As a key decision maker of a scaling business that is seeking to embrace IoT, you might have faced the dilemma of choosing between a build v/s buy strategy w.r.t IoT Gateway Solution.
“Custom solutions are the trend in the market. Customized IoT gateway solutions will be ideal for you to achieve your business goals and increase ROI. You should go for customized IoT gateways” says some.
“You can never go wrong with the Off-the-shelf IoT gateway solutions – It is the tried and tested method already being used by your peers. “say others.
But in such a noisy and confusing situation, how do you know which solution is ideal for your business?
In this blog, we will do a comparative analysis between the two investment strategies for IoT gateway solution and help you choose the one ideal for your business.
Making That One Important Decision
More often, the key factors driving the businesses to go for a particular solution include:
- The implementation cost
- The return on Investment (ROI)
- How does it address your business challenge while being cost-efficient
In addition to these, before deciding and going ahead with your choice, it is important that you look into how each of the strategies fare when analyzed through important business and technical parameters.
Let us look at what these key parameters are.
Analyzing the Key Business Parameters:
- Per unit Cost:
- Ease of implementation:
- Closer to the Business Goals:
- Ownership of the IP Rights:
- Conditions Apply**:
- Time to Market:
- Need for an Expert Software and Hardware Team:
As a general rule of thumb, it has been observed that cost per unit of custom developed IoT Gateway is less than that of the off-the-shelf solution, only if the volume of IoT gateway units is very large.
Large volumes ensure that the overall BOM cost of the IoT gateway design reduce due to the bulk purchases from all the component suppliers. Production of large volumes of the IoT Gateway Units also results in per unit cost savings in form factor and also software/hardware development.
While the IoT Gateway devices bought off-the-shelf, in large volumes, would never be able to match such cost savings and per unit cost is most likely to be always higher.
In contrast to this scenario, let’s say your business decided to first develop a prototype of the IoT automation systems. In that case, cost per unit of the custom built IoT gateway solution is always going to be higher than the available off-the-shelf IoT solution.
Custom built IoT gateway solution will be developed by your IoT partner after considering all the use-case scenarios, your business automation goals, end-user challenges and the future scalability.
Such a solution will be more close to the ground reality and would have been developed by considering all the interoperability challenges that you may encounter during the deployment.
Contrary to the build strategy, an off-the-shelf IoT gateway device may throw up some surprises by way of the interoperability issues during system integration and deployments.
The custom developed gateway development is designed, prototyped, and developed following an iterative process of feedback and evaluation based on your business requirements.
Add to it the freedom to make changes in the product, that a custom developed option offers.
The off-the-shelf IoT gateway solution, on the other hand, will have a more generic design that may have been design for a range of industry domains (like Home Automation, Industrial Automation, Renewable Energy, Enterprise Battery Management and more).
Hence, a custom developed IoT solution is more aligned towards your unique business challenges and goals.
One of the biggest advantages of a custom developed IoT gateway is that as a business, you own the IP rights of the IoT Gateway product design.
This means that you can always reuse the existing product components to upgrade the IoT gateway hardware or software, scale-up your operations in future, by deploying more IoT gateway devices (at similar or lesser per unit cost) and have control over the regular firmware and security patch updates.
On the other hand, investing in the off-the-shelf IoT gateway product renders you dependent on your IoT gateway vendor, for these decisions and activities.
In the worst case scenario, the IoT gateway company may decide to withdraw the product support or for some reason is unable to perform the required upgrades or maintenance activities. All this can have a direct impact on your business operations.
Sometimes, an off-the-shelf IoT gateway vendor may try to cross-sell and bundle the IoT Gateway product with in-house or 3rd Party Cloud Hosting Services.
Such a bundled solution may not fit the bill in terms of both cost and features.
On the contrary, with a custom developed IoT gateway, you can choose a cloud (and other associated) service that best fits your requirement and cost parameters.
This is a no-brainer- The off-the-shelf IoT gateway supports immediate deployment and decommissioning. Hence the buy strategy ensures reduced time-to-market.
The build strategy, on the other hand, delivers benefits if executed as a long term strategic investment.
Once your business decides to invest in a long-term IoT strategy, it becomes necessary to either build in-house IoT software and hardware development team or partner with an expert IoT services provider.
