Cashing in on the Internet of Things requires agility
Key to this is the ability to quickly and easily create monetisation, pricing, and mediation schemes, enabling monetisation business strategies that didn’t exist yesterday. It doesn’t matter what one is trying to monetise: API calls, MRI machines, car services, security, voice services, storage, or access.
Brendan O’Brien, co-founder at San Francisco-based Aria Systems and the inventor of cloud billing, agrees that the IoT is probably the most hyped technology in his lifetime.
“But the huge upside has yet to materialise,” said O’Brien. “While many companies are driving customer service, operational, and supply chain improvements using IoT, most companies are still working in the margins when it comes to monetising IoT. When companies upgrade their systems only then can the hype be actualised.”
Following are two trends bringing about the “Monetisation of Things”:
1) All revenue will become recurring revenue. Think of the variety of consumption and subscription-based business models. Perhaps not in the next 12 months, but the mandate is clear: customers increasingly want what they want, when they want it and how they want it. Already 47% of U.S. businesses have adopted or are considering adopting a recurring revenue model to be able to respond rapidly to customer demands and the number is steadily rising. Billing as we know it is broken. The $8.9 Trillion dollar IoT opportunity requires new approaches to billing and monetisation. Without agile billing engines behind recurring revenue models, IoT offerings will fail to fully launch.
2) Usage will be the key driver for IoT monetisation. There is a gold mine in the data collected from IoT devices, sensors, etc., and a green field opportunity for companies to determine how to provide value to customers from that data. But of even greater value will be the role usage plays in customer retention. For customers to buy offerings on an active and repeating basis over time, you need to know them very well – to anticipate their needs, maximise their satisfaction, and present them with cross-sell and upsell opportunities they love. That knowledge comes from usage data. Understanding how customers consume products and services provides insights into their habits, behaviors and patterns that can’t be seen otherwise. The vendors who succeed at getting close to their customers will win the IoT market.
There are many use cases to consider. One major industry already benefiting from usage and consumption-based models is healthcare but others abound.
The author of this blog is Brendan O’Brien is the co-founder of San Francisco-based Aria Systems.
About the author:
Brendan O’Brien is the co-founder of San Francisco-based Aria Systems and Described as the inventor of cloud billing. A frequent speaker on IoT subjects, he is also at the forefront of the recurring-revenue revolution that is empowering enterprises and specifically enabling information systems and new business models, including IoT usage-based models to secure predictive revenue streams.
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