The first post in this series on how IoT solutions deliver value provided an introduction to the components of an IoT solution and an overview on how a solution can provide value to the end user.
Developing an IoT solution begins with clearly identifying the value proposition and then quantifying it with a model that demonstrates that value. The bottom-line is that the incremental value generated by an IoT product/solution must be greater than its cost – or the value of the solution becomes questionable.
Improving an Existing Product
There are many ways to improve an existing product and, perhaps, the best way is to focus on an outcome that your end user finds most valuable. The outcomes valued by an end user include:
- Significant differentiation from the existing competition
- Increased market share
- Decreased operating expenses
- Increased revenue
In whatever way one wants to approach adding value through IoT, there are four ‘must’ steps that are critical to identifying and quantifying value and determining requirements:
- Creating the value proposition/statement
- Developing a model that demonstrates the value
- What are the operational requirements for the solution
- What are the data requirements
Perhaps the best way to demonstrate this is to look at an actual example of how an innovative IoT solution improved an existing product.
Gas Well Optimization
One of our oil and gas service customers provides a program to optimize oil and gas wells. These programs are utilized in order to increase production volume when a well begins to experience diminishing production due to natural decline.
Traditionally, the program relied on integrating with a customer’s expensive and often overly complex on-site infrastructure to perform the functions of monitoring and controlling the wells. Our customer wanted to improve their existing program (which includes hardware and software), to enable the customer to achieve intelligent and automated optimization of their wells in addition to providing full monitoring and control features from anywhere in the world…at a fraction of the cost of the customers’ complex in-house solutions.
Together we developed a value model that would demonstrate the value that incorporating AMS’ SensAble platform into their optimization program would deliver. The model needed to demonstrate:
- ability to reduce the cost of the customer’s overall program
- ability to monitor and control wells remotely
- ease of installation; reduce the cost and complexity of the setup and ongoing programming
Our client had specific operational requirements that also needed to be incorporated while improving the existing product, including;
- must be able to operate in a hazardous environment
- controls and data storage would be ‘cloud-based’
- controls and data must be accessible on any internet enabled devices
- hardware/software must expandable, able to also monitor/control compressor stations, storage tanks and future remote operation capabilities
The improved product called for real-time data requirements, that could be viewed remotely, that allowed for intelligent and reactive control. Those data points included:
- casing pressure
- tubing pressure
- line differential pressure
- plunger arrival times
- flow rates
By clearly identifying and addressing the four steps to demonstrate value, and working closely with our customer, we were able to deliver a highly valued, significantly improved gas well optimization program that includes:
- daily monitoring and optimization (can easily change optimization algorithms and refine them quicker via remote access)
- real-time alarm notification to multiple, key personnel
- integration of flow computers to collect production data
- reduced operating expense (less requirement to have employees on site)
The enhanced product has become a central offering in our customers oil/gas well products/service division. Since the original IoT enhanced design, our customer has incorporated camera technology to monitor the physical wellhead and adjacent area as well as a remote well optimization app to control the wells within their program.
“Our company is a leader in technology, field services and engineering solutions for both oil and gas well optimization. We have made a commitment to provide solutions that increase production output and extend the lives of wells. AMS’ solution has allowed us to deliver a cloud-based solution that provides real-time monitoring and control of our optimization programs. This has provided us a distinctive competitive edge over other service providers.” – Steve Vetter, GM, Premier Integrated Technologies.
Next Post: Operating Products Better
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