{"id":759,"date":"2018-06-27T03:47:02","date_gmt":"2018-06-27T00:47:02","guid":{"rendered":"http:\/\/kusuaks7\/?p=364"},"modified":"2025-12-09T11:18:36","modified_gmt":"2025-12-09T11:18:36","slug":"how-iot-transforms-business-models","status":"publish","type":"post","link":"https:\/\/www.experfy.com\/blog\/iot\/how-iot-transforms-business-models\/","title":{"rendered":"How IoT Transforms Business Models"},"content":{"rendered":"\t\t
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\n\t\t\t\t\t\t\t\t\tReady to learn Internet of Things? Browse courses<\/a>\u00a0like\u00a0Internet of Things (IoT) Training<\/a> developed by industry thought leaders and Experfy in Harvard Innovation Lab.<\/em><\/strong>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t
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IoT isn\u2019t just about improving existing business operations<\/strong><\/h3><\/h3>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t
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For years predictive maintenance has been touted as the killer app of IoT; that IoT and predictive analytics is the cure for inefficient machine maintenance and unplanned downtime; that we need industrial IoT to deliver zero-downtime (\u201cZDT\u201d) and so on.<\/p>\n

All that is true. However, new technologies enable us to do more than one simple thing. IoT can be used to:<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

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    \n \t
  1. Improve existing business operations<\/li>\n \t
  2. Create new offerings and new business models<\/li>\n<\/ol>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t
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    Predictive maintenance falls in the first category. I will discuss the second category here, on how new business models can be constructed with IoT.<\/p>\n

    Business models require thinking through the consumption side of your offer (demand side \u2014 how it is bought and used) and the production side of the offer (supply-side \u2014 how it is created and delivered). We will look at both.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

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    Changing the Consumption Model<\/strong><\/h3>\n<\/h3>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t
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    We have evolved from buying a physical book to buying a digital book, to buying a subscription to read books, and finally getting that book read to us. All via a progression of\u00a0Amazon \u2192Kindle \u2192Echo \u2192Audible\u00a0<\/strong>offerings. That progression took years of evolution.<\/p>\n

    How can we do the same in our industrial world? To do that, we need to think of the offer from the consumer\u2019s lens (buyer, user, and operator).<\/p>\n

    Let us compare how we sell a robot product vs. how a robot is offered as a service. We can then generalize the building blocks of the consumption model for any product.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

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    In scenario A, the customer owns the product outright, pays for maintenance to vendor yearly. In addition, they perform their own operations with their personnel.<\/p>\n

    In scenario B, robot is consumed as a service at a price per year for fixed subscription fee. (The numbers use a weighted average cost of capital, WACC, of 12% to arrive at the equivalent subscription price. The WACC varies by company.)<\/p>\n

    Thanks to IoT, we can measure the utilization of the robot and charge by utilization, going beyond a simple term subscription. E.g. We can\u00a0charge by shift<\/em>for a robot used for site-security.<\/p>\n

    We could have offered better maintenance for scenario A using IoT. That would not have leveraged the power of cloud-connected robots and wouldn\u2019t have charged based on asset utilization. Nor would it have delivered flexible consumption models to customers.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

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    IoT enables us to take a consumption-centric approach to creating new offerings because we can measure consumption.<\/strong><\/blockquote>\n

    Can we do this for any product? What are the mechanics of doing this?<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

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    Decoding the Dimensions of Consumption<\/strong><\/h3>\n<\/h3>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t
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    To reimagine your offerings for a connected world, think about dimensions of consumption for your offer, any offer. All from the lens of those who consume the offer.<\/p>\n

    This picture illustrates the four dimensions:<\/p>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

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    The dimensions convey the following:<\/p>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

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    Flip the Tiles for New Consumption Models<\/figcaption><\/figure>\n

    We can mix and match the red-blue tiles above and see how existing offerings in the market leverage these dimensions:<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

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