IoT business models in an industrial context

Abstract

here is a broad consensus that the transforma-tive power of the Internet of Things (IoT) will affect allkinds of industries; or, to put it in a more optimistic light,that almost no domain is excluded from the opportuni-ties to leverage the IoT. But, what does this mean for thefuture of industrial processes? This article introduces theconcept of high-resolution management (HRM). IoT en-ables the collection of high-resolution data for the phys-ical world where, as in the digital world, every aspect ofbusiness operations can be measured in real-time. Thiscapability facilitates high-resolution management, suchas short optimization cycles in industrial production, lo-gistics and equipment efficiency, comparable to methodslike A/B-Testing or Search Engine Optimization, which arestate of the art in digital business. We take the followingtwo perspectives on leveraging high-resolution manage-ment. First, through greater insights into their industrialprocesses, companies that apply HRM in their operationsare able to achieve higher efficiency, quality and flexibil-ity. The example of vehicle fleet management illustratesthis effect. Second, we buildupon the St. Gallen BusinessModel Navigator in order to look in greater detail on howthe IoT affects industrial processes. Gassmann et al.¹in-troduce55generic business model patterns, of which our xtended research identified20that could profit signifi-cantly from the IoT².Analyzingthese20patterns allowedfor the identificationof six key components:Remote Usageand Condition Monitoring,Object Self Service,Digital Add-on,Digital Lock-in,Product as a Point of SalesandPhysicalFreemium. These building blocks help companies to sup-ply HRM-supported offerings. Finally, the example of re-mote monitoring of process parameters shows that thesebusiness model components can also be deployed to cre-ate offerings that enable others to apply HRM.