Many companies are contemplating how to monetize IoT solutions, and how new data-driven opportunities are changing the characteristics of products and services.
I just recently read two articles related to monetizing IoT. First one was PWC´s white paper about Monetizing the Industrial Internet of Things and the second was Forbes's SAPVoice article about 4 Supply Chain Strategies to Drive Digital Transformation. I will bring forward some highlights from these articles, and elaborate further on some ideas.
Creating IoT-Driven Business
According to research cited by PWC, companies are “hunting for ways to monetize IIoT through revenue-generating products and services, or to differentiate their core products and services offerings. IoT is prompting manufactures to form a new mindset around servicing clients”.
The key reasons for companies to launch IoT driven solutions development are: 1) competitive pressures, 2) prospects for new revenue and return on investment, and 3) customer demand.
According to PWC´s article few of the key questions from IoT monetization perspective are:
- What do our customers want to get?
- Will they be ready to pay for it?
- Does it improve internal supply chain as well as external?
Other relevant questions that we can consider from IoT monetization perspective are:
- Does it keep our existing customers, and/or can it bring new customers?
- How do we build up the ecosystem, if there are a lot of suppliers?
The picture below illustrates the high-level road map for IoT monetized services, with previous questions added:
Many Sources for Revenue
Referring to PWC´s article from the IoT perspective, recurring revenue monetization is related to the following key areas: 1) Product performance monitoring, 2) data analysis diagnostics, 3) IoT-driven field services, and 4) pay-per-use.
Many Models for Revenue Generation
According to the research cited by PWC there can be many different revenue generation models, for example: 1) charge for using apps and web-tools, 2) charge for a subscription, 3) charge based on outcome, 4) charge by each product and single service or 5) charge by every event or notice.
It may be wise to think of these monetization models in parallel, not just as alternative options.
At best, the chosen pricing model reflects what customer values. At best, even pricing for a lot size of one is enabled with billing and monetization automation.
What comes to driving digital transformation, there are four different strategies for supply chain development according to Forbes SAPVoice article. These strategies are 1) customer centricity, 2) predictive business, 3) smart automation and 4) total visibility.
Customer centricity needs to be integrated with digital supply chain capabilities to serve segments of one consistently.
With predictive business solutions comes the ability to react to issues before systems come down and processes halt.
Smart automation enables the move from mass production to mass customization, and with total visibility one is able to be responsive throughout the whole supply chain.
In a Nutshell
To sum up, to capitalize on IoT solutions, a company is to analyse business opportunities widely, conclude on revenue generation and differentiation possibilities, and plan the digital transformation from end to end.
Are you operating service business and launching new recurring revenue business models? Be sure to acquire flexibility to utilizing IoT-data with variable revenue generation models - and to automate monetization end-to-end.
Good Sign Solution is software for flexible Recurring Revenue Billing, Monetization and End-to-End Digitalization. To find out more, download our whitepaper The Why and How: Recurring Revenue Business Models: