IoT is so far essentially used to cut costs (predictive maintenance, energy spent, productivity…) but there are huge opportunities for new revenues. That’s a point on which less information is available as it’s quite new. Only a handful of companies have leveraged the opportunities of new revenue channels offered by IoT. Let’s see how your enterprise could benefit from it.
First things first, to make the most out of IoT initiatives, your company needs an agile structure. That may be a long and not easy first step to make but is also necessary to keep up with always more opportunity-seeking startups (not to mention the big groups like Google who already use this agile approach to business). Reason for this: being agile is necessary to be able to try new ideas that will enable your business to keep pace with industry disruptors without risking endangering your other activities. To create new revenue channels with IoT you need to try and if necessary drop ideas easily. It may sound logical but it changes the way business is traditionally run in most departments, see for example this article from HBR.
There are very few ways companies have started using IoT to generate incremental revenue. HP has put sensors in ink cartridges so that when the printer runs out of ink, new cartridges are automatically ordered (if you have agreed to it of course). This is just an example of something that can be called more widely a Product as a Service model (PaaS). Revenue made on cartridges will go to HP instead of a competitor. I think this model is likely to spread across the industry for many products that are consumed: shampoo, milk, washing liquid… could all be delivered to your door as soon as you need them! Even better than the Amazon dash button, you’d have nothing to do and never have to worry about running out of ink just when you have this very important document you need to print for the next morning and it’s already 11pm…
Another rising business model is to commercialize the IoT data your devices gather or to sell an expertise on the data businesses generate but don’t know how to use. Data expert Hitachi recently created the Copenhagen City Data Exchange (CDE) that enables both of these models to be leveraged. As a smart city Copenhagen is equipped with lots of sensors that generate big data. With the CDE Hitachi has enabled the City of Copenhagen to sell its public data. As a consequence businesses and startups can now leverage this data to create solutions that will improve the quality of life of the inhabitants: many things are made possible when you can understand the way traffic works, how weather impacts your city, or how energy is consumed.
What do you think are the other ways IoT can create new revenue channels?