This ensures that you achieve the desired organization goals and RoI.
However, if the decision is in the favor of ‘buy’ strategy and not ‘build’ strategy, that your organization may opt-in for support and maintenance contract with the IoT gateway device vendor. One can also build a small-size in-house team for maintenance activities.
The table below summarizes the points we have discussed so far:
| Key Considerations | Off-the-Shelf | Custom Developed IoT Gateway |
| Time To Market | Less, as the product is ready to be deployed | More, as it needs to meet all the customization requirement |
| Degree of ownership ( IP Rights) | Is majorly with the IoT solution provider | You are the owner of the final product design |
| Support and Maintenance | As per the terms and conditions of IoT Gateway Vendor | Can be negotiated and tailor-made before signing the contract. |
| Prototype Development | Best suited for prototype development using standard hardware and software components | Not feasible due to high cost per unit. |
| Competitive advantage | Lesser time to market, | Freedom to add features you like Include and pay only for the features that you need< |
Significant Technical Parameters to be taken care of:
While the above mentioned business parameters are quite applicable to off-the shelf vs custom developed solution predicament, what makes the scenarios unique are the technical parameters.
As a business organization looking to invest in an IoT solution, it is important to calibrate the following technical parameters and how well your business can adopt to these parameters:
- The Hardware:
- Communication Protocol:
- Compliance and Certifications:
- Form factor:
An off-the-shelf IoT gateway solution usually comes with hardware and peripheral components that are suitable for a range of use cases. This means for a particular function there might be multiple hardware features.
For example, an off-the-shelf might have multiple connectivity modules integrated on the board like Wi-Fi, Zigbee, 6lowpan, Bluetooth and more.
But it may happen that though you end up paying for all the features, but after deployment you only use handful of these functionalities
To avoid this, your business may decide to invest in a ‘build’ strategy. This would sometimes mean that you don’t have to spend extra money on hardware components for features that you might never use.
Please do note that now many off-the-shelf IoT Gateway vendors are also offering limited programming access. This enables you to configure and deploy functionalities that your project requires.
However, this might increase the overall development cost
The ready to deploy IoT gateway solutions that are available today support a number of wired and wireless connectivity protocols, such as ZigBee, Z-Wave, LTE, Thread, Wi-Fi, RFID etc.
Your specific IoT use-case may call for a more powerful connectivity protocol that is both reliable and secure, and can better communicate with the equipment within the network.
Also, you might need a combination of Northbound (Wi-Fi, LTE, and Ethernet) and southbound connectivity (ZigBee, Z-wave, LoRaWAN, Thread, Sub-GHz) options.
In such a case it is better to choose a custom developed IoT gateway solution rather than readily available ones.
The most important part of the IoT gateway development process is to get the gateway certifications (FCC/CE/IC) on time. There are also certain pre-compliance considerations that need to be considered.
This can be a bit challenging if you are getting the IoT gateway custom developed. You need to ensure every module that goes into your customized IoT gateway is certified.
You must also avoid instances of incomplete compliances and certifications which might affect your product deployment. . All these processes can be painstaking and lead to more time to market.
Meanwhile, the off-the shelf IoT gateway vendors most often have all these pre-compliance processes completed and they certify the product before releasing to the market.
The readily available IoT gateway has a fixed form factor. Hence you cannot expect it (the off the shelf device) to adapt and accommodate your specific requirements, if any.
With the custom made IoT gateway, you have the freedom to decide the form factor design. This is particularly important when your operating environment is open solar fields or if it is an enterprise-wide deployment.
“A ‘build’ strategy gives you the freedom to develop an IoT solution tailored for your project goals. On the other hand, with the ‘buy’ strategy you might have to be flexible with your goals in order to get the best out of the solutions available in the market.”
Sujith Vasudevan, Technical Lead, IoT
To conclude:
In addition to these technical considerations, it is important to identify your business priorities before making the decision. For this, you might want to ask yourself some important questions such as:
- Are ROI and cost savings more important for you?
- Are IP ownership and customized solution, the most prominent factors?
- Is a strong and secure network connection more relevant than using readily available options?
Once you have listed down your priorities and requirements, then it will be easier to make a decision that best fits your business context. It is also advisable to prepare an IoT development road-map so that all the stakeholders are in sync with the bigger picture.
