Buy or build: when are custom IoT solutions better than off-the-shelf?

Digitalisation plays a crucial role in the growth of many industrial companies. It allows the integration of different systems, devices, and machines to form a connected ecosystem that centralises all data and processes. An Internet of Things platform collects and analyses data in real-time, providing control over the manufacturing and operation of products and offering valuable insights for better decision-making or delivering better value to end customers.

Many companies undertaking digital transformation are faced with the choice of how to build an IoT system. When is the best option to buy an off-the-shelf solution, and when should you consider building a custom IoT system with custom IoT development services?

Features of an IoT system

As an IoT system covers a whole range of data points, production and operational processes, and connected devices’ or companion apps’ performance into a single platform, it must have a set of functionalities that ensure its relevance and usability. IoT software plays a crucial role in the development, deployment, and benefits of these applications, enhancing connectivity, data management, analytics, security, and user interface.

Here are some key components and functionalities of an IoT platform:

• Connectivity and network management. Ensures reliable and secure connection protocols for seamless communication between IoT devices and the platform.
• System integration. Offers APIs for IoT data utilisation within enterprise systems, analytical tools, or external services.
• Device management. Facilitates the registration, organisation, remote monitoring, and management of IoT devices, including firmware updates and troubleshooting.
• Data collection and processing. Collects and processes data from IoT devices, translating it into usable formats and managing the high throughput.
• Real-time data monitoring and notifications. Based on real-time data, IoT platforms provide immediate insight into system performance. If data exceeds thresholds or unusual patterns are detected, it informs users and stakeholders of important events.
• Analytics and intelligence. Employs advanced analytics and machine learning for insightful data analysis and predictive decision-making.
• Automation and control. Using real-time data and algorithms to automate tasks previously performed manually (i.e., managing warehouse inventory).
• User interaction. UX/UI offers dashboards, visualisations, and applications for users to engage with the IoT system, analyse data, and make decisions.
• Security. Implements security measures to protect the IoT ecosystem (data, devices, and communications) from unauthorised access and cyber-attacks.
• Scalability. A well-designed IoT architecture supports the growing number of new devices, processes, and volumes of data without performance loss.

Off-the-shelf solution or custom IoT service? Depends on the project’s complexity

There are two main approaches to developing an IoT platform: using ready-made software or building a custom system on top of cloud services. However, there is no one-size-fits-all answer. Each solution has its benefits and drawbacks, and those depend on several factors, such as the company’s business and technical requirements, the number and variety of digital products, or development plans.

Off-the-shelf software

The market offers an array of off-the-shelf IoT solutions, each with a suite of core features ready to deploy. These pre-built solutions provide advantages such as reduced initial costs and quick implementation, addressing the need for quick time-to-market.

However, they come with drawbacks, including limited customisation and, in case of a system’s growth and increase in complexity, high maintenance costs and scaling issues. As a user of the off-the-shelf solution, you’re bound by licence restrictions and have no intellectual right to the software, which might result in difficulties with systems extension, migration or functionality reusability in other digital products.

Off-the-shelf solutions often serve as a universal starting point for companies looking to enter the Internet of Things space. They also work well for IoT systems that are kept at a relatively constant level without frequently introducing new services or digital products.

Custom-made IoT platform

On the other hand, the “build” approach involves the creation of a highly customised IoT platform based on a company’s requirements, existing or planned products, development plans, or technology preferences. This path is a better choice than off-the-shelf for companies that seek unique feature sets, must need industry-specific compliance, or plan to scale up significantly by increasing the number of products or introducing new devices and applications.

Businesses that already have digital products and want to upgrade their IoT system may opt for ready-made solutions without considering the alternatives or the long-term implications. However, when faced with extensive projects that require a system that scales with their growth and evolves with their changing needs, custom IoT development is often the better choice over off-the-shelf software.

Custom IoT development – answering the needs of a comprehensive project

Custom IoT development might be preferable over off-the-shelf software in several scenarios where a project’s unique needs and complexities demand a tailored IoT solution. Here are key benefits a custom-made IoT platform can provide a company.

