Exploring the Best Business Models for Business Processes in the Internet of Things
As the Internet of Things (IoT) continues to grow and evolve, more and more businesses are incorporating IoT technologies into their operations. From smart factories to connected supply chains, IoT can drastically improve business processes and optimize productivity. However, with so many different business models available, it can be challenging to determine which one is right for your organization. In this article, we’ll explore some of the best business models for business processes in the IoT.
What is IoT and its business benefits?
At its core, the IoT is a network of connected devices that communicate with each other to exchange data and perform tasks. In a business context, this can include everything from sensors and wearables to vehicles and industrial machinery. By leveraging IoT technologies, businesses can achieve a wide range of benefits such as increased efficiency, greater visibility into their operations, and the ability to predict and prevent issues before they occur.
Business models for IoT in business processes
There are several business models that businesses can use when implementing IoT in their business processes. Let’s take a closer look at some of the most common ones.
Product as a Service (PaaS)
Under this model, businesses don’t sell products outright to their customers. Instead, they offer them as a service or subscription. For example, a smart appliance manufacturer might offer a subscription-based service that provides continuous updates and maintenance for their appliance. This way, the customer is always using the latest version of the product, and the manufacturer can gather data and insights on how the product is being used to improve future iterations.
Outcome-based model
Under this model, businesses are paid based on the outcomes they deliver rather than the services they provide. For example, a smart irrigation company might offer a service that optimizes water usage, and they are only paid if they can demonstrate reduced water consumption for their client. This model incentivizes the service provider to deliver results and encourages them to continuously improve their offerings.
Platform as a Service (PaaS)
IoT platforms provide a way for businesses to manage, analyze, and act on data from their connected devices. Under this model, businesses can use IoT platforms to develop their own custom business solutions on top of the platform, rather than building everything from scratch. By leveraging an existing platform, businesses can save time, reduce costs, and focus on their core competencies.
Examples of business models in the IoT
Let’s take a look at some real-world examples of businesses using these models in their IoT operations.
Rolls-Royce
Rolls-Royce, a global aerospace and defense company, has embraced the PaaS model in its aviation business. The company has developed a suite of IoT-enabled services called TotalCare that allows them to monitor their jet engines in real-time and use predictive analytics to optimize maintenance schedules. This service ensures that planes are always operating at maximum efficiency, reducing downtime and maintenance costs for customers.
Honeywell
Honeywell, a technology and manufacturing company, uses the outcome-based model in its smart building business. They offer an IoT-enabled service that uses real-time data analytics to optimize building energy usage and reduce costs for customers. Honeywell only charges their customers for the energy savings they deliver, incentivizing the company to continually improve their energy optimization algorithms.
IBM
IBM is a prime example of a company that has embraced the PaaS model in its IoT offerings. The company’s Watson IoT platform provides businesses with a comprehensive suite of tools to manage, analyze, and act on data from their connected devices. IBM has already developed a wide range of solutions on top of the platform, such as the Watson IoT for Manufacturing solution which helps manufacturers optimize their operations and reduce downtime.
Conclusion
The IoT offers limitless potential for businesses to optimize their operations and achieve better results. However, in order to succeed, businesses must adopt the right business model for their needs. Whether it’s PaaS, outcome-based, or PaaS, the key is to choose a model that aligns with your overall business strategy and allows you to deliver value to your customers. By doing so, you can be sure that your business is well-positioned to take advantage of the opportunities presented by IoT.
