Prepare the Ground for Two New Commercial Strategies in Enterprise IoT

September 23, 2015

By Emil Berthelsen, Principal Analyst, Machina Research

This final blog post in the ThingWorx Enterprise IoT series will address two new commercial strategies which enterprises will need to consider and ultimately implement as part of their core business strategy: collaborative advantage and data pricing. Both of these strategies stem from an increasing focus on applications and data in the Internet of Things, as well as an emerging trend whereby potential sources of sustainable revenue will come from the services generated by aggregated real-time data, rather than from the enterprise’s products alone.

Collaborative Advantage Displacing Competitive Advantage

Closely related to Big Data and data analytics, this new dimension of advanced analytics is enabling enterprises to identify and deliver real and significant value based on new IoT architectures. For example, enterprises are improving industrial and manufacturing processes by implementing product tracking technologies – not only within manufacturing plants, but also by applying the benefits of these technologies to the entire supply chain, from the raw material to the finished product sold by the retailer. In these broader and aggregated data environments, or Subnets of Things1 , data sharing becomes an overriding priority, and collaborative advantage a significant market driver.

In closed, competitive environments, data is closely protected and sharing is limited. However, in the Internet of Things – where product-based services are often designed using aggregated and analyzed data from third-party sources – data sharing becomes an important market factor. Of course, we do not envisage that all data from within an enterprise will be made available to every other enterprise in the industry. Nonetheless, we do expect to see the market adopting a significantly more open and collaborative approach. And for those who doubt whether this is possible, we have already witnessed several examples of this kind of beneficial and necessary collaboration, for instance in the airline industry (where flight schedules, routes, pricing information, availability, etc. are shared) or in meteorological institutions, where data is shared openly for the benefit of all.

It goes without saying that sharing data at this level will introduce additional challenges in terms of data ownership, protection, and security. However, in order to reap the potentially significant benefits offered by the IoT, convincing enterprises to pursue collaborative advantage on the basis of data sharing looks to be the way forward.

Be Prepared for Commercial Negotiations on Data Sharing

Given the increase in partnerships and collaborations, enterprises will inevitably begin to invest more time and attention in commercial data sharing arrangements. In some cases, this will delay the process of actually sharing the data; however, we anticipate the emergence of new service providers that will assist enterprises with this process and help them to monetize their data. Early and emerging service providers include SenseIoT and C3Energy.

Monetizing data is not new. However, one major difference compared to earlier models is that the data that is resold will generally form part of a much wider and aggregated set of data that is processed, analyzed, and resold as valuable information affording new insights. One successful example of this approach is INRIX, a leading provider of traffic management and movement analytics solutions. Drawing from over 400 different data sources, INRIX aggregates and analyses data using highly advanced and complex algorithms, thus producing some of the industry’s most accurate and detailed information for leading navigation systems and movement analytics solutions. 2

1For more information about the concept of Subnets of Things, including how discrete data communities or Subnets of Things will be the first step toward an Internet of Things, see “Big Data in M2M: Tipping points and Subnets of Things,” published by Machina Research in February 2013, and our Research Note, “More of a network of Subnets of Things than an Internet of Things?” published in September 2014.

2For more information about INRIX and movement analytics, see the White Paper “Movement analytics delivers an untapped revenue opportunity for mobile operators,” published by Machina Research in February 2015.