May 15, 2018
The Internet of Things (IoT) is reconfiguring industries from the inside out. That's not merely because of its tremendous economic impact, which McKinsey projects to be at least $3.9 trillion by 2025. It's also because the IoT makes entirely new business models possible, while radically enhancing and disrupting others.
Here's a small sample of the IoT's transformative power and the new opportunities it's creating.
The "as-a-service" revolution
Increasingly, all kinds of businesses want to replace their discrete, one-off sales model with an ongoing, subscription services-based model that combines products and value-added services within the framework of a long-term relationship. Subscription models can be better for both business and customers. Businesses get more consistent and recurrent revenue streams. Customers no longer have to make big capital investments, and they get the ability to easily scale their capacities up or down, as well as access to superior support and service.
In recent years, advances in cloud computing, connectivity, and related technologies have made all that possible, and the "as-a-service" business model was born. It started with software-as-a-service (SaaS) but quickly became about more than just software.
The IoT has given this already powerful new business model a shot in the arm.
Adding precise, low-cost, always-connected IoT sensors and monitoring devices to the products that you sell and install enhances the types of services you can provide. The real-time and historical data that IoT devices generate allows you to do preventive maintenance, for example. Automated alerting and even predictive maintenance become possible, too. All this makes the technological investment associated with the IoT worthwhile.
For an illustration of how powerful the IoT-enabled as-a-service business model can be, consider the transformation of Edison Electric Co. The venerable electric equipment company, founded in 1890, was able to thoroughly transform its business model with the help of the IoT. Now it makes wireless sensors that manufacturing plants can install on pipes and conveyor elements — to monitor vibration, pressure, flow, and temperature. These sensors, which plant operators or vendors monitor remotely, can improve productivity, not to mention help prevent hazardous incidents.