At Ayla, we talk daily to Manufacturers across a slew of product categories that are in the process of developing their next generation connected products. Controlled by smartphones and tablets, these products are typically fast-tracked for development thanks to competitive pressures from disruptors such as Nest.
For some Manufacturers early in their product planning, the decision of how best to integrate the new connectivity, automated analytics, and mobile control capabilities into them has not been decided. For these Manufacturers, the decision dilemma is whether to develop all of these platform technologies in-house or partner with an Internet of Things (IoT) cloud solution (like Ayla)?
As with any make vs. buy decision, there are several important factors to consider, such as:
- Expertise of the existing Development Team, and recruitment/retainment of any skill set gaps
- Development time to market (which includes development risk)
- Future flexibility to evolve functionality (which includes future scalability to handle large scale deployments as product demand accelerates)
- Overall investment (i.e. upfront and going costs, which includes labor, facilities, development systems, etc.)
IoT is often referred as an interdisciplinary field because there are many different technologies that must come together into a cohesive end-to-end solution that makes a great smart-connected product. Those technologies include: embedded wireless to Internet connectivity, cloud infrastructure (servers, storage, back-office software), mobile application (operating systems, GUI design), and finally overall platform design for security, supportability, scale, and more.
To do all of these well, an in-house development initiative requires assembling a team composed of:
- Embedded device communications engineers
- Cloud infrastructure architects
- Data analytics analysts
- Mobile application developers
- Quality Assurance (QA) engineers
Depending on the size of the project, let’s assume the hypothetical of two engineers for each of the aforementioned types, or 10 engineers total. Assuming an annual fully burdened cost of $150K per engineer and $300K upfront costs in facilities and development equipment (amortized over three years), the total investment for in house development and ongoing support is nearly $5M. Obviously, our various Manufacturer customers have different cost models, but you get the idea of overall investment with this simple example.
The primary perceived benefit to develop an IoT platform in-house is to retain full control of resources with the assumption that the Manufacturer will innovate and create competitive advantage by doing so. On the flip side, the potential drawbacks of this approach are: high upfront investment; increased schedule risk as the development team is assembled and comes up to speed with the technologies; retainment of the development team as the platform needs ongoing support; challenges to develop a platform for scalability at day one that can also handle an unknown future demand; and opportunity cost of investing development resources into other areas.
Now compare all of this to what Ayla and its
IoT Cloud Platform provide.
The table below summarizes the comparison of the approaches within the Manufacturer’s Dilemma:
Given the comparison above, more and more Manufacturers are realizing now that there’s no longer a dilemma. In fact, Ayla’s best customers are often Manufacturers that initially start with an in-house development approach, come to the same aforementioned conclusions on their own, and then transition their products to the Ayla Platform.