Monetization, it’s a funny word - filled with a lot of meaning and adopted as a jargon term of late, especially when applied to the tech world. This is particularly true for the Internet of Things (IoT) and, jargon or not, it won’t become a reality unless innovators find ways to make money with it.
Most IoT initiatives are new ideas. The very concept is immature. If asked, different people will likely provide you a different definition of what the IoT is – from fitness trackers, to smartphone interactions at your favorite store, to industrial process monitoring. It’s a lot, and it can make us a little more susceptible to chasing hype. It’s understandable, but folks making IoT devices, systems, and applications must look past the nifty things and focus on the pieces that can practically revolutionize how we interact with the world; things like industrial production and supply chain management.
That just leaves the question, “How does one make money in this new world of smart, connected devices? “
Let’s take a look at some realities of the IoT landscape and see what each means for those looking to capitalize on the potential.
It’s a new world for us all, sorta
The common theme for the different facets of IoT is the addition of smart, connected devices. This doesn’t mean the additions are limited to the most novel of new product ideas. There’s a lot of success to be found in adapting existing products for the IoT. This is especially an advantage with proven product lines perfected over years of use.
Here, the customer base and their market problems are well understood. Sales channels both exist and are probably pointed in the right direction. The foundation is already present; it’s just a matter of adding the right IoT functionality.
As an example, Schindler Elevator found great value in simply adding connected sensors to their elevators. The Schindler Digital program provides real-time data for field maintenance teams reducing repair costs and downtime. As an added benefit, it gives customers visibility to the status of their elevators. This was all accomplished without altering strategies like target customer or sales channel. (Reference: https://www.t-systems.com/de/en/references/use-cases/use-case/schindler-internet-of-things-239450 )
IN A NUTSHELL: Existing product lines have existing customers and sales channels. Don’t overlook using a smart-connected approach to make something good, better.
One word of caution: make sure the new add-on or refresh doesn’t alter the product or service so much that you must completely overhaul sales channels, support staffs, and infrastructure unless you are ready for these changes. That brings us to our next point…
New worlds can bring new challenges (and opportunities)
Fresh product scopes and game changing new ideas often bring associated tasks, services, and add-ons that were not relevant or needed before. It can be daunting as these require new worker skills and infrastructure pieces to succeed. However, this transition also presents a great opportunity to take in new customers and generate new revenue streams from existing customers.
These new opportunities might include:
- Installation and/or commissioning services
- System integration consulting
- Maintenance contracts – physical assets and software systems
- Monitoring services
- Service or data subscriptions
- Automated secondary services
Most end customers don’t want to deal with the challenges of these new necessities but will find value in the insight and new functionality that connected products provide. They’re happy to pay product manufacturers to fulfill their needs from start to finish. Vendors can provide their customer additional items of real value by providing more than just the physical product.
For example, adding a wireless supply-chain monitoring system to a manufacturing facility provides the opportunity to sell the product along with installation and/or commissioning plus ongoing system maintenance services. This can be in addition to a subscription model for access to the data, or advanced amenities such as offering the automated delivery of key supplies before they run out.
IN A NUTSHELL: Don't overlook the need for new infrastructure to execute your plan as a product vendor. Missing pieces can kill an otherwise great product or, when filled, enable revenue. These new pieces can be something you either DIY or you partner up to provide. This brings us to our next topic…
It takes a village... of many different platforms to develop applications
IoT adoption has been slower than many initially thought. One cause is the number of new elements that product makers have to add to their systems to create truly useful, end-to-end products. It’s not easy, and it’s dealing with things they’ve had little experience doing before - cloud apps, data aggregation schemes, remote device management, and graphical interfaces.
IoT applications are complex enough that few can, or should, endeavor to create everything - from the thing to the cloud. Many developers are avoiding these challenges by using an ecosystem of partnerships that leverages expertise in specific pieces of the IoT value chain.
For example, a leader in rodent control recently released an automated, wireless system. During development, they realized their expertise did not lie in understanding the complexities involved in an entire solution ; instead, they utilized tools and solutions from 3rd party vendors. The SNAP® Things Platform by Synapse® was used as a means to network and program custom edge functionality while the Exosite® Cloud Platform formed the tools for data aggregation, background admin, and user interfaces. If you’d like to learn more about this application, you can do so here: (https://exosite.com/casestudies/victor)
IN A NUTSHELL: Don't get stuck trying to do what someone else might already do much better. Focus on what makes your offering unique and differentiated. This gets you to market faster and allows you to evolve quicker. You have the joint innovation of all your partners – keenly focused on their core competencies.
