Solution should be cost effective and implementable, finance people need to better understand operations and customers should be willing to pay for both service and solution.
By Srinivasa Moorthy
I want to share my experience of proposing an IoT solutions to two different companies and how both proposals ended.
Second one is entirely different, this is beverage company which wants to measure their liquid product’s volume under production continuously. Their products are stored in tanks and there is a risk of loss in volume due to weather and related aspects. Even though they have 10,000 tanks in a day they will measure the volume only for 200 – 300 tanks only as the measurements have to be done once in 15 days only. By the way, currently they are not doing any measurements. Being in a backward area they can afford to have manual labour to do the job. So when we proposed a solution, we proposed a semiautomated solution with measurement being automated through IoT, but the instrument will be carried by manual workforce to each tank that has to be monitored. After presenting the proposal, customer said he wanted 100% automation and despite our warning they insisted on a proposal. Once the proposal which had one IoT “Thing” per tank customer felt it is expensive (yes it was!) and said they can’t afford. The interesting fact is, the operation head is convinced that the semi automated process will help him in his operation in a great way. Since the management is not convinced he is keeping quiet. In fact I did ask him why he is not expressing his opinion to the management as he is responsible for the production. He says if he pushes for the solution the management will think that there is some vested interest.
I do have two more cases exactly in the same situation and we have not given proposals as we see the solution will disturb the existing situation and there will be no cooperation. So there are three lessons I have learnt after this and want to share;
- Your solution may be real, cost effective and implementable. But if it is going to disturb the existing scenario in the client organisation chances are high it will never be implemented.
- CFOs who control the finance worry about the present and never about the future. They have no clue about especially nimble competition. They just worry about classic P&L and veto any investment which has a longer payback. Almost all the companies CFOs whom I interacted are very powerful than the operations team have bigger clout. Unless the MD/owner is hands on and understand the operation, it is very difficult convince the bean counters with technology and efficiency. Most finance people never understand intangibles!
- Under these situations many of the prospective customers ask for a “OPEX” model where they are willing to pay for the service but not for the solution. While this is attractive, for the startups funding such a large amount and long payback period (close to 3 years) is a challenge. In addition customer winding up and not paying is an additional risk.