When developing IoT products, it's not the cost, it's the value
When engaging in a new IoT product strategy, it is important to evaluate the options for developing new products. This is especially challenging for companies that have not created smart connected products in the past, as they may need a mix of skills outside their normal core competencies. These required skills could include new expertise in wireless communications, cloud-based infrastructure, analytics or mobile device software. Even when the company has the necessary internal skills, often those internal resources are already committed to sustaining its current products.
So, what are the options for realizing the vision of a new IoT product?
Internal staff expansion
This is an option many companies will consider. However, in today’s job market, there are two big issues. First, there is extreme competition for talent in the current economy, with the engineering unemployment rate running between 1.5 and 2.0%. At this unemployment rate, it could take months — or longer — to find and recruit the needed experienced talent. This could severely delay the start of any new project. In addition, skill sets required for IoT product development are in uniquely short supply, such as hardware engineering, wireless and RF communications expertise.
Likewise, expansion of internal staff implies a longer-term commitment to employment. If you need to build a team rapidly, what happens to those direct staff members when the project ends? Will the company be overstaffed? Scaling back often involves a personally painful process and often, with the offering of severance, a tail-end expense to reducing team size.
Recruitment of temporary staff
It’s common for companies to engage temporary staff to satisfy bandwidth and skill needs. In more of a “buyer’s market” for temporary talent, there can be a large pool of technical staff available that can be hired by the hour to help supplement an internal team. When engaging temporary staff, internal staff will be needed to interview candidates, bring them up to speed, equip them with the tools of the trade and manage their activities. It is not just the hourly cost of such staff — by the way, hourly costs for experienced temporary help are quite inflated in the current job market. As such, bringing on even one temporary person will require some incremental managerial bandwidth from the client’s internal team. The company takes responsibility for the work and workmanship of the temporary team members’ work. And any mistakes along the way are simply paid for by the hour. Nobody stands behind their work.
Engagement with a product development firm
Many companies benefit from engaging with a highly skilled product development (PD) professional services firm. An engagement of this type offers significant benefit to the company:
- A PD partner comes to the table fully staffed ready to start immediately. Of particular value, a PD partner expert in IoT products will have the unusual and diverse skills needed for end-to-end system development, including both hardware and software, as well as user interface and experience. It comes to the project ready to start rapidly.
- A PD partner’s team is fully equipped with test equipment and more. There no need to go out and procure incremental things, like new computers and software; the PD partner’s team is already equipped. It may also have its own test lab and prototyping capabilities so as to not need to draw down the company’s capacity.
- A PD partner takes responsibility. A well-chosen PD partner will assume the responsibility for the quality and workmanship of the team. While the company will need to provide oversight to the PD partner, it takes responsibility for its work and does not require daily supervision or onboarding.
Engaging with a product development professional services firm is a practical option that requires minimal ramp up, consolidation of responsibility and the ability to rapidly engage in realizing the new IoT product vision. There is a cost for such an engagement and is not inexpensive. The question is not the cost, but what is the value of achieving the goal?
Certainly, the cost of a PD firm, on an hourly basis, is likely higher than simply engaging temporary staff, though not always. However, when the overhead of finding and managing temporary staff is considered, the true costs are more than the hourly rate. It is tempting to compare hourly cost of an internal team versus a PD partner. The true cost of an employee is more than just their annual salary divided by 2080. When adding the direct additional costs, such as tools and health insurance, plus burdened indirect costs, including administrative and facilities, the cost of a PD firm may actually be lower than the company’s own cost.
When it comes to IoT product categories, focus on the value of the new product or service and not just the cost. While cost is important, what is the benefit to be garnered from the new product or service? A product development professional services partner may be the right answer to jumpstarting the realization of opportunities.
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