IoT has become a big buzz in today’s world, and its deployment is disrupting almost every industry. The integration of IoT in every segment of the system automates the entire process. Hence, organizations are adopting smart offerings and outcome-based processes while leaving conventional practices behind. IoT solutions have the capability to collect a huge amount of data with the help of thousands of sensors. This gives you a platform to create advanced business models that help in business development through areas never explored before.
With the help of enterprise IoT solutions, digital products get the capability to offer multiple services besides their core functionalities.
“A business model is a company’s conceptual design that supports the sustainability of the business, its purpose, goals, and its strategies for attaining the same. It defines a company’s products and services, its expenses and the ways a company creates profits.”
When you sell a product or a service, it generates one-time revenue. But when you involve a subscription model, it generates revenue at every regular interval of time. A connected device provides the facility to create a subscription model for repetitive revenue generation. This way, instead of selling a product and making just a one-time profit, you can offer your customers a subscription model and charge a fee by providing constant value. It would be like creating a SaaS model for a system that includes software and hardware both. This model enables you to offer a daily, weekly or monthly subscription, along with paid upgrades, and a freemium model if you have a strategy that includes it.
This model is usually referred to as an ‘as a service’ (*aaS) model. This model benefits customers at large as they have to pay only for the outcome that the product provides to them instead of paying for the entire product.
Let’s understand this with an example. Rolls-Royce Motor Cars Limited, a luxury automobile maker now provides jet engines as a service for commercial airlines. The company keeps the ownership and maintenance of the jet engines with itself. It charges a fee per engine flying hour to rent their engine to the airline. The engines are implanted with thousands of sensors. Rolls-Royce headquarters receive information via those sensors, generating a digital twin of the engine to track the real-time engine conditions. It further uses predictive analytics to get insights and plan for future maintenance requirements. This model helps Rolls-Royce to generate revenue on an ongoing basis, while airlines do not need to purchase engines. They are maintained by Rolls-Royce who ensures easy operations and most importantly, engine uptime.
When you buy expensive equipment, there are chances that you won’t be able to utilize it to its utmost capacity. Hence, the concept of sharing assets comes into the picture. Recently, many companies have started providing car and bike sharing services. With the help of this business model, you can actually sell the capacity of your equipment (which is not being fully used by you) so that it can be utilized to its greatest capacity across various customers.
IoT incorporation with the system gives you the capability to maximize asset unitization with more competent solutions like self-driving cars, virtual power plants, shared drones, and more. This sharing model allows your customers to use the equipment at a reasonable price which results in an increase in your customer reach.
You can use your IoT products as an agent to drive sales of your other products as well. And in this process, you may have to sell your IoT product at its cost price or at a little less loss. But this will not keep you in a loss for a long time. Once your customer starts using your IoT product, it opens the doors for sales of your other products as well. Even today, selling parts and services is the most lucrative option for most companies, especially for automobile manufacturers. IoT makes it so much easier for manufacturers as well as for the customer who benefits from zero downtime and personalized customer experience.
Amazon utilizes this business model via its Amazon Dash Buttons. Dash buttons are small consumer electronic devices, which place an order for a particular entity from Amazon which reaches your place in 3-4 business days. This model is very useful to sell products that need regular refilling.
Data has vital significance in IoT. Without data, IoT is like equipment without fuel and power supply which leads to no utilization of the asset. So the actual worth of IoT is realized through the useful insights derived by the analysis of the collected data. This makes data the most important resource in the world.
Have you ever wondered how to derive monetary benefits from data? Almost everyone who browses the Internet holds an account on LinkedIn and Facebook. Hence, these websites easily get a huge amount of data from all of us. Although these websites provide us the value, the advertisers that get our data and promote their products and services attain the actual value by reaping the monetary benefit out of data.
It is important to have a great business talent to manage your business. And it is even important to have state-of-the-art technologies to enhance your business processes. These technologies simplify your tasks and give you amazing ways to earn a profit. IoT solutions provide you with various industrial IoT business models to monetize your product.
With the increase in adoption of the Internet of Things (IoT), companies from all industries now have a question – which IoT business model and application is right for them? Check out this whitepaper to know what, why and how of IoT business models.
In this whitepaper, we have covered some important elements you should consider when looking to transforming your business model.