Discovering new business models with the Internet of Things
Markets and analysts agree: the Internet of Things (IoT) is here and it’s a fast-growing opportunity. But what does opportunity really mean for an enterprise? The ex-consultant in me wants to bucket this simply as the chance to increase revenue, decrease cost and drive more profit and value. So yes, enterprises are excited about IoT—and they are particularly interested in how to monetize it.
A lot of people think about IoT in the area of sensors and wirelessly connected things, such as lights that turn on through an app. But actually, the Internet of Things is about much more than things; it’s also about the insights and capabilities that connectivity provides and how these new capabilities can create better value. When I think of a successful IoT case, I often think about Uber, a ride sharing, car-hailing app that takes advantage of connectivity information to deliver value to both drivers and passengers.
So how exactly does Uber monetize IoT? Uber doesn’t build its own connected cars, it doesn’t own any cars and it doesn’t own the drivers. Its business model simply taps into the data enabled by IoT. Using information such as driver location, passenger location and payment method, Uber helps connect the dots between a passenger looking for a ride and a driver willing to provide it. By packaging this material in a consumable way through a mobile app, Uber delivers a new level of customer engagement and gives power to the consumer.
Uber’s business model also brings about a new IoT value chain. Uber has inserted itself between the manufacturers of products and service operators that utilize the product and positioned itself as an enabler of service. It has become a “service enabler,” and market research suggests service enablers will dominate this new value chain.
Plus, IoT-capitalizing organizations such as Uber are disrupting legacy business models and current incumbents. Obviously, taxi companies are less than thrilled about their new ridesharing competitors, but even conventional car manufacturers are not safe. Uber announced it will be opening a research and development center in Pittsburgh to study autonomous cars—and it even recently poached a Google Maps executive to oversee location technology.
The takeaway, then, is that the Internet of Things has real value that’s much more than just connecting your TV to the internet. It’s also about taking a hard look at your business and determining what new information and capabilities the Internet of Things can provide, and if you can acquire new value and monetize it. The answer is in there. We can help.