Developing an Internet of Things (IoT) Product from the Idea-stage – A Detailed Strategy Guide

Nov 30, 2021

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The Internet-of-Things (IoT) is finally a mainstream technology. It is all around us, delivers instantaneous information about our products and lets us take in-the-moment decisions. To put it simply, devices and machines communicating over an internet network form the Internet-of-Things. 

Unlike other technologies, IoT touches multiple engineering disciplines, is critical to a modern digital business and has a greater appeal. It combines physical and digital assets with network infrastructure and produces actionable analysis about consumption. 

IoT is essential for speeding up digital transformation initiatives of enterprises as well as individuals through sensor-based data collection, data optimization and process automation. This will be crucial in creating new revenue models as well as production optimization across the sectors. 

IoT Applications & Use Cases  

As far as applications are concerned, IoT has an oceanic scope. It encompasses a wide range of technologies, products, systems and processes that can not only produce a smarter consumer experience but also create innovative enterprises. Not to miss, the IoT intersects with a multitude of technologies such as AI, Mixed Reality, Blockchain, Edge Computing and others. 


A few interesting use cases already in practice include:-

  • Predictive analytics and remote monitoring & control of industrial equipment. Classic case of IIoT. 

  • Smart home appliances – sensor attached door locks, CCTVs, coffee machines etc.

  • Self-driving cars that sense the traffic and road signs automatically. 

  • Fitness trackers and wearables that monitor the health status of human bodies – smartwatches for example.

  • Agriculture – smart farming practices to reduce water loss, protect the crops from weeds, and weather forecasting for a period of time. 


Why IoT development is hard?

IoT is hard to ignore because it promises enormous possibilities to address real-world problems. Furthermore, enterprises have outlined IoT networks as a value-add to their center of excellence. Beyond technology companies, IoT POCs are floating across the manufacturing, FMCG, healthcare, and automobile industry. At this pace, the IoT investment is anticipated to touch

USD 1 Trillion by 2023; making it one of the fastest-growing technologies in present times.

That being said, it is equally important to understand that IoT is inherently complicated. Most IoT project ideas either don’t go on floors or fail at the execution level. As per the comprehensive findings from Beecham Research, 74% of IoT projects failed at some stage.

In the following guide, we detail the strategic roadmap of developing an IoT product from scratch, the key engineering disciplines, budget, pitfalls to avoid and the role of tech partners. 


Building Blocks of an IoT ecosystem

First things first, IoT is a complex landscape of multiple components and services. Each component represents specific engineering or consulting discipline. All of these components contrive to form a thorough ecosystem. All of these components are further explained in appropriate sections in the roadmap.

Therefore, building this ecosystem will require breaking down the project into different components. IoT product development can be broadly divided into the following components:

IoT Hardware (Mechanical, Electrical & Electronics Engineering, Firmware Development, Industrial Design)


It includes all physical component development including electrical such as sensors, microcontrollers and microprocessors, physical casings and other structures, and user interface components. 

Engineering disciplines required: Mechanical, Firmware and Electrical are the core engineering disciplines required. Apart from these, industrial design may also be needed for product design.

IoT Software  (UI/UX, Backend, System Migration, Mobile & Web apps)

This layer interacts with the end-user and thus involves UI / UX design and development, mobile and web app development, database development and ultimately IoT product cloud development. The cloud provides a central point of access for all user stakeholders such as the admin etc. 


IoT Connectivity Development (Networking, Firewalling, Telecom Engineers)

This layer is also known as the lifeline of IoT. It establishes, maintains and monitors the connectivity between the hardware and the software layers. The objective of this layer is to sustain uninterrupted data streaming between the device and the software in real-time. 

If you have an IoT project in mind, you are among numerous others ideating it every day. But if that idea doesn’t go on the production floor, you are missing out on the trillion-dollar dream that the IoT market could be valuing in a few years from now.

Therefore, it is imperative to take a pause, weigh your choices, and prepare an elaborate plan before taking your idea to production.


