Many consider data to be the new oil. Others refute this thesis and animate a debate on the correctness of this metaphor. Try typing “data new oil” in Google and you will see the result.
Oil or not, there is no doubt data contains an enormous intrinsic value that can be exploited. Thus, let’s keep this debate aside and address a fundamental question: how can I generate revenue from IoT data?
When we want to answer this question it is essential to define the business domain first. It doesn’t make sense to look for generic anwser, valid for all types of IoT applications. The answers can in fact be very different if we consider different domains such as smart city, smart building or smart manufacturing.
IoT-enabled connected products
Let’s define our business domain, then. Our focus in this post (and the very one of our company) is the IoT-enabled connected product.
In a previous post we talked about the connected product being the first digital step towards servitization. Once this first step has been implemented, you will begin to collect a large amount of data from your connected products. At that point you will ask yourself: how can I generate revenue from the data coming from my connected products?
Monetize IoT data
A first answer to this question could be: sell directly the data to product users.
However this could not be easy, for a number of reasons:
- users could argue that the data is already owned by them; the data are in fact generated by their use of the product;
- IoT raw data is not immediately actionable; it requires some data analytics processing and product users could not have the knowledge and capabilities necessary to perform this processing;
- the value of IoT raw data is directly proportional to quantity; to maximize the value you have to wait until you have collected big amount of data (Big Data).
Monetize IoT-enabled services
An alternative to selling directly the data to product users is exploiting the data for selling IoT-enabled services.
This could generate much more value for a manufacturing company. Let’s make a comparison:
|IoT data monetization||IoT-enabled service monetization|
|Ownership||Product users are offered to purchase data, but they could argue that the data are already owned by them||Product users are offered to purchase valuable information and insights; these belong to the manufacturing company|
|Know-how||Product users could lack the know-how needed to transform data into actionable insights||The manufacturing company takes charge of the transformation of data into actionable insights, by exploiting its unique know-how about the product|
|Value||The value of raw data is proportional to quantity; big value is only generated by big data||The value of information is proportional to the benefit this information gives to the user; even a small amount of data can generate great value if it helps create a gain or solve a pain of the product user|
In conclusion, if you have just created your connected product and are wondering about how to monetize data, try taking one more step. You can use that data to create IoT-enabled services to sell to your customers. Such services will be empowered by your unique know-how and will be your new competitive advantage. They will generate more revenue than raw data by itself.