequences) from the product manager to the General Manager to the C-suite.

Planning is important and, above all, the most important thing you can do is align for success with the key stakeholders. You must know your customer: what they do, what frustrates them, how their systems will integrate with yours. It requires knowing their dual goals and expectations (IT + biz), and understanding that both must converge and be met for your pilot to be successful.

[1] Cisco survey, The Journey to IoT Value, May 2017. Statistics based on survey conducted among 1,845 IT and business decision makers (executives, directors, engineers, architects, and managers) fielded in April of 2017. The survey covered the Retail / Hospitality, Energy, Transportation, Manufacturing, Local Government, and Health Care industries

[2] Based on Cisco’s survey, 35 percent of IT decision-makers called their IoT initiatives a complete success, whereas only 15% of business decision-makers did.