IoT Product Development Roadmap 


Stage 1: Business Learning & Strategy

Duration (Minimum 1 Month)

The purpose of the Strategy phase is to perform a mapping of the business objectives and resource availability. The business learning is kick-started with the PESTLE Model analysis; i.e. the Political, Economic, Social, Technological, Legal and Environmental impact of the product. Other important analysis frameworks included are the SWOT (Strength, Weakness, Opportunity, Threat) analysis of the product in focus. Business learning is a comprehensive activity and involves endless workshops, micro-experiments, tentative blueprints and product schema diagrams. After this phase, the teams should be able to lock the product outcome based on –

  • The market gap that the solution tries to resolve and the level of consumer acceptance

  • Effort estimation analysis accounting for IoT designers, solution architects, engineers, assemble consultants etc.

  • Regulatory compliance guidelines and bottlenecks as per the targeted geography

Based on the learnings so far, a product scoping document is locked that works as a bible for the project development.


Stage 2: Design & Prototyping

Duration (2-3 Months)

The purpose of Prototyping is to build a mock version of the product before proceeding with final development. However, these developments are meant for the POC only and should not be judged as the main development.

For IoT products, prototyping fulfills the following objectives –

  • To validate the expected outcome as scoped in the business case

  • To evaluate the concept with the targeted customer

  • To do the gap analysis of the available versus required technical expertise

The Prototyping can be further classified into developing a minimum functional unit covering the below aspects –

2.1 A User Interface (UI) on either a web app or mobile app or both 

2.2 A hardware device with the chosen IoT wireless protocol 

2.3 Backend system to drive the business logic 

2.4 Connectivity of all the 3 components

2.1 User-interface

The data collected and processed by the IoT system is finally consumed by the user through devices such as mobile phones. At the prototyping level, the purpose of UI is to prove the product’s value to the end-user. This is done by building a front-end system that displays the data generated by the IoT system in real-time.

The users are deployed to evaluate the UI build for accuracy, responsiveness and the quality of the interface. This helps in scoping the user behavior and defines the focus area for the final product.

UI development for IoT is thoroughly engaging and can be done using a line-up of interactive technologies such as Vue.JS, Npm, Chrome DevTools, Bootstrap, Grunt and the evergreen HTML (Version 5).

Since the scope of prototyping is restricted to usability testing, HTML (prior versions) or a mix of HTML/CSS/JS  are sufficient at this stage.


2.2 Hardware Components

The purpose here is to procure and build the simplest configuration of the IoT product so that the prototype analysis can be done with minimum cost and effort. This may include developing a PCB (Printed Circuit Board) followed by the overall hardware component integration. This includes sensors to take readings from the physical environment, a wireless connection, and LED indicators.

At this point, you can also go for pre-packaged boards for IoT prototyping. There are many Launchpad platforms that provide all the essential electronic components required for a prototyping project like this.


2.3 Backend

The backend system includes comprehensive database development that drives the business logic. Most IoT builds fail because their backend systems were ignored. The encoded business logic impacts real-time enterprise decision-making. An IoT system landscape could be fetching data from multiple non-relational databases that produce a lot of heterogeneous data. A strong backend system should faultlessly process the big data and produce real-time feeds for the visual analytics. Any mismatch could falsify the entire logic. Mostly MongoDB, InfluxDB and Redis databases are preferred.


2.4 Connectivity to ensure interoperability

Connectivity of the above builds can be classified into user backend and device end. While User-backend connectivity can be done using REST APIs or MQTT, the device-end may be connected through –

  • Wi-Fi



  • Bluetooth

  • Low-Power Wide-Area Networks such as LoRA

  • Low-Power Cellular Networks such as NBIoT

  • Wi-Fi: Best suited for indoor or closed range facilities such as homes, private compounds, offices etc.  
  • RFID/NFC: Card-based access control instruments. The most common example includes selective entry to offices. 

  • GSM/GPRS: Best suited for standalone devices installed outdoors such as sensors in gateway entries, traffic lights, speed breakers etc. 

  • Bluetooth: Most used for wearables or other devices that can be monitored from mobiles such as phones and pads. In certain sue cases, they can also be used for W-Fi provisioning or set up a mesh for multiple devices. 

  • LoRaWAN: Best suited for industrial setups or public infrastructure such as within 3-5 km range communication. This can create a network with gateways over a larger spread of area. 

  • NB-IoT:  A cellular technology specially designed to power communications between low-power devices.  

