By the end of 2022, there will be more than 14.4 billion connected devices with expected growth of 18%. With such massive growth in the field of IoT, it’s safe to say that this isn’t just another trend; it’s the future. With IoT in place, organizations are getting improved productivity, cost-effective operations, better resource utilization and whatnot. But the primary aspect is still left out of the discussion, which is how to make sure that the organization can monetize IoT
Before digging deep, let’s start from the basics…
As we all know IoT stands for ‘Internet of Things and it describes an environment where day-to-day devices are connected to the internet. IoT promises widespread automation and data exchange, which will eventually change the way we work and live. Information travels between devices to automate the processes eliminating the need for human intervention. In the end, IoT enhances the up-time and accuracy of a task by decreasing the number of people involved in the procedure. Now, this is responsible for bringing a seismic shift in the industry because connected devices bring learning and revenue opportunities. That’s where IoT monetization comes into the picture.
When we talk about IoT monetization it’s related to making money with IoT. We can get a better understanding of this with a utility use case. Water or electricity supply is a volume business and with usage of IoT in this field proffers various monetary benefits. If we consider water supply, then with IoT implementation there are the following advantages:
Automatic Meter Reading: With IoT smart water meters, water usage can be effectively managed. These meters can easily send daily readings to a network of receivers, which forms a two-way data sharing between meters and billing systems. This eliminates the need for a personal meter reading.
Automatic Leak Detection: With smart sensors incorporated into IoT water distribution systems, it’s easier to detect leakage in real-time before too much water gets wasted. It also allows controlling the water flow remotely.
Water Quality Monitoring: IoT embedded water monitoring system is designed to record the water quality data and transfer it to the cloud with the help of gateways. This way the authorities keep a check on the water quality from the remote location.
All the above-given benefits lead to financial savings for the water billing departments, as the labour work is reduced and water wastage can be controlled in real-time.
This is one of the examples; in different sectors, IoT is monetized in different ways. The issue arises when the organization don’t know how to improve the monetization factor. Let’s first find out how CSPs are currently capturing value in IoT.
The existing scenario is this, that TSPs are struggling to capture IoT’s value. IoT revenues are at best just 1% of the total revenues of the CSPs. The majority of the revenues are coming from connectivity, which is a very small part of the overall IoT solution and offers low margins.
It’s not easy to move up the value chain, as it needs investments, competency build up and partnerships. CSPs are very much capable of capturing value from the upper layers of the stack by offering value-added services on top of its connectivity.
IoT itself is a complex, fragmented and scattered technology and simultaneously integrations and interoperability offer a substantial challenge.
IoT delivers desired results by combining data, devices and analytics to produce business-related insights. Now the challenge arises when the IoT application is required to be connected to multiple endpoints (ERP, CRM, Billing, etc.). These endpoints can be external too like weather information, road traffic information, Taxation info and more. Now, the CSPs are kind of conventional and slow when it comes to opening up to the world of APIs. This is also the reason why integrations and IoT ecosystem development gets costly and complex.
Whether CSPs decide to launch their own vertical IoT solutions or become a platform for third-party vendors, an IoT enabler will be necessary for monetization. IoT monetization includes charging, rating, payments, invoicing, configure-price-quote and general ledge integration process.
Just offering your customers wireless connectivity and managing their devices won’t lead to meaningful IoT profits for the CSPs. For moving up the value chain and to become an IoT service provider, CSPs need to combine connectivity with third-party software and hardware and then sell that bundle as managed services. Service providers must understand that monetization isn’t just about connectivity but about revenue sharing and partner management.
There’s no doubt that the CSPs are ready to become an IoT providers which is much more than just dumb pipes offering connectivity. They can make the best use of their communication managing capabilities between multiple parties by taking advantage of relationships with enterprise customers and hence enhancing existing monetization abilities. But CSPs should move fast to best capitalize on the IoT opportunity.
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