How to Select an IoT Monetization Vendor When Digital Transforming Your Connected Device Business
The essential issue of monetization for companies providing IoT solutions remains a hot topic in 2016 and will remain so for many years until business models can solidify across niches and verticals. Until such a time, the key challenge of managing monetization in an IoT business will evolve at a rapid pace, following consumer and enterprise preferences. While new connectivity and software smarts offer unprecedented business model flexibility, what will ultimately optimize revenue in any given segment will take quite some time. Whether you believe in Gartner’s forecast of $ 309 billion in incremental revenue by 2020 or a market worth $ 1.3 trillion predicted by Verizon by 2019, the opportunity remains so large that organizations from all walks of life are driving initiatives to capitalize on the technological revolution.
While the business of IoT is nascent, selecting the right underlying technologies is crucial to responding to and proactively addressing the changing market.
Step 1 – Determine your business model
Before turning to potential solutions, you will need to determine the type of transactions that will best support your overall strategy and how you will go to market.
Your business may revolve around simply selling devices at a margin. Selling devices today is relatively simple with many plug-ins and eCommerce platform choices available, but selling devices alone is a difficult strategy in the long run as markets saturate. In their early days, giants like Fitbit and GoPro focused on pushing quality hardware into the marketplace, but more recently have begun expanding their portfolio to include soft goods such as apps and subscriptions. Fitbit believes offering apps will not only create a new revenue source, but also help extend its relationships with corporate wellness programs.
- Software and Services:
Internet connectivity and software-defined feature sets are where IoT business models truly stand out. There are many approaches to selling software and services for devices and you have likely taken notice. Services have been replacing assets (as-a-service models), recurring payments have taken the place of one-time sales, and complex bundles are becoming the norm over simple products. Because of the general flexibility of software, there is no lock in on monetization method. This affords more agility than purely hardware sales.
Step 2 – Compare functions
There is a broad range of monetization solutions on the market, therefore the features with high relevancy to your business model should take precedence. The following are some feature considerations to get you started.
Billing is a critical function that intersects payments, business model structure, cash flow, and user experience. Look into how invoices are handled, the level of detail provided on invoices, and any processes that add flexibility into the invoicing process.
- Pricing flexibility:
Can it support a wide variety of models including one-time, subscription, tiered, and metered? Are complexities such as contract terms, free trials, grace periods, setup fees, and multiple editions easily configured? Does the solution provide the ability to quickly change pricing for products?
- Payment processing:
Generally, the more payment options available, the more likely a customer is to convert. Look into what out-of-box payment options are available. If you already own a billing and payment relationship with your customer, can the solution easily integrate with your billing and payment infrastructure?
Consider how well a catalog will scale, what product types it will be able to support, how products can be categorized, and the level of metadata flexibility and depth offered.
Your customers will need to be able to discover and purchase your products and services somehow. Does the solution offer a storefront to promote, display, and sell? Is it available where your customers are (web, mobile)?
- Partner onboarding:
Does the solution allow for you to sell third-party products? Are you able to define, generate, and settle revenue shares? Can partners easily join, submit, and get their products and services published?
- Reseller management:
Enabling multiple channels to distribute your offerings can allow you to rapidly expand and grow your IoT business. Does the solution allow dealers or other reseller to assist in sales?
- User management:
A focus on the user that includes managing identities, subscriptions, entitlements, licenses, orders, account information, authorization, and roles is key to ensuring a seamless experience.
- Big data and Analytics:
The ability to capture and use the data that your ecosystem generates is key to growing your business. Consider how the solution may be leveraged to create reports and analysis for all your stakeholders. Can the solution easily integrate with your devices and other enterprise systems?
- Device support:
With significant fragmentation in IoT device configurations, most monetization solutions are device agnostic and provide various API abstractions to allow for fast adaptations. Consider how quickly and easily new devices can be supported and how this will scale as your business grows.
- Value added services:
There are many unique IoT monetization services and features that may tip the scale for your organization. For example, does the solution offer you pre-integrated partners that instantly provide your customers new value? Does it tie in engagement interfaces like chat? Is the solution white label?
Step 3 – Decide on a time to market
In the hyper competitive market conditions that exist for IoT, the ability to be lean, agile, and responsive is essential to success. Does your monetization platform help you by:
- Allowing you to get started immediately?
- How long does it take to set up?
- How long does it take to configure?
- Cutting down the time to change?
- Are there many options to change products, prices, and business model?
- How often are new features released?
- Reducing effort to customize?
- Is the solution API addressable?
- Are there broad configuration options for key functional areas?
- Are there SDKs, libraries, or kits?
Step 4 – Think about the non-functional requirements
Often overlooked, the non-functional aspects of a monetization solution are often the most critical.
- Does the platform offer great support?
- Is tier 1, 2, and 3 support offered?
- Is there documentation available?
- Can an SLA be provided?
- Is there a solid track record?
- Are there strong existing customers?
- Is the platform supported by accredited investors or backers?
- Can you be confident in security?
- Does the platform have PCI compliance?
- Is there Roles Based Access Control (RBAC)?
Further Questions to Ask
- Consider whether the monetization solution is aligned with your business. Is it incentivized to help you grow your revenue? If there is a revenue share in place, does it fit with your success metrics?
- Collaborating with third-party developers and channels can be a very effort intensive operation. Do you get a leg up with building a partner ecosystem?
- There’s a long road ahead for IoT businesses. Does the monetization platform have a roadmap that they will discuss with you? Is their architecture helping you to future-proof?
It may seem like a simple task to bring monetization into the new era of IoT, but as you can see, there are many factors in choosing the right technologies to fit with the many different IoT business models. The future potential in this market is massive, but still unknown.
Businesses looking to monetize their solutions must be certain their IoT monetization solution will future proof them for the foreign business models to come.
Colin Chong is Head of Product at AppDevices. Passionate about driving innovative products and solutions, he is experienced in product management, developing marketing strategies, industry analysis, and new product development. At AppDevices, he is responsible for all aspects of developing, delivering, and support of IoT management and monetization solutions.
AppDirect is the cloud service commerce leader, making software and products accessible globally. The AppDevices division of AppDirect powers the digital transformation of the world’s most innovative companies by empowering them with agile business models, partner ecosystems, and new revenue streams. AppDevices pairs its expertise of device management with the critically acclaimed solutions portfolio of AppDirect to bring complete end-to-end software and service distribution, management, and monetization to the connected devices and connected vehicle markets.
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