Although LoRa provides tremendous possibilities for a wider range, it is an expensive setup and not recommended for higher data speeds. As an alternative cellular network can be used that ensures bulk transfer at standard speeds and across a wider spread. 


2.5 Messaging Communication Protocols

Next, the messaging communication protocols between the IoT devices and the cloud systems occur through the following: 

  • HTTP: Most ideal for single requests, this is a non-continuous communication protocol. It is synchronous and has lots of overhead. 

  • HTTP WebSockets: Based on HTTP, this messaging protocol supports continuous communication and has lots of overhead.  
  • MQTT: MQTT is the most popular messaging protocol for IoT. It is highly flexible, based on the subscription model, is lightweight and thus causes no unnecessary footprint. 

  • AMQP: This one is an open-source, message orientation, queuing, routing message protocol that supports point-to-point and publish-subscribe model.  


Stage 3: Production Design and Development

Duration – 3 to 6 months

In a way, the actualization stage is the extension of the prototyping build wherein the prototype is transformed into a ready-to-market commodity. Therefore, the 3 components – the hardware, the backend, the UI are further developed using industry-standard components. This is also the phase where a vertical-specific component is added to the build. However, depending upon the requirement, this could be included in the prototype.

The development phase can be broadly ideated as

  1. Development of custom-engineered embedded devices (low power computing devices based on the ARM architecture)
  2. Wireless Communication protocols integration based on data transfer and frequency requirements (Wi-Fi, GSM, Bluetooth, BLE, LoRA, NBIoT, SigFox, 4G/5G etc.)
  3. End-to-end UI application development following SDLC standards. Emphasis on localization factors, thorough QA, and app-store publishing.
  4. Back-end system development – This may be the longest of all stages as comprehensive database development is involved.
  5. Integration – Integration of the hardware & software components, communication ports and other third-party devices or tools
  6. Integration Testing – End-to-end QA evaluation at the network level for a range of functional test cases. This comes after Unit Testing.

Since multiple hardware and software elements are involved, it is important to emphasize all the developments. This will assist in the prompt detection and addressing of bottlenecks that would otherwise affect mass production.

Another important consideration is ensuring product QA as per your regional regulatory standards. This is important because guidelines vary from region to region and any mismatch could drain your mass production effort. Therefore, make sure your product is in compliance with all the certification checks in the future.

Designers should be able to fix most issues at their end. They should predict the problems via EMC/EMI simulation. For this purpose, various CAD simulation tools such as ADS, CST, ANSYS etc. can be used.

Cloud Development 

Cloud and IoT are mutually complementary. While IoT means multiple device communications, the cloud provides a central dashboard for management and monitoring. It is this layer where data capturing from multiple devices is put to analytics. The cloud captures data from all the devices (up to thousands and more) and controls the overall operational logic of the ecosystem.

It stores, transforms and delegates data through a management protocol that drives the application of all products. At the same time, it also manages the current health status, upgrades and predictive analysis of all the assets in the network. Since an IoT network of devices could be spreading over a large geographic area, the cloud is the one-stop access point to control everything. 

That being said, the cloud dashboard also monitors the interaction between the software layer and the devices through the connectivity layer. To put it simply, any instructional command released as per the operational logic is broadcasted to all relevant devices and executed. 

While we are at it, designing the cloud architecture requires a specific skill set. The concerned resource should excel in SaaS (Software-as-a-Service) development. 

  • Demarcate the message receiving layer from the processing layer. This is needed to avoid any choking of messages. 

  • Device enabling/disabling management.

  • Predictive analysis of possible faults. 

  • Provisioning air updates to resolve bugs and any change in requirements. 

  • Ensuring all communications are secure and accurate. 

  • IoT data is subject to increase and thus the cloud database ensures scalability. 

Setup an authentication system so that one device can’t publish messages for another device and can’t subscribe to channels that are not allowed to it. 


You can opt from the following IoT-compliant cloud solutions.

  • Microsoft Azure IoT Suite

  • Google Cloud’s IoT Platform

  • AWS IoT Platform: integrated well with Amazon FreeRTOS

  • Watson IoT Platform

Stage 4: Sourcing & Mass production & Commoditization

Duration – Varies as per product, target market, capital, etc.

