How to Plan an IoT Pilot Project - Execution Options

You’re sold on IoT and its benefits for your business. But where do you start? An IoT pilot project is a great route, but there are many ways to pursue one.

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IoT Pilot Project

One of the challenges of getting started is that IoT technology and its Applications are still evolving. In this environment, it’s advisable to start small with pilot IoT Applications projects, experiment, build prototypes, and then expand as you develop IoT expertise.

While there’s a lot of information on the technology behind IoT, case studies, and visions of what it can do, there isn’t a lot of practical content on what you need to get started today.

How to Plan an IoT Pilot Project - Figure 1
(Image credit: Strategy of Things) Figure 1: IOT Innovation Approach

What Are My Options for an IoT Pilot Project?

There are five approaches to starting an IoT pilot project. Your specific situation will determine which of these are applicable to you. These options are:

  1. Internal Part-Time Project Team
  2. Internal Dedicated Project Team
  3. Internal IoT Lab
  4. Vendor IoT Lab
  5. Independent IoT Lab

These options assume that you’ve already identified a list of IoT Applications, and have the budget to build a prototype as a pilot project.

How to Plan an IoT Pilot Project - Figure 2
(Image credit: Strategy of Things) Figure 2: Applications Build Out Models

1. Internal Part-Time Project Team

This model consists of a small pool of internal part-time resources that are assigned to the pilot project. External consultants may be included to supplement the team capabilities as required.

This strategy is ideal for organizations that don’t have time constraints and/or don’t have funding to support full-time resources. Managers use this approach to get the data to justify a larger and more ambitious IoT Applications effort. The part-time resources typically spend 10 to 20 percent of their time per week on the IoT pilot project.

One disadvantage of this strategy is the longer time required to complete the pilot project. Without a firm schedule, these projects tend to get pushed out.

In addition, at this early stage, internal teams often lack IoT expertise and the right tools and infrastructure to successfully build and test pilot projects. Some of this can be mitigated with focused innovation and IoT training or by leveraging external consultants as subject matter experts (SME) to guide the project team.

2. Internal Dedicated Project Team

This approach consists of a small pool of internal resources who are dedicated full-time to the IoT pilot project. External consultants may be included to supplement the team as required.

This model is ideal for organizations with specific Applications applications, committed project timelines, and appropriate sponsorship and budget for dedicated full-time internal resources.

The main difference between this model and the part-time model is the higher level of management commitment. In this model, you have a higher level of internal expertise, supporting data from earlier pilots, or a very specific Applications that needs to be addressed.

The success of this strategy depends on the expertise of the internal resources assigned to the project. Similar to the part-time resources model, this team would need its own set of tools and infrastructure to successfully build and test out the Applications. External consultants and SMEs may be required to supplement the team’s expertise.

3. Internal IoT Lab

This model consists of a dedicated team of resources and infrastructure set up specifically to focus and pursue IoT projects on a wider scale. This team supports one or two large projects or multiple smaller projects.

This approach is ideal for organizations with an established corporate innovation lab, and those committed to building long term IoT capabilities to exploit future opportunities. The knowledge gained is shared with various teams across the organization. This model requires executive sponsorship and a more generous budget allocated to the IoT Lab structure.

4. Vendor IoT Lab

This model involves partnering with an IoT platform vendor (e.g. Microsoft, IBM, GE, etc.) who has a lab to help your organization build out Applications. This model includes having a hybrid model of either part-time or full-time dedicated resources who work very closely with the IoT vendor resources.

The vendor IoT lab provides most of the infrastructure and processes. You access the lab remotely or physically through the vendor facility. Your specific access method will differ depending on the level of engagement and the stage of the Applications build-out process. This model assumes that the vendor provides a significant portion of the expertise and resources.

One major disadvantage with this model is that you’re locked into the vendor’s solution ecosystem suite with limited options to test alternative products that may be a better fit. It’s also likely that you may have to use their preferred resources and/or integration partners for downstream implementation efforts.

