The Internet of Things has received much attention in Switzerland these last few years. The ability to monitor and manage objects makes it possible to arrive to data-driven decisions. Companies that use IoT to develop new business models and find ways to monetize unique IoT data are likely to enjoy more sustainable benefits, which goes beyond the technology stack of IoT.

Selling a service

The most advanced of the emerging business models in the IoT is based on ‘servitization’, i.e. switching from one-time selling of products to selling services. For software companies like Salesforce, Adobe or Apple, which successfully implemented this approach, this isn’t anything new. In the future, this will also be the way to connect smart things. Providing ongoing services will add real customer value and, as shown in the image below, IoT-applications can be properly monetized over a longer period of time. As the IoT becomes increasingly sophisticated, the ‘as a Service’ business models are getting more complex due to multi-tenancy billing, cross charging to other accounts, usage-based charging billed to a third party, etc… An emerging path to monetize the IoT is by enabling stakeholders in the IoT ecosystem and cultivating customer loyalty through a scalable, open, agile and flexible framework.

Key capabilities for new business models

The scope of connected smart things is enormous. Gartner predicts 20 billion connected devices by 2020. That is why any monetization solution for the IoT must be highly scalable, which almost inevitably means using a model that is focused on services. Succeeding in the IoT realm is about cooperation with various suppliers, because no single provider can cover the whole IoT value chain. To apply new service-oriented business models, platforms must be multi-tenant because business models will be multi-sided, and data sharing between multiple parties is essential. That is why a platform’s openness is going to be all-important. The Internet of Things is usually integrated into the broader business processes of different stakeholders. To add even more complexity, IoT business models are constantly evolving and changing. To secure sustainable, recurring revenues, systems and processes must be developed, integrated and improved in an agile manner. And different stakeholders in a respective ecosystem have different demands regarding the applied business models. This opens up endless possibilities and successful platforms must be able to cope with them all.

Business model innovation with the Internet of Things

A broad variety of companies are already using recurring business model patterns. The models suited for the IoT, as illustrated below, can be used individually or in combination to meet customer needs and to sustainably increase revenues.

The example of Digitec Galaxus AG illustrates what this can mean in real life. The company has a broad portfolio of conventional electronic devices, such as network cameras, hotspots, routers, speakers, GPS trackers and alarm systems. All items that, with the help of the internet, can be connected to each other to enhance and multiply their performance. For example, it could be helpful to have an overview of connected cameras, alarm systems, routers and hotspots. Or, a customer wants to check the status of his or her Bluetooth speakers that are all linked to each other.

To do so, Digitec Galaxus offers IoT-SIM cards used in smartphones or tablets and provide users with a web portal to easily and simultaneously manage all their devices. Just like a mobile cockpit, everything can be steered and controlled with one device. The integrating platform does not only provide a smoother customer experience, but also creates recurring revenue, since Digitec not only sells the respective devices, but also the on-going subscription service.

Further subscription offerings such as Product-as-a-Service or usage-based insurance for gadgets are now just a stone’s throw away. The foundation now exists for a broad service portfolio for private and business customers.

A one-stop-shop for new business models and IoT SIM cards

Digital Republic focuses on two main areas. To benefit from the advantages of the Internet of Things, connectivity is key and it needs scalable and easy-to-use solutions to achieve it. The on-going digitalisation of the work place creates the need for machines that communicate with each other swiftly, easily and effectively. As a BAKOM registered telecommunications service provider, we offer a one-stop-shop for IoT/M2M communication. People can use the «Connect» data SIM cards to connect their smart devices over the best 3G/4G/LTE mobile networks.

Our second core competency is the implementation of new subscription- and usage-based business models. As previously mentioned, cultivating customer loyalty by providing a scalable, open, agile and flexible framework to benefit from the Internet of Things gives companies a competitive advantage. The customer experience is enhanced by not only relying on smooth running machines, but also by being able to monitor, tweak and update workflows.

As Marco Arnold, one of Digital Republic’s CEOs says: “Shifting to selling subscriptions is a major challenge for customers and their legacy IT systems. Subscriptions require new processes from CRM, provisioning, rating to billing as well as customer self-care and our IoT Business Suite is able to deliver all the required components in one platform.”

Digital Republic, founded in 2016 by IoT/M2M specialists Marco Arnold and Ali Soy. Without believing in traditional office structures, the young company is often to be met in the 25hours Hotel on Langstrasse, Zurich where they coordinate their emerging business.


Author Stéphanie Schenk, digitalswitzerland

Head of Communications and Marketing

More posts by Stéphanie Schenk, digitalswitzerland