Product IoT in an SME: creating a sustainable profit and loss account


The addition of connectivity to products that are brought to market thanks to IoT technologies is an extremely topical issue. In our experience, in fact, several SMEs are structuring themselves through internal and external expertise in order to equip their product range with connectivity.


First of all, depending on the type and shape of company, the benefits and motivations may change. Some ways to leverage usage data can be:

  • better understand the nature of demand and customer needs
  • offer additional/new services
  • optimize maintenance operations
  • be competitive to adapt and change your business model in the future


Conception of the initiative

Creating a connectivity platform for a manufacturing company is in itself no different than creating a startup, going from conceptualizing a prototype to go-to-market with a scalable structure.



In the initial stages of platform conception and development, the company generally turns to its internal technology contact. The IT department starts working on the conception of the prototype and joins a pool of internal and external expertise to create the platform:

  • hardware production: component selection, custom board assembly/selection of standard modules...
  • development skills: firmware, app, server, web portal...
  • Third party services: choice of providers for connectivity and communications, security, customer service systems...



Consolidation of activities and increase in quantities

Once the prototyping phase of the platform has been overcome, which presents an architecture of a certain complexity, the focus begins to shift to the organization side.

  • it is necessary to provide for the constant management and updating of a complex technological infrastructure
  • the management of suppliers becomes more critical because they are extremely different in nature from those with whom the purchasing office is used to talking. In particular, the relationship with the hardware manufacturer is always critical.
  • the management of new services (e.g. subscriptions and renewals) through a dedicated process and related customer care should be considered

The activities necessary to maintain and develop the IoT platform physiologically begin to "propagate" throughout the organization by leveraging work hours from different departments and levels of hierarchy. It should be noted that this sort of "diffuse organization" that has been created carries out activities that are different in type, dynamics and priority from those of the parent company.



In a startup IoT-based initiative in the lap of an established organization, the operations and execution risk of the initiative will go up exponentially as the number of pieces in the market increases



It is therefore advisable, just before the quantities are put on the market:

  • mapping the activities related to the IoT initiative
  • decoupling the growth in required activity from the growth in quantities placed on the market
  • unbundling these activities from the parent company's business and bringing them under a dedicated business unit



Following this procedure, it is possible to optimize the absorption of the costs of the initial development of the platform in the context of the existing organization, and then to go and unbundle the activity when it can be linked to a sustainable business unit income statement, appropriately synchronizing the timing with the go-to-market of the (new) connected product.

The entire process can be facilitated in its phases by the adoption of an organizational/documental framework that allows you to take advantage of the incentives available to companies that engage in innovation projects, which I have written about in this article.


If you liked this article, then you'll appreciate Quodigi's support: we provide consulting and advisory services on web strategy and digital transformation. We have developed IO, the web intelligence platform designed for business decision makers. Learn more about what we do to support your company in its digital growth!


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Ernst Vittorio Haendler
Ernst Vittorio Haendler
Following a degree in Aerospace Engineering and some work experience in Italy and abroad at the European Space Agency and then in the technology intensive sector of Aerospace & Defense, he starts his entrepreneurial activity in 2012 founding the startup Beast Technologies following all aspects from vision, conception and execution of a digital business, raising funding and bringing to market a new product currently sold in 35 different countries through web channel. Following this experience, Ernst-Vittorio joins Quodigi as a Partner in 2017 bringing his vision and experience in business modelling, project management and technology intensive teams, and dealing in the broadest sense with all aspects of business development on the digital plane.
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