We are starting to move beyond the initial emergence phase of the Internet of Things. Until now discussion on IoT has monumentally focused on the technology enablers: access technologies, software platforms, standards, protocols and so forth. Less focus has been given to the what we do with these tools. At Machina Research, through our Enterprise IoT Research Stream we are focusing a huge amount of attention on the implications that IoT has for how companies do business, such as company structure, skill sets and monetisation. Increasingly the conversations that we have as analysts are with enterprises thinking seriously about how IoT will affect them, as well as with suppliers looking to plug that gap in enterprise capability. I spent some time in Israel this week, speaking with new tech start ups. One of the emerging trends there, along with the sheer volume of technology innovation, was the number of companies looking to support the evolution in enterprise business processes necessary within IoT. In this article, I want to focus on just one of these business issues that needs careful consideration: monetisation.
As has been well documented before, IoT covers a diverse range of enterprise and consumer use cases, each with their own characteristics and requirements, and many transformational in their impact on enterprises. Each will also have its own requirements for monetisation. As documented in our recent White Paper ‘Successful monetisation of the Internet of Things will bring a $1.3 trillion opportunity’ some will be simple, based on the transmission of data, but over time we expect the business models associated with IoT devices to become ever more complex. For instance we will see the emergence of multi-sided business models where IoT devices support multiple services charged for in different ways including ad-funding and sponsorship. We also expect many enterprises to take advantage of the opportunity presented by connectivity to move to ‘servitisation’ based business models, selling services rather than products. Even more sophisticated will be the business models based on data analytics and data exchange, all of which will require complex settlement between multiple parties.
These changing business models bring with them more complex monetisation requirements. Machina Research has looked at its global IoT forecasts through the prism of monetisation and identified that a large and growing proportion of the revenue associated with IoT is related to the more sophisticated monetisation opportunities outlined above. Specifically, between 2014 and 2024, there is a total of US$1.3 trillion in IoT revenue that is available to companies that have sophisticated monetisation capabilities. Here we are considering every company that may want to sell IoT services. In many cases this is specifically one of the key capabilities that Communications Service Providers bring to the IoT equation, i.e. the ability to charge for different services.
Machina Research also identifies seven key capabilities required by a monetisation platform for the IoT: it must be scalable, open, real-time, flexible, transparent and secure, agile, and built with the diverse requirements of the IoT in mind. The telecoms sector has a very strong legacy in billing and charging, and is light years ahead of most industry sectors affected by IoT. Compare, for instance, the relative sophistication of billing for mobile communications services compared to utilities. However, even telco billing needs to evolve its handling of payment for services if it is to provide the underlying support for monetizing the Internet of Things.
On the 1st December, Machina Research, in conjunction with Redknee, will host a free webinar entitled ‘Successful monetisation of the Internet of Things will bring a $1.3 trillion reward’. See our website for details on how to register: https://machinaresearch.com/news/new-machina-research-study-points-at-us13-trillion-opportunity-for-successful-monetization-of-the-internet-of-things/
The author of this blog is Matt Hatton, founder & CEO, Machina Research
