Forbes recently posted a fun article talking about return-on-investment (ROI) and how it can derail otherwise useful projects. This got us thinking about how this issue relates to adoption of digital initiatives, and whether companies are holding themselves back by placing too much emphasis on a single metric.
Do ROI Concerns Interfere With Necessary Digital Upgrades?
To be clear, ROI is certainly an important and necessary part of corporate budgeting and planning - but it shouldn't be the only metric of concern. As the article points out, no one questions the value of basic tools in their workflow. No one demands to know the ROI of network security, or sturdy work boots, or basic maintenance tools. Such items are accepted as necessary because their lack would cause numerous problems.
However, when it comes to digital upgrades, C-level executives often get cold feet and start asking for hard data on what the ROI of the upgrades could be. This can often be difficult or impossible to calculate precisely ahead of time, since there are too many variables which could only be resolved through detailed planning and implementation. Also, since industrial value chain upgrades are usually bespoke and unique to each business, even existing case studies may only be able to point at cost savings, without being able to provide specific details.
In short, it may be a case of 'letting the perfect be the enemy of the good,' and expecting more data than could be realistically offered. Instead, there are other ways that those proposing automation or AI upgrades could pitch the issue.
How To Make The Case For Next-Gen Industrial Upgrades
1. Cite existing examples
The oil and fossil fuel industry has been one of the first to adopt Industry 4.0 ideas on a widespread basis, and the overall results have been extremely positive. These upgrades are seen as driving growth in the industry, as well as substantially reducing downtime. Industries are finding that automation upgrades are excellent for enabling preventative maintenance, and warning of other upcoming problems, which allows the issues to be resolved with far less disruption than in previous workflow models.
2. Emphasize Opportunity Costs
It's easy for a reticent executive to fall back on "if it isn't broken, don't fix it" style arguments that since their operation runs acceptably well without digital upgrades, it isn't needed. Challenging this mindset is key. Dig into numbers relating to downtime, lost productivity, and part replacement costs. Make the case for how these numbers can all be substantially lowered through an embrace of advanced robotics and AI oversight. Even if ROI cannot be determined precisely, strong arguments can be made for overall cost-savings.
3. Leverage FOMO
While it's arguably overused in modern marketing, the Fear Of Missing Out - FOMO - is one of the single most effective ways of talking people into making changes or upgrades. Adoption of Industry 4.0 technologies is accelerating, and quickly. You probably won't have to look hard to find examples of companies in your industry, or adjacent to it, which are already adopting these new technologies. They are reaping the benefits, while your company gets left behind. For executives who care about their standing in the industry, this can be a powerful argument!
LogicBay Makes Industry 4.0 Upgrades Go More Smoothly
"Those agonizing over ROI need to ask themselves if they’re falling into the trap of worrying that something is a “fad.” Every world-changing innovation has likely been accused of being a fad at some point. But perhaps you should be less worried about ROI and instead look at other factors like availability, productivity and opportunity cost."
For more than a decade, LogicBay has been helping industrial ecosystems of all sizes grow and improve through better communications and collaboration. We can help shape your business into a lean, agile operation, no matter its size!