Businesses Built on Data will Take Off
Blog: Software AG Blog - Reality Check
Businesses Built on Data will Take Off
The Internet of Things is profoundly changing the way we live. Companies are no longer building their business models on the product itself but on the data that is derived from it. The Internet of Things is thus becoming the driving force for organizations to transform into a digital company.
The ability to mass produce intelligent sensors that communicate via the Internet is simple and revolutionary. That is why some people refer to the effects of the IoT on our society as the next Industrial Revolution.
Some may argue that monitoring the operation of machines through sensors has been done for decades and that the IoT is just another spin on an old story. There is some truth in that. There are many machine to machine (M2M) systems out there, especially in the utilities industry. So what makes IoT different from the things we have been doing for so long? There are some important differences that make the IoT a real revolution.
In the M2M world a lot of the data that was gathered by the sensor, stayed on the sensor and was used to operate a piece of equipment. Very rarely was any of this data distributed. Most often it was purged; sometimes as quickly as it was gathered, meaning the data was not available to use going forward.
In the IoT world this will be the big differentiator; more of this data is broadcast by the sensors than ever before, allowing organizations to do new and meaningful things with it. Often companies will go after use cases that give them an easy-to-understand return on investment, like reducing the cost of operations through for example superior maintenance or operations.
Just recently I came across a company that sells a connected toothbrush. Children get direct feedback on their brushing through games that are connected to the device. This opens up a whole new revenue model for game providers like UbiSoft to design games that use the toothbrush as the controller. With the consent of the customer this data can then be shared with professionals like dentists that could give relevant advice to the user; adding again the possibilities for new revenue streams and potentially disrupting traditional toothbrush vendors like Philips and Oral-B.
Another business model is pay-per-use, lowering the entry barrier for users to by lowering the initial price of goods while vendors make their revenues through superior service models. In the consumer area we see initiatives like this in car sharing, but this will probably become hugely popular in B2B also. Printer and copier manufactures are taking the lead with pay-per-print and no doubt other industries will follow soon.
The last business model to mention is what Gartner calls the extend model, or providing additional value or services through an asset. Take, for example, manufacturers like Tesla (cars) or Sonos (speakers)—they can enrich their products with new features through software updates, even after you have bought them.
All the models mentioned have the ability to disrupt existing businesses. What they have in common is that they build their business on the data that is derived from their products.
The Internet of Things is thus becoming the driving force for organizations to transform into a digital company—one that is not only able to transport data but also able to refine it and build a business on the information derived from it. That is the real revolution that will enable your business to take off.
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