Three Reasons Enterprises Invest in IoT

Nugeen Aftab
Nugeen Aftab | 5 minute read

Even though the concepts behind IoT have been around for dozens of years, companies in the past have been hesitant to work specifically on IoT initiatives. Despite the hesitance, IoT is helping to keep many industries and businesses alive. Enterprises of all sizes are adapting and starting to incorporate IoT into offerings and operations. If you look closely, you will see how companies connect products to and receive data from the Internet without even knowing that it is IoT. This is because IoT is a technology shift, not an industry, and therefore has a vast number of applications.


We get quite a few customers that understand they want to implement IoT solutions, maybe as a part of a digital transformation, but they're not sure in what capacity. The questions we always ask are, "If you could have any data about your assets, what data would that be, and what would you do with it?" Their response helps us determine their line of business goals and the best ways to meet them.

A company could look at a condition-based monitoring maintenance project to reduce operational costs, but it's also possible for them to be creating new product lines that can increase revenue. For that reason, it's not possible to focus solely on one part of a business when looking at IoT.

So let's explore why companies invest in IoT solutions. Ultimately, there are only a few overarching reasons that companies implement new technologies: to increase revenue, to decrease costs, or to mitigate risk.

Let's dive further into each.

Increase Revenue

When companies are looking to increase revenue, there are a couple of ways they can approach the challenge at hand: they can gain more customers, renew and expand orders from happy customers, or up-sell to current customers with different offerings. For many companies, these can be achieved by incorporating IoT into new or existing product lines.

For product manufacturers, staying ahead of competition is key to gaining customers. Product differentiators can make a sale and turn customers into advocates. This is why many OEMs look at IoT as an avenue for product innovation.


The IoT sensors integrated with John Deere's tractors do all of this for them automatically, making the farmer's life more efficient. On the flip side, by recording this data, John Deere can learn more about its users' habits and adjust its products leading to happy customers that will continue to buy as they grow.

By doing this, John Deere's customers are much happier and will continue to buy from the brand. Customers in the market for a new tractor may see this as a must-have feature and will therefore buy from John Deere. In fact, some customers like these capabilities enough that they're willing to pay for them, with the onetime activation fee John Deere requires per tractor for the application and associated services. This value-add created an additional revenue stream for John Deere.

Reduce Costs

Cost reduction is a common high-level initiative at companies of all sizes. Many times, the most measurable cost reduction exercises happen in process improvement, especially in product manufacturing. There's a reason there is an entire field dedicated to it: operations management. IoT can be beneficial, especially on the factory floor, in distribution, supply chain, or for logistics uses. Increasing machine uptime, more efficiently moving and managing goods and resources, and improving quality are all ways companies can decrease costs.


It's not just industrial settings that are looking at automation to reduce costs. A smart campus certainly uses IoT for cost reduction, from building operations to resource optimization. An HVAC system within a set of buildings can be monitored and serviced for increased efficiency. If air quality goes down, a service technician can be dispatched to get to the root of the problem. Usage of spaces can be monitored, and airflow can be optimized to not only reduce costs but also to provide a better experience for employees and guests. As those employees and guests move from area to area, heating/cooling can be adjusted, and light can be turned off in idle rooms—all resulting in energy efficiency.

If this same company provides perks to its employees, usage can be monitored. Is food provided in the cafeteria? Based on consumption patterns, less food will be wasted. Are bathrooms well-stocked? Maintenance resources can be re-routed on the most efficient path based on usage. Once understanding space utilization of shared spaces and utilization of employee perks, amenities can be opened and closed, and perks restocked based on traffic flow.

Mitigate Risks

Another major reason companies use IoT to solve challenges is risk mitigation. Some concepts to reduce risk are dual-purposed. Product delivery improvement reduces costs and also keeps customers happy, which guarantees a steady flow of cash. There are uses for IoT, however, purely to mitigate risk within a company's operations, like focusing on employee/talent satisfaction or physical security in company-owned spaces. Initiatives around employee satisfaction can include better space utilization or creating "smart" spaces for talent to interact with. In emergency situations, facilities staff may want a simple way to ensure that all people have vacated a building. Or, daily, they may want to make sure that restricted access areas are being accessed only by appropriate staff.


A risk mitigation initiative we've seen quite a lot of amidst the pandemic is social distancing and contact tracing. For companies that rely on in-person output, maintaining a safe workspace is crucial. Employees need to feel safe at work, so they continue to feel supported by their employer and continue to produce output.  A COVID outbreak in a facility can be both a health & safety and public relations nightmare. With fewer employees in physical spaces, there's also been an uptick in lone worker use cases. Monitoring employees' safety in hazardous situations has increased priority when, because of a reduced workforce, they're in spaces all alone. 

Aside from employee safety and related PR risk mitigation, a COVID outbreak in employees could be harmful to top-level revenue. A retailer whose e-commerce business has increased, for example, relies on its distribution centers and warehouse operations more than ever. If an outbreak occurs within a distribution center, less product is turned around and delivered to (at this point) unhappy customers.

To read more about social distancing with IoT, read Aidan Zebertavage's blog post. You can also learn how our engineers implement contact tracing with IoT using Losant's application enablement platform in our Contact Tracing Deeper Dive.

A Technology to Rule Them All

IoT can seem complex because of the many disciplines used to create a full solution. The upside of this, however, is that this allows IoT to be utilized in so many industries for a plethora of solutions. Ultimately, companies use IoT for three main reasons. Companies look to create new or expand old product lines to increase their revenue, they try to increase operational efficiency to reduce costs, and they look at safety-increasing measures to mitigate risk.

To learn more about projects Losant has helped with, look at our case studies. Or dig into Losant's tools through Losant University.