Ten years ago, if you had asked the average consumer to give their perspective on technologies like artificial intelligence (AI) or the Internet of Things (IoT), you would have likely heard Terminator references or received blank stares. Today, Apple’s AI assistant Siri is used on over half a billion devices and consumer spending on connected devices in general is set to reach $62B this year. This growing comfort among consumers with next generation technologies is reflected in CSG’s latest research report, The Future of the Digital Experience: IoT Edition. We asked over 2,000 consumers – between the ages of 18 and 64, across the U.S., U.K., Australia and Canada – to share their understanding, usage and sentiment about current and future IoT applications. Their answers mirrored the upward trend of consumer IoT adoption, and as you saw in my last blog, 9 out of 10 consumers said they already own a connected device.
For companies that want to generate new revenues from the IoT opportunity, it will be essential to expand and flex their business model to include a new ecosystem of partners that together, improve the lives of consumers. From connected trash bins, to buildings with smart sensors that warn of problems before they happen, the IoT requires a new business ecosystem of partners who challenge traditional thinking around who serves the consumer and how.
For example, many of the companies looking to move into IoT such as consumer goods or edge device component companies, have never had to think about the onboarding, management, network connectivity, activation, mediation and monetization of the end consumer – whether an individual or enterprise. This has been the job of a retail partner, or third-party distributor. IoT changes this world and introduces new complexities, and many changes into existing commercial models.
To monetize new IoT services requires rethinking the very bedrock of the way that organizational business models are aligned to serve today’s digitally connected and mobile consumer. CSG has identified 4 pillars to success to capitalize on the connected-everything world:
The Right Business Model
Changing, or in some cases introducing, a business model to better take advantage of the IoT opportunity isn’t as simple as putting new technologies in place or charging a credit card for a monthly recurring subscription. Business models must support the flexible nature of the IoT and tie usage policies and the collection of data to the commercial structure. IoT, at its very core, rewards organizations that align ecosystems and partnerships to introduce new value-added services. This become more about how those relationships evolve and the creativity in the business models that can exist, requiring more flexibility in the back-office systems required to support these models.
The Right Partners
Supporting the devices, people and services that are, and will be, connected by the IoT requires an increasingly complex web of partners and connected ecosystems that share knowledge and develop new applications, products and services. In IoT, these partnerships will create the differentiation between offerings and ultimately the value received by the consumer. How IoT providers allow these ecosystems to quickly evolve to support the need will become a competitive differentiator.
The Right Technology
The cloud is the enabling platform for speed and agility and moving back-office functions to the cloud in particular can provide a lift in speed, scale and reduced operational cost. In turn, this will provide an improved ability to white label third-party solutions, create new billing models that match the IoT service being deployed, manage a value chain and settle revenues with multiple parties in the ecosystem.
The Right Mindset
In IoT, the very definition of who a digital consumer is becomes a critical mind shift – we cannot think of consumers as a device, or a location, or a facility. An organization’s entire mindset from the inside out must focus on delivering an evolved customer experience, regardless of who those customers are in the digital ecosystem…from consumers, to vendors, to partners, to enterprises.
Building new revenue opportunities from the emerging IoT isn’t just a technology strategy; it’s a business strategy. With every connected device comes significant new opportunities to create value through managing complex platform and service ecosystems, data and analytic offerings, and much more.
For more information on CSG’s IoT survey, check out this infographic.