To Build or Buy IoT Software? The Challenges of a DIY Approach

The Industrial Internet of Things (IIoT) has become a transformative force across industries, offering unprecedented opportunities for efficiency and data-driven decision-making. Yet, the question of whether to custom-build an IIoT software platform or purchase an off-the-shelf solution like innius continues to perplex many organizations. In this article, we explore this decision-making process, drawing from both our own experiences and recent insights from a Microsoft report, to shed light on the challenges associated with a DIY approach.

Learning from Experience

Over the years, as we’ve passionately advocated for the untapped potential of Industrial IoT, we’ve encountered several prospective clients who initially chose to embark on the journey of building their own IoT software platform. While it’s disheartening to lose a potential customer, we’ve learned that long term, it often works in our favour. There are two significant reasons for this.

Firstly, the willingness to invest resources in building their own solution demonstrates a deep understanding of the transformative power of Industrial IoT and its potential impact on their operations. Secondly, our experience has taught us that many organizations attempting to build IoT platforms often face insurmountable challenges. Eventually, with a heightened appreciation for the technology, they realize the need for an off-the-shelf platform.

While there are valid reasons for pursuing custom-built solutions, our experience underscores that many companies tend to underestimate the complexity, costs, time-to-value, long-term commitment, expertise requirements, and scaling challenges involved.

Insights from Microsoft’s Report

The recent Microsoft report, titled ‘Digital Operation Signals – Industrial IoT Solution Spotlight’ (July 2023), reinforces the lessons learned from our own experiences. Based on research conducted by IoT Analytics, this 82-page report provides valuable insights into the build versus buy IIoT dilemma. You can access the full report here.

Some notable findings from the report echo the sentiments we’ve observed:

• “Companies are increasingly looking to buy off-the-shelf solutions.”
• “When a buy solution is available, the median time to break even decreases by 40%.”
• “The buy approach is the most cost-effective and allows for a quick return on investment (ROI) with few integration challenges.”

These findings strongly align with the advantages of considering off-the-shelf solutions like innius. Now, let’s delve into 5 specific challenges associated with a build your own approach:

1. High Initial Investment & Longer Time to Value

The decision to build your own Industrial IoT platform typically requires a substantial upfront investment. Furthermore, the implementation timeline for a DIY project often extends over many months. In stark contrast, off-the-shelf solutions like innius can commence data generation within mere hours. This significant disparity translates into a longer time before realizing the value of a DIY solution and a return on investment.

Additionally, the elevated initial investment and prolonged implementation phase introduce the risk of discovering project failures at a late stage, resulting in substantial resource wastage. In such scenarios, there may be a temptation to allocate more resources to rectify the situation. Conversely, off-the-shelf solutions enable early issue detection with minimal investment. At Innius BV, our consultancy service takes this a step further by offering a Feasibility Study to identify and mitigate potential risks.

2. Challenges to Scaling Out of Pilot Purgatory

Scaling an IIoT project beyond the proof-of-concept stage presents significant challenges, as highlighted in industry research. A widely quoted McKinsey report in 2018 concluded that about 70% of companies fail to scale Industry 4.0 projects out of the proof-of-concept stage. Furthermore, Microsoft’s Signals Report in 2019 found that 30% of IoT projects fail during the proof-of-concept stage. These statistics underscore the formidable nature of this stage, emphasizing the importance of a well-considered strategy and the right technology solution to navigate the complexities of scaling in the IIoT landscape.

The ability to scale up out of the pilot phase depends on a range of factors:

• A clear vision from the leadership.
• Support across the organization.
• Adherence to industry security standards.
• Scalability of the software architecture.
• Ability to find economies of scale.
• Meets the needs of multiple use cases.
• Connects with the existing IT/OT ecosystem.
• Not depending on a few key individuals (who could leave their current roles).

3. Long-Term Commitment

While building your own platform may be viewed as a long-term strategy aimed at avoiding future subscription costs, it’s essential to recognize that even successful DIY projects require ongoing investments in security, scalability, new features, and interoperability. This continuous improvement journey can become a significant distraction in terms of focus, investment, and time. In contrast, an innius subscription offers flexibility and price increases are capped at inflation rates, as outlined in the terms and conditions.

4. Market Competition

The adoption of IIoT is rapidly becoming mainstream across industries. Manufacturing companies that lag in implementing an IIoT vision risk falling behind competitors. This scenario creates a sense of urgency that might lead organizations to hastily develop solutions that ultimately prove inadequate and costly.

5. Workforce Capabilities

For large multinational companies equipped with in-house software teams, customizing an IoT platform may indeed be a viable option. However, many manufacturers lack agile software development teams, necessitating the construction of such teams from scratch—an arduous task, especially in the current competitive job market. Outsourcing development might undermine the advantages of a DIY approach, as it may hinder in-house capabilities for long-term software maintenance and upgrades.

Focus on Your Expertise

The notion that every industrial company needs to become a software company is gaining traction, inspired by successful examples like Tesla, which is often referred to as a “software company that builds cars.” However, we believe that the key for every business is to focus on its core expertise. The challenge for industrial businesses is to adopt the latest digital technologies to improve their products and services without becoming distracted. Attempting to become software companies themselves is not necessarily a recipe for success.

Conclusion

The decision to build or buy an IIoT software platform demands careful consideration. Our own experiences, coupled with insights from Microsoft’s recent report, affirm that embarking on the path of building your own Industrial IoT platform can be riddled with risks, from high initial investments and prolonged time to value to challenges in scaling, long-term commitment, and workforce capabilities. To remain competitive and harness the benefits of IIoT technology without undue distraction and risk, organizations should earnestly contemplate off-the-shelf solutions like innius. Ultimately, success in the IIoT era hinges on strategic focus on core expertise and the astute adoption of technology solutions that accelerate growth and innovation.