Sourcing is one of the most important factors impacting the seamless mass production of IoT products. There’s a long line-up of electronic devices such as sensors, controllers, PC boards, LEDs, display units, etc. We suggest finalizing upon a reputed IoT sourcing provider with a proven record in providing on-demand commodities.

Consider Ioterra, a digital marketplace that connects IoT project owners with vendors on the same platform. It enables the project owners to filter vendors based on their budget, location, and engineering services needed. Furthermore, it provides a one-stop solution for finding reliable engineering service partners for building your remote monitoring applications, IoT Cloud apps, Predictive Maintenance Solutions and Industrial IoT solutions. Given such proven expertise in IoT, you could benefit from the lesser time invested on multiple stakeholders and fast-track your production.

Prerequisites to go for mass production include –

  1. Research for a sourcing partner who provides procurement assistance for the full-stack IoT build. Prefer professional companies with proven experience in IoT.
  2. An engineering partner – one or more reputed engineering firms with proven experience in designing and developing IoT-related electronic components and embedded systems.
  3. A production partner – A reputed manufacturer with proven experience in manufacturing, assembly, testing and packaging of IoT products.
  4. Thoroughly tested the compliance of firmware systems with the PC boards.

Stage 5: Product Certification & Regulatory Compliance

Duration – 1-3 months

Most ready-to-market IoT products don’t see the light of the day because this part was overlooked. Regardless of the size, an IoT system is accountable for processing real-time data and should be attached with all necessary certifications & approvals. Certifications are important as they accurately foresee product failure in the field against regulatory norms. Certifications for IOT can be classified as below

5.1 Regulatory Compliance Certifications

These certifications test and validate the product within the national regulations of a region. These focus on safety measures and security protocols. For example, the RF Emission (if any) is within the permitted parameters and not hindering other wireless equipment. Example Certifications – May vary in your region

    1. China Compulsory Certification (CCC)
    2. Federal Communications Commission (FCC)
    3. Radio Equipment Directive (RED) & Electromagnetic Compatibility (EMC)
    4. Network Access License (NAL)

5.2 Telecom Industry Certifications

Telecom certifications evaluate the functionality of the IoT product and that it meets all industry standards. Various tests monitoring operational performance in the field and interoperability capabilities are considered. These deal with compliance of devices and products wrt the mobile networks only. Certification Examples – May vary in your region

  1. Global Certification Forum (GCF)
  2. PCS Type Certification Review Board (PCTRB)


5.3 Sector-Specific Certifications

In addition to the above, sector-specific certifications are needed to seek clearance on grounds of operational standards. Since IoT has a wider scope with all sectors, it is imperative to get licenses from the authorized body in a particular region. For example,

  1. Health Insurance Portability & Accountability Act (HIPPA) Certification for Healthcare
  2. Federal Energy Regulation Commission (FERC) Certification for power
  3. North American Electric Reliability Commission (NERC) Certification for power
  4. Federal Motor Vehicle Safety Standards (FMVSS) Certification for Automobile
  5. Verizon, Deutsche Telecom or AT&T certifications for Telecom


Finding an IoT development partner

Picking the right development partner is crucial for success and we have a few tips to share:- 


Start with a Whitepaper

We always emphasize this. A Whitepaper is an official documented version of the product that you have in mind. Bring on board subject matter experts across development, market research, finance and production to help document the project under ideation. Needless to say, the whitepaper will be the bible (go-to reference) for the entire project. 


Cross-discipline development expertise 

As already discussed, IoT includes multiple engineering disciplines.. So, check that the partner has the right skill set across technical roles such as mechanical engineering, firmware development, electrical & electronics engineering, telecommunications, networking and security. You may need to hire more than one firm to address all aspects of your IoT product.


Explore multiple channels 

The success of the IoT product depends upon the technical finesse and timely completion of the product development milestones. Never make haste by outsourcing to just any other development company. Finding the right fit development partner will significantly increase the chances of your success. Reach out to potential companies through multiple outbound channels such as social media, tender platforms, tech events and of course organic web search. Reach out to marketplaces like IoTerra to publish your requirements and seek qualitative leads. 


