Investing in an Internet of Things (IoT) asset tracking system may be the best way to streamline your business’s operations and ensure that all assets are properly tracked and accounted for.
But before investing, it’s important to understand exactly how much return on investment (ROI) you can expect. As a business leader exploring this solution, you want to make sure that it’s worth the effort and cost.
In this guide, we’ll detail how to calculate ROI from an IoT asset tracking system and discuss why it should be considered as part of your overall strategy for maximizing efficiency in both short-term and long-term goals.
Why Is Calculating Return On Investment Important For IoT Asset Tracking Systems?
ROI, or return on investment, is an important concept to consider when assessing the success of any new technology system and calculating the cost/benefit.
In particular, ROI calculations become especially vital when calculating the cost of implementing an IoT asset tracking system. This type of system often represents a significant investment for organizations that choose to implement it, so calculating the expected rate of return and determining if this will be profitable in the long term is essential for successful growth.
Companies must carefully weigh the potential losses against possible future gains before taking a leap into investing in this type of system; otherwise, companies could find themselves in debt without any tangible benefit for their organization.
Steps In Calculating Return On Investment Of An IoT Asset Tracking System
When calculating return on investment for an IoT-enabled asset tracking system, it is important to consider three key factors: cost, benefits, and timeline.
- Start by calculating the total cost of ownership, including the initial installation cost of the system itself, tracking devices, and any associated fees beyond that, such as services or asset maintenance.
- Then quantify the expected benefits and capital gains that this asset tracking system will provide for your business and supply chain, such as increased operational efficiency, asset performance, or a reduction in theft.
- Last but not least, look at the total expected timeline for these benefits and calculate when you can expect to see a positive return on your investment.
When taking all these items into consideration, calculating return on investment for an IoT asset tracking system is possible and can help inform decision-making surrounding its implementation.
Next, we will dive a little deeper into each of these ROI metrics and the key factors to consider.
Key Factors In Calculating Total Cost Of Ownership Of An IoT Asset Tracking System
When calculating the total cost of ownership of an IoT asset tracking system, there are several cost factors to consider, including all those associated with the hardware, software, and infrastructure installation. Be sure to account for the following:
- Upfront Costs: The initial costs of implementing an IoT asset tracking system can vary depending on the size and scope of the project, as well as the types of assets and IoT devices.
- Training Costs: Training costs for asset tracking systems are typically minimal, as most systems are designed to be user-friendly. However, businesses may need to invest in additional training for employees who will be responsible for managing the system.
- Maintenance Costs: Maintenance costs for asset tracking systems are typically low, as most systems do not require regular maintenance or updates, but it’s crucial that you are aware of what may be required of you in the future. For instance, depending on the battery life of the asset trackers you select, you’ll want to factor in the cost of replacements.
- Recurring Costs: Recurring costs for asset tracking systems are typically minimal, but most systems require a monthly or annual subscription or licensing fee.
Taking all of the above into consideration will help to calculate the total cost of ownership for an IoT asset tracking system.
However, looking further ahead, and calculating how the system can help to reduce costs in other operational areas, such as preventative maintenance costs like battery replacement and service visits, will help provide a complete picture of its true price tag.
Furthermore, in some cases, the benefits of improved efficiency may be quantifiable enough to balance out these additional costs.
How To Quantify The Expected Benefits Of An IoT Asset Tracking System
In order to effectively assess the potential return on investment of an IoT asset tracking system, businesses must quantify the expected benefits they will receive by adopting such a solution.
This calculation should include both short-term and long-term analyses to gain a comprehensive idea of how this IoT system will positively impact its operations over time.
By calculating savings that may be gained from increased efficiency due to reduced labor hours, shipments tracking accuracy, as well as reduced costs associated with more effective asset management, businesses have the ability to accurately measure the value added by an IoT asset tracking system.
Additional quantifiable benefits to consider include the following:
- Improved Customer Service: By providing real-time visibility into asset location, you can ensure that your customers always receive their orders on time. Additionally, by using real time data to optimize your delivery routes, you can reduce delivery times and improve customer satisfaction.
- Enhanced Security: By tracking the real-time location of high-value company assets, you can ensure they are always properly secured and lower costs related to shrinkage. Additionally, by monitoring your assets, you can identify potential security risks and take steps to mitigate them.
- Meet Regulatory Compliance: Adopting an IoT asset tracking system can help to ensure that your assets are always in compliance with safety regulations. Additionally, by using asset tracking data to monitor employee behavior while working with these assets, you can ensure that they comply with all relevant laws and regulations while ensuring workplace safety.
- Greater Insight into Business Operations: Many IoT asset tracking solutions today provide advanced analytics and custom reporting that allow you to identify trends and patterns that would otherwise go unnoticed. This information can be used to make informed decisions about how to improve your business processes.
- Competitive Advantage: Finally, leveraging IoT technologies can give you a competitive advantage over businesses that do not have such a system. For example, by using collected data to optimize your operations, you can improve your efficiency and cost-effectiveness relative to other businesses.
Evaluating Your Expected Timeline For An IoT Asset Tracking System Deployment
Lastly, when calculating the expected return on your investment in an IoT asset tracking system, it’s important to consider the full timeline of the project. Be sure to account for the following:
- Implementation Time: Asset tracking implementations can typically be up and running within a few weeks, depending on the complexity of the system, but you need to make sure the system you select will be able to meet your intended expectations.
- ROI Timeline: The ROI timeline for asset tracking technology varies depending on the size and scope of the project, as well as the type of assets.
Additionally, you should build a timeline that factors in potential disruption while transitioning into this new system and be realistic in your expectations of when these benefits will be realized.
Doing this work in advance will help you understand when you can expect a positive return from your investment in an IoT asset tracking solution.
Tips For Maximizing The ROI Of Your IoT Asset Tracking System
When it comes to getting the most bang for your buck from an IoT asset tracking system, there are several steps you can take to maximize your ROI net gains.
Start with ensuring that all the collected asset data is being properly utilized and does not sit idle in any place. If the solution you select does not offer advanced analytics, make sure to outsource resources when needed, such as analytics experts, who can turn this data into tangible insights that empower managers to make better-informed decisions.
Additionally, be sure to select a system that leverages physical asset tags such as RFID tags or BLE beacons that do not require a line of sight to be scanned, which will automate faster processes while recording highly accurate information that helps to track assets.
Lastly, make sure the IoT asset tracking system you select is fully integrated with your existing infrastructure and ERP systems, as this will ensure that you can take full advantage of the asset data you are collecting.
By taking these steps, you can be sure to see a significant return on your investment when it comes to an IoT asset tracking system.
See Immediate ROI With Radiant’s Infrastructure-Free IoT Asset Tracking Solution
From the beginning, working with Radiant is cost-effective and lets you see ROI immediately.
Our IoT technology can prevent costly compliance fines and provide you with the real-time visibility needed in order to maximize your asset investments.
In addition, our infrastructure-free solutions give customers cost savings from the onset by leveraging existing devices rather than requiring the purchase of new hardware. This also makes for easy and affordable scalability.
Moreover, Radiant’s IoT asset tracking platform is user-friendly, helping to keep implementation timelines to a minimum, and allowing your team to start seeing benefits right away.
Ultimately, Radiant’s full-stack asset tracking solutions provide customers with access to reliable data that informs decisions and produces meaningful ROI.
Request your demo below to learn more about how Radiant’s IoT asset tracking solutions can help you realize immediate ROI.
Last Updated on January 25, 2023 by Radiant