24 May 2015

IoT revenue generation requires smart- planning and licensing models


If you want to generate additional revenue from your products by connecting them to the internet of things (IoT), the right steps and planning can help you achieve results while maintaining your competitive advantage and creating more rewarding customer relationships. Here are a few suggestions as you plan for your IoT revenue, so you can distinguish your offerings and organization from the huge IoT landslide that is currently in progress.

Simplifying IoT business models

Outrageous economic predictions accompany the fast growth of the IoT. Analysts have asserted that the providers of products and services who incorporate the IoT into their business model are set to produce $300 billion in additional incremental revenue by 2020. Overall, economists anticipate that the IoT will add a value of $1.9 trillion to the global economy through sales into various markets. In a survey by Gartner from February 2015, 63 percent of the respondents stated that the IoT would within five years either result in significant new revenues or savings, or completely transform their businesses.

That kind of outlook causes many business leaders to wonder about how they can make the IoT a part of their business model and sustainable achieve revenue from it. There are several important considerations in planning for revenue returns from the IoT.

For one thing, it’s a good idea to keep things simple, which will also help manage the needed investment. The recommendation is for companies to begin by building a single device model that contains all valuable capabilities, as opposed to a series of similar devices with different sets of functionality. Companies can offer customers a variety of licensing agreements that enable them to access subsets or the entirety of the device’s functionality. They can combine this with entitlement management, which enables manufacturers to centrally implement and manage customer access to device functionality. They can restrict and unlock features, offer bundles of functionality, and offer customers a variety of upgrade paths.

Software services and market insight

In differentiating an IoT-connected device from its competitors and help companies monetize all aspects of the product, the software that comes with the device is at least as important as the hardware, and far more flexible in adjusting to different contracts and service agreements. Companies can offer software licensing along with licenses or purchase agreements for the devices themselves, and subscription-paid software updates can make a strong contribution to revenue.

As the IoT grows rapidly and large numbers of companies are looking for ways to generate IoT revenue, timely and reliable market intelligence becomes extremely important. Companies need to have the reporting and insight tools to make sense of the big data that IoT-connected devices provide about their utilization and performance, and use it in planning their competitive strategy and growth into additional markets. Without that insight, they will not be able to properly segment markets or implement tiers of device and software functionality for certain customer populations. These BI tools are also critical if companies aim to produce revenue by selling or licensing the use of packaged data collected from IoT sensors. To provide transparency and planning capabilities for all aspects of the business, they should also connect to the back-office, where companies need to have robust, scalable systems to manage the customer care, financials, field service, logistics, and other operations that surround and support IoT networks.

Io T Monetizing

In addition, companies will need to protect the intellectual property associated with IoT devices and software by means of proper agreements and licensing structures. They also need to address the risks the IoT brings. We will talk about that in the next blog post.

Got any great ideas for generating IoT revenue and would like to share? Get in touch with me or contact To-Increase.

Luciano Cunha
Luciano Cunha,
Luciano Cunha,
Chief Executive Officer (CEO)

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