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Make or Buy? Key questions to ask before implementing your IoT strategy

July 1, 2020

During various conversations with prospects that we converted into clients, there was a common thread noticeable. Going digital follows in general a three stage process 


  1. Management decides that the company should come up with a digital strategy
  2. Through numerous iterations (depending on clarity and viability mostly) the digital strategy is defined and takes shape
  3. Tech teams are tasked to define the product or service that should eventually be at the core of the strategy

This process may take anything up from six months to a few years. When you arrive at the third stage, you are likely to begin with researching what is in the market already, how is competition doing and do you have to start building everything from scratch or is already something out there you can build upon.  

But while doing your research and scouting technology, management’s impatience may sooner or later manifest by asking where we’re at with a first prototype and what is the timeline for product development.  

There are two potential options to choose from: Either you build the product or service with inhouse resources yourself or you bring on a partner that can help building your digital product or service.  

» Option 1: Make

You certainly know your team, its skillset and capabilities well. That gives you an advantage over external partners as you know what you can expect. Managing expectations and aligning them with capabilities and time restrictions is very important in order to build a great product. If this is not done at all, you may have to deal with a disconnect between management and development teams resulting in tensions and frustration.  

For that reason, communication within a team, among other departments or with management is essential. Setting up this communication with an external partner helping you to build your digital product requires more effort in the first place. In any way, the communication piece should go hand in hand with project management. Either within your organization or if pulling in external partners, you should rely on software tools to communicate, organize and assign tasks as well as to track and document progress. A big advantage is also that these tools allow to measure progress, efficiency and many other things helping to benchmark or even to improve performance.  

Among the most critical pieces is the product vision. Once set, all the work from development, product management, marketing, etc. will focus on achieving the vision that has been set out. Therefore, it is crucial to think it well through in the first place and to only adjust it if you realize halfway that major goals of the digital strategy cannot be accomplished (like entering new markets, gaining more customers).  

As your management lays out the strategy, it is useful to continuously update and align (e.g. through milestone meetings) on what the company wants to achieve with their digital products and services and where you at in the process. Working within the same organization is creating an advantage as synching (and potentially taking corrective measures) can be done easier than with external partners. 

Being in the know of what your team can do, how to set up communications as well as managing expectations inhouse and aligning with management on a product vision are all things that speak to MAKE your digital products and services inhouse.  

» Option 2: Buy

Doing everything by yourself can be rewarding but it also creates some challenges you should be aware of as they may become obstacles for implementing your company’s digital strategy.  

Building (and operating) digital products and services require a broad skillset from frontend to backend developers, UX designers and DevOps engineers.  And this is just the technical part. There are likely people from project and product management as well as consulting involved as well. If you don’t have the necessary resources to pull it off, you need to start hiring them. Given that the market for people with this kind of skills is quite competitive, it may take a while to ramp up everything before you can kick off product development.  

Once you set the product vision, define your roadmap and start with the actual work, you may realize that in order to substantiate the product vision, it may take more than you actually thought it would. The workload can easily be overwhelming, especially if it is the first time you are building a full stack product (like everything from edge to cloud, with backend, frontend and so on). This is a ton of work to build. And once it is built, you need to maintain and support the stack. Depending on how elaborate your digital product will be, you need to make sure that it works 24/7. Because downtime literally kills digital products and services. If your product is unavailable due to reasons like server issues, faulty updates or scalability issues (to mention just a few), you may end up with no one using the product you have built over the last couple years. 

Lack of domain expertise is another roadblock that may not seem obvious in the first place, but surely strikes you, once you get into the development process of your digital product. There are many traditional companies out there that want to participate in the digital economy and ask their IT department to help, since they are usually dealing with software, hardware and all the tech-related things. But is IT the go-to department? Well yes and no. Of course, the people working there understand technology and depending on their interest also know about IoT or Industry 4.0. Does this qualify them as subject matter experts that can build digital products? Not really, even though some might be enthusiastic about it and begin prototyping.  

But the set of skills necessary to build a distributed tech stack that connects to industrial assets enabling to address industry specific use cases is not something you can get off the shelf. Even though, the solution stack features standardized components like databases, protocol adapters, APIs, dashboards and message brokers, bringing all those things together and tailoring it to (industry) specific requirements is a job that requires experience and an understanding of two worlds: information technology (IT) and operational technology (OT). The latter refers to knowledge about electrical engineering and automation which is required for the sensor and PLC / machine part. Skills and experience from the OT side is key to fulfill this equation: IT+OT= IoT. 

Standardization and Interoperability are key factors for success that every digital product should follow (unless you want to build and use it only inside your own organization, but even then it may makes sense to adopt it). That means development needs to know and incorporate what is considered “standard” in the market, because if not, you may face a situation where you have finished development, but sales won’t take off, because the product or service requires further integration or specific training in order to be used.  

Since IoT and Industry 4.0 solutions are fairly new, standards are yet to be established in that area. However, there are some initiatives underway (like for OPC-UA) or there is some consensus about the use of certain protocols (e.g. MQTT) and APIs (e.g. REST) as the de facto standard. Why is this important? Well if you want your product being widely adopted in the market and to ensure that products of other vendors can seamlessly work with yours (without the hassle of huge and expensive integration projects), it makes sense to follow standards ensuring interoperability. Given that your (potential) clients already use products and services from other vendors, they are not likely to rip out and replace it unless something is not working (at all). They usually require to keep their systems untouched (especially if they are mission-critical) and that your product works along with them. You got to know what is standard (as there are so many official and de facto standards out there) in the market, and how to ensure interoperability as those are key factors for a successful roll-out.  

Another critical element is to build enterprise-grade products and services. Especially if you aim for large-volume and big clients, this is a must-have. That is a tough one as it combines elements about scalability, stability, security, resilience and long term support. Building blocks can include large-scale provisioning and deployment features, a fast and scalable backend ensuring that massive amounts of data can be handled and also securely stored in highly performant databases, a responsive frontend with a variety of visualization options and a suite of connectors and protocol adapters enabling you to onboard and process data that your users need to work with. Building and maintaining all of this is critical to ensure uptime / availability of your products, a great user experience as well as to fulfill SLAs you may have negotiated with your customers. On top, an enterprise-grade product or service needs to come at a level of quality that your customers can rely on and that ensures trust in your brand. 

If none of the above feels challenging in any way, then you should go ahead and start developing inhouse as it seems you got everything it takes to successfully implement the digital strategy of your company 

For everyone else, you may consider going the BUY route by pulling in some professionals that are specialized in building and delivering the building blocks, which serve as a solid foundation for your company’s digital strategy. You would also enjoy some additional benefits like 

  • Faster time to market 
  • A high degree of standardization ensuring scalability and reliability across your organization   
  • Customization as per your requirements  
  • Best practices incorporated into the platform and consulting based on long standing experience 
  • Specialized support and DevOps 
  • Lower overhead costs for development and support infrastructure 

» DECISION TIME 

Once you have put together your pros and cons list and factor in things like budget and time restrictions, you are ready to take action and decide, which way is right for you. The arguments presented above can be helpful to guide this decision. However they are far from complete and reflect only experiences we as a company have made throughout the years. But in any case, it is useful to be aware of how the journey of developing digital products and services can look like and what roadblocks you need to clear in order to be successful.   

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