Pitfalls in IoT Product Development 

IoT development is new and complicated and is more prone to mistakes because it touches multiple engineering disciplines. Alongside understanding key tactics for development, avoiding pitfalls is an important consideration. Some of the leading pitfalls that have deteriorated the several projects at large are:-


Pitfall 1: Not having a clear RoI pathway (Return on Investment)

Building an IoT solution is an expensive affair. One needs to carefully plan the milestones with IoT development and deployment so that the return on investment could be feasible. 

What to do:

Before you spend money on a production run, get a fully functional prototype up first and do a pilot run. Make sure the problem you want to solve is functionally being addressed by the prototype. Check that once a solution is in place, is it really leading to cost savings or productivity improvements or an increase in revenue potential? Unless you are getting clear signals on the RoI, keep iterating on the pilot phase. 


Pitfall 2: Underestimating the cost and timeline

IoT is complicated and involves almost all the major engineering disciplines you can think of in the modern technology world. Whether you do the project in-house or outsource, IoT projects get quite costly. Since IoT is new, there are not many experts who can estimate the cost and timeline accurately.  

What to do:

You must talk to at least 2 experts from each of the disciplines involved in your IoT project in the planning phase. Get your project plan, budget, timeline and architecture reviewed from them. They will hardly cost you a few hundred dollars at this stage but will save you a ton of money down the line.


Pitfall 3: Hiring the wrong development partners

The right selection of a development partner could very well be the difference between success and failure of your project. If you are well versed with software, you would need a hardware partner and vice-versa. And then you need a reliable partner for supply chain management, manufacturing and deployment too. 

What to do:

Hire specialized development partners who have prior experience in your kind of project. The firm should have built similar products in the past. Also, in the IoT world, having prior experience with the industry vertical is a major prerequisite because of regulatory requirements.This could really help avoid costly mistakes. 


Pitfall 4: Ignoring the core use case and end-user experience

Your product will be used by a human ultimately. Be it a web or a mobile interface or a physical hardware interaction with the user, you need to keep the end user in mind so that you build a product that intended users like using. 

What to do:

Have extensive trial runs with actual users in the field with your prototype. No matter how ugly the prototype is, it should functionally solve the problem of the end user. For example, if the IoT solution is not giving predictive maintenance insights to the plant supervisor and machines are still breaking down, then you need to come back to the drawing board.


Pitfall 5: Ignoring the security vulnerabilities

The recent DDOS attacks have proved that security cannot be treated lightly at the time of IoT product development. Smart devices are increasingly getting popular, are exponentially increasing in number and popularity attracts unwarranted threats.

What to do:

You need to decide on what level of security your IoT solution requires when you are architecting the solution. Please remember that not everyone needs the Pentagon level of security. Then, hire a specialized security firm to audit your architecture and suggest improvements. 


Pitfall 6: Ignoring regulatory compliances and certifications

Most industries have their own regulatory compliance requirements. For example, HIPAA compliance for the medical industry in the USA. Noncompliance could attract monetary penalties as well as may severely damage your goodwill in the market.

What to do:

Plan for regulatory compliance once you are sure that your prototype run is successful. Hiring a development firm with prior experience in your industry will help. Also, there are dedicated certification agencies who can guide you on the requirements. 


Pitfall 7: Not setting up remote monitoring and feedback

Smart connected systems are all about 24/7 feedback loops. When you have IoT devices remotely connected, and streaming real-time data, it gives you an opportunity to improve customer experience as well efficiency in your operations. It also enables you to fix issues remotely and upgrade your IoT devices firmware. 

What to do:

Plan for remote device management once you are in the final stages of your prototype run. There are dedicated IoT protocols for remote management such as LWM2M which is becoming an industry standard. This will help you in seamlessly integrating your IoT solution with your own as well as  3rd party systems if needed.

Plan your IoT product development NOW!

The above guide provides a quick run-through of the fundamentals of actualizing your next IoT project. So far, we have discussed the various challenges in planning, developing, sourcing, manufacturing, and assembling devices and networks. There’s no silver bullet to resolve IoT complications. 

The enterprise must hold on to the temptation to arrive in the market without due planning for the IoT challenges. If you prepare well, partner well, then achieving a seamless and cost-effective IoT solution can be a reality. The better you prepare, the sooner you arrive.