IoT Driving New Business Models

Joe Stanganelli

Updated · Nov 04, 2014

The Internet of Things is a misnomer.

While both the Internet and “things” are involved, IoT is not really about “things.”  Rather, IoT is about new possibilities made accessible to customers. It is an Internet of Solutions.

Accordingly, here are three real-world examples of new, useful business solutions driven by the Internet of Things that were discussed at the recent Connected Cloud Summit in Boston.

IoT and Climate-Control-as-a-Service

If IoT is an Internet of Solutions, it follows that it cannot exist without an actual problem to be solved.

“Where do you start [with IoT]?” Ariane Lindblom, vice president of Product Marketing at ServiceSource, a provider of revenue management software, rhetorically asked event attendees during an executive roundtable panel. “What is the use case? What’s the customer problem we’re [trying] to solve?”

The example Lindblom highlighted is a problem most offices face at one time or another: terrible climate control, stiflingly hot winters and freezing summers. She expressed the problem succinctly: “What you’re really trying to do is to get a room at the right temperature.”

She mentioned a ServiceSource prospect that is no stranger to this problem – a traditional, commercial HVAC company. The company wanted to “move [its] model as more of an outcome-as-a-service.”  Now, its customers pay strictly for temperatures between 70 and 72 degrees Fahrenheit.  If the temperature falls below or above that range, the customers pay nothing.

This climate-control-as-a-service, Lindblom said, is a “cool idea, and it solves a problem” – specifically, the problem of cost optimization. Customers of this service have seen a “huge reduction in cost on [their] heating and cooling bill,” making it worth paying for.

Yet Lindblom doesn’t consider the prospect’s work done. In an on-site interview at the Summit, Lindblom pointed out that the HVAC usage data can be further monetized. As with any customer data, it’s just a matter of figuring out how.

“Develop new services that go [with] it,” Lindblom advised. “It helps you be much more customer-centric.”

IoT’s Cool Supply Management

New England Biolabs had some problems. The company also had a solution to its problems without even realizing it. Specifically, New England Biolabs makes and manages commercial freezers that are used by scientists. The business model presented difficulties in inventory management and other pain points.

“We have these freezers,” said Ruben Melo, business systems manager of New England Biolabs, in describing the thought process leading to the company’s epiphany. “Since our customer information is already on the cloud, could we possibly [integrate]?”

The Freezer of Things was born.

“We launched a product using IoT technologies,” related Melo to attendees. “We built a freezer that’s connected to the Internet and is able to provide services to our customers [via] the cloud.”

Indeed, this “cool” solution to the company’s logistical issues has allowed New England Biolabs to move its customers to an automated subscription-based model – replenishing items as they are removed from freezers while allowing more efficient inventory management and security for customers. The company is able to view its customers’ inventory turnover in real time – and quickly act to replenish them.

Now, the customer journey is wonderfully simple, if Melo’s description is any indication: “Identify yourself, open the door, remove your items, scan them out, walk away.”

The benefits have been manifold – and profitable.

“These units have replaced our salesforce,” reported Melo. “[This freezer] solves logistics issues; it’s able to actually monitor inventory and…manage products inside the freezer. It…solved the customer facing problem [and] it captured [additional] information [for] our marketing department.”

Yet New England Biolabs does not see its innovative work as complete; the company is working on new ways to further simplify the process for its customers through the Internet of Things.  Technical support integration, in particular, is one thing that Melo discussed at the Summit.

“If you have a problem,” offered Melo, “Why not provide that button?”

IoT and Pay-Per-Print

Panelists and presenters at the event spoke often about two distinct Internet of Things concepts: consumer IoT and industrial IoT. There is a difference, for instance, between relying on IoT to run your laundry cycles in accordance with optimizing your schedule and relying on IoT to efficiently manage your manufacturing processes.

Yet the two concepts are closely related.

“The real transformation in business models is when you begin to connect consumer IoT and industrial IoT together,” Bobby Patrick, marketing chief of HP’s cloud division, told an attentive audience.

One popular way businesses are making this transformation happen is using a subscription model to bring enterprise-style supply chain management to the home and to the small business. HP is no exception.

“What’s the most frustrating thing about your printers?” Patrick asked the audience. The question was rhetorical; Patrick immediately offered the answer, “running out of ink.”

While this is distinctly a customer frustration, it can be just as frustrating for printer manufacturers like HP. Every time a customer’s printer runs out of ink, that customer may wind up buying a generic replacement ink cartridge instead of an HP-branded one – assuming they replace the cartridge at all. Replacement ink cartridges can often be cost prohibitive for consumers – to the point that a customer may decide to just buy a new printer, potentially switching brand allegiance in the process.

Last year, HP leveraged its existing technology and the Internet of Things to create a subscription-based solution to this customer problem called HP Instant Ink.

“Now when you go to Best Buy…you can buy Instant Ink,” explained Patrick in his presentation.  “By connecting [your] printer up to the Internet…you will have your ink sent to your house before you run out, and you will pay a monthly fee, and that fee will change as you do more or do less. What’s cool about this is that [because of access to the printer] we can improve shipping costs. We can pass on a lot of that savings to the consumer.”

Specifically, customers pay a few dollars a month to subscribe to x number of printed pages per month. As with cell phone plans, Instant Ink customers may pay a bit extra if they go over their allotted subscription amount while unused pages may carry over to the next month.

“It’s an easy example,” Patrick said, “but it took connecting to the cloud, connecting to the device, [and] connecting to the supply chain.”

It took a network of solutions – an Internet of Things.

Joe Stanganelli is a writer, attorney and communications consultant. He is also principal and founding attorney of Beacon Hill Law in Boston. Follow him on Twitter at @JoeStanganelli.

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