Dream on! But, look for where there is true value
It’s ok to dream big with new technologies. That’s how we’ve gotten revolutionary jumps in innovation. (Cheers to you Philo Farnsworth, and not just for the hair.)
New tech gives the ability to do wild and crazy things once unimaginable. Many choose to jump at creating something truly unique in an attempt to make the next iPod or Nest thermostat. However, for each of these successful innovations there are hundreds, if not thousands, that fail. In many cases, the idea rocked – I’m looking at you Apple Newton. Successful products don’t have to be the glitziest, they just have to solve a customer’s real problems. When we start talking about the IoT, it usually comes down to the power of the data. But, what data? Just because you can monitor something doesn't mean you should, or that monitoring it constantly is best. You have to look for what provides valuable data for your customers.
Let’s quickly look at ways solutions can provide real value beyond the most common goals of reducing costs, enabling a new task or lowering energy consumption:
- Reduce Risk
- Safety costs: IoT devices can provide a lot of help in not only collecting data about usage and movement of people, but wireless systems can actively participate in preventing dangerous situations.
- Reduce downtime of key equipment: Ensure the right people know when a problem occurs, or when it might occur, and then assist in making the repair process go smoothly (diagnostics, automated parts replenishment, etc.).
- Adherence to governmental or industry regulations: New policies and standards are pushing technology into new markets. IoT devices can form practical, cost saving means of adhering to regulations.
- New Revenue Streams
- Monitoring services: Either those that make the product or those that sell the product can offer services to provide context and actions.
- Maintenance and Network management services: Offer services to watch over the network and fix issues as they occur or provide peace of mind that equipment will always be in working order
- Add-on products and accessories: Even without direct integration, companies can offer additional solutions to start monitoring existing, deployed products.
- Build partner ecosystem
- Just like Voltron, combining powers can lead to awesomeness.
The offerings of two companies can be united to create one valuable offering in the eyes of the customer.
Example: Smart Cities: As streetlights and infrastructure pieces are installed, other vendors will be able to add their point-solutions to the mix. However, it goes without saying (even if its printed here), the key to success is both parties receiving a portion of the earnings or the final combo boosting each other’s sales accordingly.
- Sticky products and brand loyalty
- You can deepen a customer relationship by adding the ability to access or control unconnected things customers deal with every day.
- Provide a compelling reason to use your standard product more frequently.
- Example: Selling an equipment monitoring device and service when you own the repair company (this can be a big scale too).
- Utilizing the data to expand existing business models
- For you as the product maker:
- Know thine customer! It gives a great advantage to know how to access markets and how to provide impactful marketing.
- The data can give insight into developing the next generation along with accessory/complementary products and services.
- For partners:
- 3rd party partners might find a different use for the data you collect.
- Don't overlook controlling things, too
- IoT is not just about data collection. There can be a lot of value in having IoT devices take actions as well. This can happen in node-to-node, GW-to-node or Cloud-to-node. The concept of distributed intelligence in action.
- For you as the product maker:
IN A NUTSHELL: Just ‘cause you can, doesn’t mean you should. Take care to implement the things that bring real value to you and the customer. And don’t just think about monitoring things; the value might be in what that data allows you to control (ex. Feedback from one sensor to shut down another machine). Bottom line, the initiative (product and/or service) doesn’t have to be revolutionary to make a big difference and thus make money!
While it might initially seem like it doesn’t mesh with the other topics we’ve discussed, security is one very big reason the IoT has not been as quickly adopted as first expected. Even large corporations are trying to figure out what connecting their “things” to the internet can mean with regards to exposing both data and their devices to malicious intent. IoT solution providers cannot ignore this. Products and services must have a great security story if they are going to be successful, and this story must be baked-in, not just an afterthought. It can be used as a selling point as customers are using this more and more as an upfront decision maker.
IN A NUTSHELL: Do not forget to factor security as an integrated piece of an offering as this can really impact adoption rates. Use a strong story as a selling point, but ignore it and risk getting passed over.
The IoT has certainly added complexity to the process of creating useful and successful solutions in a newly forming marketspace. But, the new capabilities it provides have excited the innovation imagination of product makers. Through some helpful collaboration and a focus on providing valuable things, there will be a number of revolutionary changes to how we interact with the day-to-day world around us.