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With digitization altering the business-consumer relationship in a big way, businesses are being forced to find new ways of keeping up with increasingly demanding customer expectations. The good news is disruptive technologies such as cloud, big data and IoT are coming to their rescue. The Internet of Things (IoT), in particular, is helping organizations speed up product development, improve services and strengthen competitive advantage. According to Harvard Business Review, as the Internet of Things (IoT) spreads, the implications for business model innovation acquire greater significance. Merely filling out well-known frameworks and streamlining established business models won’t be enough.
IOT gathers steam
Over the last couple of years, almost every industry – whether product or service based - has witnessed a significant shift. Companies are relying on IoT and cloud-based platforms to improve their bottom line. According to IDC, by the end of 2020, close to 50% of new IoT applications built by enterprises will leverage an IoT platform. So, how does IoT help businesses achieve their current goals and prep them for future growth? Here are two ways to propel growth through IOT.
Capturing data to build solutions
Suppliers are now under pressure to meet consumer demands faster as well as more efficiently and effectively. Customers expect brands to guarantee and achieve specific outcomes through innovative products and services. This pressure on businesses has given birth to the need for massive data capturing at all levels of product/service delivery. This is where IoT comes in.
IoT solutions provide real-time data through interconnected devices, enabling businesses to get smarter and minimize their costs and downtime by monitoring and analyzing the captured data. Not only can the data be used to make processes more efficient but also to study consumer behavior. With inter-connected products and services, real-time analytics leads to more accurate projects and effective forecasting. BMW’s attempt to make fully autonomous cars is a stellar example of using IoT to capture and analyze data. Intel, BMW and Mobileye have partnered to launch a fleet of autonomous cars by 2021. A humungous amount of real-time data, from visual stimuli to reflex responses, is captured and processed in an attempt to make this feat possible.
Introducing new business models
Business models aim to improve customer experience with the goal of ultimately improving the bottom line. With the help of IoT, one can actually monitor how customers interact and react to a certain experience. IoT also allows revenue points to grow from physical products and services to other revenue streams. Business models with recurring revenue such as subscription is often the investor’s choice as such models do not rely on repurchase or customer loyalty to drive growth. An IoT subscription model through connected devices is therefore a great option for effective monetization. An outcome-based model is another IoT-led model where the business moves from just selling its product to delivering the desired outcome(s). This innovative model is the most client-centric and the entire onus of collecting, analyzing, and processing the outcome is on the company. IoT can also be used in a service model where companies generate revenue by leasing their IoT-based solutions.
Businesses across finance, healthcare, real estate, manufacturing and retail are leveraging IoT - some faster than the others - by dynamically adopting data collection solutions and business models that work the best for their particular needs. According to IDC 2016, 55% of companies consider IoT as a strategic means to competing more effectively. As businesses eagerly embrace IoT to drive differentiation and growth, there are clear signs that neither industries nor competition will remain the same. Those organizations that innovate by pushing the IoT envelope early on will position themselves for competitive success.