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When we think of IoT in an industrial setting, we often think about predictive maintenance and improving the quality of outputs. Organisations are looking to IoT to scale their digital transformation stories and become future-proof, while also figuring out how they can automate their processes and products. IoT is more than a business injection; it’s a massive undertaking with seemingly endless turning cogs to keep it all in motion.
If it’s such a big task to face, then why not also try to find other ways to utilise this transformation? It doesn’t merely have to be about jabbing a bunch of sensors onto the things in your factory, IoT can instead bring about a whole world of opportunity if you’re savvy with your team and open to new pursuits.
Undertaking an IoT project inevitably changes your business, because of all the new data insights it can open up. But what if you could also monetise this very data? Or channel the data to provide new service or product offerings, in the form of equipment tracking?
Companies are now looking to shift their business models from the typical CAPEX (capital expenditure) model to OPEX (operating expenses). This takes away the large, long term investment of equipment that might only be used once a year, to instead paying for just the outputs in the everyday operating expenses. IoT is opening up a whole new plethora of asset tracking, which highlights just how much we’re using, or in fact, not utilising, our assets.
To some companies, these seem like very natural progressions as they embark on their IoT journey. To others, new revenue streams and business models can feel like being on a ship lost at sea, and then a storm hits. As if IoT wasn’t confusing enough, then a new business model comes along?! Worry not, the following use cases are simply ideas about the many routes IoT can open up for your organisation, or may provide opinions about your current operations and how you can start incorporating new business projects.
IoT will not only enable driving new decision making but may well increase your profits too. We’re going to look at four models and IoT revenue streams that will not only provide new insights but may trigger an organisational restructure or a new source of revenue.
Drivers of IoT adoption: data as an asset, expanded internet connectivity and 5g, mobile adoption, dynamic distributed cloud services with low latency, end to end security
1. The Outcome Business Model
What if, instead of paying for the overall asset, you just pay for what it produces or the time you use it? With IoT and asset tracking, you can now do this, instead of owning large assets that increase hefty insurance costs while sitting in storage, or continually paying for repairs. This is particularly useful for manufacturers that need to invest in niche areas, such as engines and equipment. Different sensors can easily monitor the items to assess how long they have been in use for, where the customers can then be billed for that usage.
Although it might be difficult to physically inspect the asset when in the hands of a customer, IoT again comes to the rescue. Predictive maintenance systems enable easy asset tracking to predict when the equipment is falling into disrepair. The system alerts the owners to take back the equipment and fix it, instead of sending ad hoc inspections when there is no need. Instead of wasting resources on an asset that is working correctly, you now have a system that is linked to customer usage and predicts when it is going to fail.
Set terms in place to derive full benefit from the customer, by creating a minimum usage policy so it’s not then sitting in their storage when it could be out with another customer. With this type of IoT revenue stream, the asset’s full potential is maximised, leading to reduced waste and more significant environmental benefits.
2. Asset Sharing
The asset sharing model is similar to the outcome business model in that a customer rents your assets, but whatever they don’t use is then fed back into the system. Instead of renting out your equipment to one customer, even at a minimum price, with asset sharing the customer has the asset for a fleeting amount of time. In this way, the products are circulating the market quicker, and the product is benefitting from full utilisation across several customers. This also determines how long the asset is lying around and not in use. In this use case, rather than taking the asset and only paying for the time you use it or the outputs, you rent the asset for a set amount of time and when you’re finished, it’s then passed on to the next customer.
With an IoT system, the assets are connected to the internet to ensure they won’t be stolen and can be easily tracked for usage, wear and tear.
Self-driving cars and smart or virtual power plants, shared drones and microgrids are all examples of how assets can be transferred. Toshiba has developed a virtual power plant with AI and IoT networks, mapping a power plant virtually to control the inputs and outputs and to make use of any excess supply of energy, which can then be used during power outages. These plants don’t own the energy assets; they own the data that is transferred between each piece of equipment in the network.
Another example is tied to the blockchain, whereby you pay for the amount of wifi used in a cafe in a smart city setting. The amount of wifi you use is tied to your cryptocurrency wallet, thereby saving energy and expenses because you know exactly how much you use.
3. Automatic Fulfilment
Through the vast improvements and clear value-added benefits of RFID technology, supply chains are quickly adopting IoT technology to streamline their services. Through the use of asset tracking throughout the supply chain, it becomes clear where bottlenecks occur and the possibility of theft and storage issues. Because assets can be monitored throughout the supply chain, this also allows companies to open up their inventory and monitor goods in use. IoT systems can track when inventory is running low, or is delayed due to weather concerns across the globe, and can then redirect the system to find the next best option. This allows companies always to have the right supply of goods and negates obsoletion.
Insensitive cases such as medical transportation, not only must the medicine be delivered on time and safely, but it must be closely monitored for temperature and pressure to prevent spoilage.
4. Data Monetisation
Some companies may not have the capacity just yet to dive into an IoT project. But that doesn’t mean they can’t reap the benefits from all of this data flowing around. Instead of taking on a big project and making sense of unstructured data, companies are now looking to those who can structure data and enable better decision-making from these new insights.
Companies that monitor their equipment or energy usage can sell the insights they gather to other companies who may require similar applications. Now you’re not only deriving valuable benefits for your organisation, but you can also sell this new data to create more services for other companies and increase your profit margins. It’s a win-win!
If you’re thinking of developing an IoT system within your organisation, be sure to dive into the other possibilities IoT can open up for you. That’s the beauty of Industry 4.0 because it’s so dynamic and ever-shifting, there are always new pursuits to profit from if you just think outside the box. If you’d like to discuss how to ramp up your revenue streams with an IoT platform, please get in touch with us today!
Brian McGlynn, Davra, COO
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