How to Monetize IoT in the Post Pandemic Era

In the last few months, the Corona Virus pandemic has been quickly rolling out across the world. Prime economies of the world have been hit hard by this crisis.  We are now in an era where industrial operations, smart homes and smart offices are driven by various connected devices, which will soon outnumber humans. Business and operational models based on IoT abilities are still very conventional and the expected benefits have typically focused around how to procure incremental value via improved productivity, process automation and maintenance cost reduction, etc.

However, more and more decision-makers are now recognizing the innovative potential of IoT and are likely to improve its current value stream and more efficiently utilize and monetize the data gathered.

The global IoT monetization market size was evaluated at $44,198 million in 2017 and is predicted to reach $1,361,395 million by 2025, developing at a CAGR of 53.6% from 2018 to 2025.  However, statistics also reveal that 70% of organizations are unable to create service revenues from their IoT Solutions. This shows that most organizations have yet to acquire important commercial value from IoT.  The article describes various IoT monetization models and how they are going to change post-pandemic.

Challenges Businesses Face While Monetizing IoT

The Existing IT Infrastructure is not that consistent to assist the increasing volumes of sensor data. Such huge volumes of sensor data from connected devices challenge the standard data storage and management abilities of organizations. Many companies have a shortage of resources to process the sensor data, which is necessary for the collection, analysis, integration and visualization of data in real-time.

In spite of all the excitement and hype generated around this area, service providers will have to defeat different complex challenges to recognize the full potential of IoT. The challenges that enclose IoT involve: interoperability, customer experience, business models, security and building a profile of IoT products and services for vertical markets. However, one of the significant challenges is monetization.

The IoT extends the challenges of data security and privacy. To define the value of the product and to fulfill customer expectations is another big challenge. IoT products need a sales force that is secure in articulating their value scheme and potential advantages. The development of internet-enabled devices has increased the expectations of customer support.

IoT solutions may further tend to the difficulty of queries. With the help of better connectivity, customers today predict faster support, perhaps in real-time. Many businesses lack the necessary skill-sets to effectively understand sensor data. A recent interview highlighted the issue that resistance can come less from the customer – and more from within the organization, making it riskier to line up current business processes with new IoT-based service offerings.

Enabling IoT Monetization

So, as the IoT concept evolves, operators need to look beyond connectivity, companies require to concentrate on how to generate revenue from the IoT business. Many decision-makers are now recognizing the potential of IoT and are more likely to utilize it to monetize data collection. Many leading businesses on the internet today have recognized two main phases in IoT. The first phase is where the main aim is to create traction and second phase where the concentration is on monetizing.

IoT Monetization Models

There are four models to monetize IoT focus on hardware, services, data, or ecosystem building.

Hardware Premium

We can say that this model is meant for adding connectivity value in current product infrastructure. The pilot point here is the advantages of the product that the product itself. The driving force here is the creativity facet that attracts the customers.

Service Subscription

Another way to monetize IoT is by providing high- benefit services or extra features over the existing production infrastructure. It supports to build up the customer relationship, also further allowing the company to build regular revenue.

Data Revenue

Data is not only about improving business efficiency or service it can also be utilized for regular sources of revenue for the organizations and for third parties. Businesses today are looking further to investing in data that assists them to better interpret their customers and enhance their marketing effectiveness.

Ecosystem Building

In this phase, the central point is a shared platform by service providers of hardware and software and other IoT businesses, more than a service or a product. Such a model enables the platform promoter to acquire economic benefits from end customers and other platform users.

Usage-Based Billing to Improve Monetization

Usage-based billing method enables customers to only pay for what they’ve utilized in each billing cycle. This method is already been utilizing by many businesses due to the IoT device’s natural capability to gather data that supports to clearly demonstrate the usage of the device or service. This can further be utilized to signify clear billing cycles that restore on several frequencies.

Monetizing the gathered data can be utilized for direct billing purposes to pay attention to a new product that the consumer might require. The data can further also be utilized for a monthly revenue stream by offering the customers the chance to “subscribe” to these reusable items/services.

IoT Monetization Strategies for Post Pandemic

Many organizations are now focusing on most of their IoT products and services in the new normal, below are few areas that need to be considered for IoT monetization strategy.

Monetization Perspectives

The value chain assembling approach will be largely accepted among industries that make asset visibility and location-based services a prime concern. Participating in collaborations and partnerships will support enterprises to generate more value. However, outcome-based pricing and data monetization with more resilience in pricing and offer models can support in acquiring relevant outcomes.

Subscription Offers

The basic models for businesses to monetize IoT solutions are- service subscription, software sales and hardware sales. A subscription model allows you to apply many of the advantages available to software-only products within your IoT solution. Organizations can select the hardware packaged with services or the as-a-service business models that need proper software enablement.

Data Monetization

Advanced analytics, real-time streaming and data management/exchange services will extract most monetization benefits. By utilizing these methods, industries can get faster time-to-value of data from the connected devices and strive for industry collaboration to address the needs for cross-industry data.

Solution Enablement and Support

Organizations can select from observance, platform services and solutions, professional services, or IoT managed services to allow the monetization solution. Including trust and security to solutions needs greater technology and supplier awareness, so, the consultation on the best perspective, specifically for global enterprises are needed. Packaged offerings will now be required more than ever to drive flexibility and visibility into the supply chain.

So it is very essential to have a logical strategy for how to monetize your IoT product. IoT Solutions offer many new and innovative business models for monetization of your product.