Customisation down to the smallest detail

When a business has unique operational processes or specific requirements that existing platforms cannot adequately meet, custom development can create a solution that perfectly fits these needs and helps automate processes.

Advanced integration and support for legacy systems

Businesses with infrastructure that require seamless integration may need more than off-the-shelf solutions. Custom development ensures that new IoT solutions work well with legacy systems, databases, ERP, CRM, or other specialised software, minimising disruption and maximising efficiency.

Unique features that offer a competitive edge

Companies seeking to differentiate their products or services in the market might opt for custom IoT development to offer unique features, better customer experiences, or innovative services that competitors using off-the-shelf solutions do not have access to.

One backend solution to support multiple devices and digital products

It is possible to build a custom IoT platform that routes all data from various devices and applications to a single backend. This architecture is more cost-effective and simple to maintain and allows for the relative ease of adding more solutions in the future.

Reusable component for a shorter time to market

While building a custom IoT system, one can also prepare reusable components – standardised software and hardware modules that expedite development, reduce costs, and ensure reliability. These elements can be adapted across various applications, streamlining updates and maintenance.

Unified communication standards across all systems and devices

There are a lot of parameters to take into account when transferring data between devices and systems. At the early stage of the IoT platform development process, you can create bespoke standards covering the entire system, including devices and companion apps. This ensures smooth communication and data exchange, with a low likelihood of encountering issues. Such a standard considers parameters such as the type of communication, communication protocol, data format, metadata, or data semantics. By having a template in place, development teams can easily add new types of devices to the existing IoT system with minimal effort.

Scalability and flexibility

Custom IoT solutions are designed to scale, allowing businesses to start small and expand as needed. This is particularly important for big-plan startups, industries with rapidly changing technologies and market demands, or companies that plan to introduce new products frequently.

Optimised performance

Custom IoT solutions can process data to optimise the performance of the IoT system for specific tasks or operational environments, enhancing efficiency, reducing power consumption, or improving data processing speeds in ways that generic solutions may not.

Cost efficiency over time

While off-the-shelf solutions have lower initial costs, custom IoT platforms are more cost-effective in the long run, especially if the business needs to pay for ongoing subscriptions, customisations, or additional features. Scaling is also less expensive, as there are ample opportunities to manipulate resources or rebuild the IoT infrastructure if needed.

Compliance with industry legal requirements

Industries with strict regulatory, compliance, or data sovereignty requirements may find that off-the-shelf IoT products do not fully meet these standards. Custom development can ensure that the solution adheres to all necessary regulations.

Full control over security and privacy

Custom solutions can offer enhanced security and privacy features tailored to a business’s specific risks and requirements. This is crucial in industries where data breaches can have significant financial and reputational consequences.

A case study: a platform for a company manufacturing several types of IoT devices

One of our clients – a manufacturer of photovoltaic systems and a distributor of renewable energy solutions to businesses and individuals – was looking for a partner to support it in several areas of digital transformation.

The company manufactures products such as photovoltaic panels, micro inverters, heat pumps, or energy battery storages. They also develop digital products to support the installation and operation of their devices, as well as an internal platform for data handling and analysis of collected data.

They saw a need to upgrade their existing IoT system, as the current platform could not scale any further. At first, the client considered an off-the-shelf solution, as the low upfront costs and fast deployment were promising benefits. However, after analysis, given the extent of their product grid and desire for further growth, we saw quite a few limitations to this solution: possible difficulties in adding new digital products, lack of support for legacy systems, or, the biggest obstacle – maintenance costs several times higher than compared to a custom cloud-based IoT system.

You can read the whole case study here: IT consulting services for a green energy company.

Do you want to implement an IoT system in your company?

If you are looking for the right partner to help you build and implement a comprehensive Internet of Things platform, contact us via the form below and let’s talk about how we can support you. Here, you can learn more about our custom IoT application development services.