Innovation is at the heart of Internet of Things (IoT) manufacturing, but the companies that are most likely to succeed are those that know when to innovate and when to rely on proven solutions. While innovation is critical when it comes to launching a product that stands apart, it may be less beneficial when it comes to the routine running of your business.
IoT device management and billing software is a clear case in point. As IoT companies build a business around their device, there’s often a temptation to keep overhead low – and overly manual. Executives tend to wear multiple hats and may expect their people and software solutions to do double the work as well. As a result, many companies encourage their product development team to build business and product functions within the same software system that houses the intelligence behind their IoT devices.
It isn’t until companies begin to grow that they recognize the problems that arise from asking too much of their IoT device management and billing software, especially with subscription- and renewal-based billing models.
Unique challenges for IoT device and service models
Many IoT businesses quickly recognize that their greatest revenue generation opportunity comes through selling subscription services to support their device. Subscription services can generate higher profit margins than devices alone and spur repeat business. However, subscription services throw considerable challenges at the ease of billing and renewals.
Business management software solutions such as Salesforce CRM and NetSuite ERP may have offerings tailored to manufacturers and service providers but not necessarily for subscription-based device providers that bridge both categories. As a result, many IoT companies find themselves customizing business systems to meet these needs. It’s a natural next step to instead just build these functions into a product platform that is actually intended for powering your IoT devices.
In the startup phase, there may be no reason not to put multiple software solutions together into a single database. At this stage, leadership tends to focus on the product rather than the processes needed to support sales and business growth. The company may see this one-system, one-size-fits-all approach as the easiest way to move IoT devices out the door.
This ease is often a particularly important driver for IoT companies that seem to have few off-the-shelf business management solutions to meet their unique needs. And when a company has only a few customers and one way to sell their device, there likely isn’t a problem with taking this approach.
It’s not until a company begins to grow—when services expand, and subscriptions become more complicated—that the cracks begin to emerge as a direct result of having a product-integrated software solution.
Download 5 Critical IoT Company Mistakes That Limit Scaling & Growth
The need for dedicated IoT device management billing software
It can be difficult for any company to scale. As companies grow, it becomes more difficult for leadership to touch every project or respond to every client. With the increase in customers and personnel to support them, companies risk seeing diminished visibility into their product sales and financial data. Response to customer questions may lag. It may be difficult to find clear solutions to challenges. Reporting can become time-consuming and may face delays. It may be more difficult to pivot rapidly in response to competition. These challenges can be avoided by having business processes in place that support growth and the ability to scale.
This is a point where many companies see signs that it’s time to make the switch from Excel-based financial management to more sophisticated ERP solutions. However, IoT devices companies face unique challenges here.
First, it becomes tricker to update financial and other business management processes when those business functions are built directly into product software. Any update to one function or the other will demand intensive use of resources that could be more efficiently focused on product development. This is when companies begin to face the significant consequences of expecting too much from integrated IoT device management billing software.
In addition, few existing tools are able to easily manage subscription billing for IoT devices. This software solution must be able to align data around devices and subscriptions. Devices may be deployed at different dates than subscriptions begin, devices may need to be changed out over a single subscription period. Subscriptions can be paused, renewed, canceled, or changed to reflect another payment level. If the data isn’t aligned between device and subscription, from lead to revenue, then it’s difficult to demonstrate growth and effectively provide reporting.
Plan for the future
It’s difficult for a company focused on optimizing products to think about the business needs of the future. Long-term optimization may not be front of mind. However, if growth is a key part of your business goals, then it’s critical to put scalable business processes and systems in place at the very beginning. Otherwise, there will come a point where the cost and personnel need to update product and business functions may become detrimental, and business growth will lag. Decoupling your business and product software systems will allow flexibility in the future as products are updated and business models evolve. It will let you process each on their own cadence while mastering the subscription data separate from the device data.
This is where solutions like 360 Subscription Billing can help. By automating the subscription billing process through NetSuite, companies gain reliable, error-free reporting that easily scales alongside their subscription growth.