Instead of selling a product, organizations can use a service IoT business model to monetize physical products as a service.
Many business models have been limited to monetizing software, but any physical product with IoT technology can follow a service model.
Vendors offering anything-as-a-service business models have capitalized on organizations' desires to have key parts of their operations managed and maintained off-site and IoT has expanded service model opportunities. Instead of owning a product, organizations can pay a recurring fee based on the profit and loss.
The IoT business model is based on the power-by-the-hour model coined by jet engine maker Bristol Siddeley. For example, airlines don't want to own and maintain jet engines, but they want the ability to fly their planes. Instead of purchasing the engines, airlines under the service IoT business model pay a fee based on the key productivity indicator (KPI). In this case, the KPI is number of miles flown per paid seat. Organizations from many industries other than airlines can apply a service business model.
The ICIP IoT training program aims to help professionals solve the most pressing challenge of IoT: creating a positive ROI and profitable business. Learn more about the ICIP IoT training program.