The two trends driving the monetisation of the Internet of Things
Cashing in on the Internet of Things requires agility, usage data, and new approaches to billing
Short of time?
While all the talk at CES this year was on the Internet of Things – from connected cars to smart home systems to wearables in healthcare – one aspect that isn’t being talked about is the practical and necessary component.
With that in mind, how exactly do organisations make money from this ubiquitous connectivity and the ensuing avalanche of data?
Key to this is the ability to quickly and easily create monetisation, pricing and mediation schemes, enabling monetisation business strategies that didn’t exist yesterday.
It doesn’t matter what one is trying to monetise – whether it be API calls, MRI machines, car services, security, voice services, storage, or access.
The Internet of Things is one of the most hyped technologies of all time, but the huge upside has yet to materialise.
While many companies are driving customer service, operational, and supply chain improvements using the Internet of Things, most companies are still working in the margins when it comes to monetising it.
When companies upgrade their systems, only then can the hype be actualised. And the monetisation of the Internet of Things will be brought about by two trends.
The first is that all revenue will become recurring revenue. Think of the variety of consumption and subscription-based business models. Perhaps not in the next 12 months, but the mandate is clear: customers increasingly want what they want, when they want it and how they want it.
Already 47% of U.S. businesses have adopted or are considering adopting a recurring revenue model to be able to respond rapidly to customer demands, and the number is steadily rising.
Billing as we know it is broken. The $8.9 trillion dollar Internet of Things opportunity requires new approaches to billing and monetisation. Without agile billing – the engine behind recurring revenue models, Internet of Things offerings will fail to fully launch.
The second trend driving the monetisation of the Internet of Things is usage. There is a gold mine in the data collected from Internet of Things devices, sensors, etc., and a green field opportunity for companies to determine how to provide value to customers from that data.
But of even greater value will be the role usage plays in customer retention. For customers to buy offerings on an active and repeating basis over time, you need to know them very well – to anticipate their needs, maximise their satisfaction, and present them with cross-sell and upsell opportunities they love.
That knowledge comes from usage data. Understanding how customers consume products and services provides insights into their habits, behaviors and patterns that can’t be seen otherwise. The vendors that succeed at getting close to their customers will win the Internet of Things market.
There are many use cases to consider. One major industry already benefiting from usage and consumption-based models is healthcare, but others abound.
Sourced from Brendan O’Brien, co-founder, Aria Systems