5. Independent IoT Lab

This model involves partnering with an independent IoT Lab vendor who isn’t a solutions vendor. This approach provides the advantages of the vendor IoT lab model with the flexibility to work with multiple vendor solutions that best fit your needs.

The Independent IoT Lab vendor offers multiple solution models for you to choose from. They have a SME network with both breadth and depth to cover a variety of Applications. This is ideal for those organizations with very industry or solution specific Applications that the vendor labs may not have the capabilities for. This model assumes that the lab provides a significant portion of the resources, expertise, and infrastructure.

Which Option is Right for Me?

Depending on your specific situation, some or all of these approaches are available to you. How do you narrow down which options are right for you?

Start with the following six criteria to help you assess and evaluate your options:

  1. Cost to Pilot IoT Applications
  2. Availability of Dedicated Resources
  3. Access to IoT Expertise/SME Network
  4. Access to IoT Infrastructure/Tools
  5. Flexibility to Assess Multiple Vendors
  6. Speed and Agility to Pilot Applications

The table below provides a framework to map the 6 criteria/considerations against the 5 models discussed to help you narrow down the options best for your organization. Start with this framework and customize it to your needs, culture, environment and circumstances.

How to Plan an IoT Pilot Project - Figure 3
(Image credit: Strategy of Things) Figure 3: Criteria to Assess Applications Build Out Models

Practical Considerations to Guide Your Decision

The six criteria shown above is a general list. Consider adding additional criteria, such as culture, strategic goals, internal capabilities, and your past experiences to this list. This will allow you to create a set of criteria that’s specific to you.

Speed, Expertise, and Risk:

If your goal is slow, incremental research that steadily moves the needle, then your best option is to use the “Internal Part-time Project Team” model or the “Internal Dedicated Project Team” model.

The “part-time” model is ideal if you want to build out your Applications in a lower risk environment or want to do something with minimal resources.

The “dedicated” model is ideal if you have a firm idea of the IoT Applications and a specific problem to solve.

The internal project team approach is a good fit if you or your team have some expertise in innovation management and IoT.

The lab model (internal lab or external), is ideal if you don’t have the expertise, or want to innovate faster. It’s less risky in that the lab provides the processes, infrastructure, and expertise. However, this approach requires a larger commitment and more budget.

Within the lab model approach, consider setting up an internal IoT Lab only if your organization has the expertise, capabilities and past success in operating an innovation lab. Ideally, the IoT Lab is established within the corporate innovation or digital transformation center (if one currently exists).

If your organization has not set up a lab before, then you should select the “Vendor IoT Lab” model or the “Independent IoT Lab” model. Both these lab models provide the ability to ramp up your IoT efforts quickly without having to invest substantially in IoT infrastructure or resources.

Flexibility and Options:

If you’re already aligned with one of the major vendors with IoT solutions, it’s easier for you to leverage their lab for your pilot projects. However, you’re tied to their product suite and may miss out on solutions that may fit your needs better. With the lack of standardization and the continuing fragmentation of the IoT vendor market, it’s a good idea to keep your options open.

One advantage with the “Independent IoT Lab” model is that you don’t need to be tied to any one vendor and you can negotiate your desire to assess multiple vendors in advance. The “Independent IoT Lab” model gives you the opportunity to test multiple solution approaches using multiple vendors to solve the same Applications. This provides you with the ability to compare and contrast the performance of the overall solution prototypes.

Written by Renil Paramel. Renil is a Senior Partner with StrategyofThings and has over 20 years of management consulting experience on solving complex and strategic problems. Connect with Renil on LinkedIn or you can email him at

Guest Writer
Guest Writer
Guest writers are IoT experts and enthusiasts interested in sharing their insights with the IoT industry through IoT For All.
Guest writers are IoT experts and enthusiasts interested in sharing their insights with the IoT industry through IoT For All.