Patterns of business model innovation for advancing IoT platforms

Abstract

PurposeThe emergence of Internet of Things (IoT) platforms in product companies opens up new data-driven business opportunities. This paper looks at the emergence of these IoT platforms from a business-model perspective.Design/methodology/approachThe study applies a mixed method with two research studies: Study I–a cluster analysis based on a quantitative survey, and Study II–case studies based on qualitative interviews.FindingsThe findings reveal that there is no gradual shift in a company's business model, but in fact three distinct and sequential patterns of business model innovations: (1) platform skimming, (2) platform revenue generation and (3) platform orchestration.Research limitations/implicationsThe results are subject to the typical limitations of both quantitative and qualitative studies.Practical implicationsThe results provide guidance to managers on how to modify the components of the business model (value proposition, value creation and/or delivery and profit equation) in order to enable platforms to advance.Social implicationsAs IoT platforms continue to advance, product companies achieve better performance in terms of productivity and profitability, and more easily secure competitive advantages and jobs.Originality/valueThe paper makes three original contributions: (1) it is the first quantitative study on IoT platforms in product companies, (2) identifies three patterns of business model innovations and (3) offers a first process perspective for understanding the sequence of these patterns as IoT platforms advance.

Prioritising enabling factors of Internet of things (IoT) adoption in digital supply chain

“…Martens et al (2022) identified eight challenges to IoT (administration, data collection and management, cost innovation, integration, efficiency matrix, people, security, bringing value, and business solution) while Aamer et al (2021) suggested that IoT challenges fit into five thematic challenges (technical, financial, social, operational, educational and governmental). The challenges inherent in current IoT systems are likely to be key to the variable commercial success of IoT adoption that was identified by Markfort et al (2022).…”

“…(2021) suggested that IoT challenges fit into five thematic challenges (technical, financial, social, operational, educational and governmental). The challenges inherent in current IoT systems are likely to be key to the variable commercial success of IoT adoption that was identified by Markfort et al. (2022).…”

“…IoT will significantly change the landscape of the supply chain as a result of its ability to connect all members and enable them to influence one another (Boehmer et al, 2020;Zangiacomi et al, 2020). Furthermore, it has been suggested that IoT has the ability to connect the physical and virtual world thereby enabling "things" to communicate automatically (Markfort et al, 2022). Examples of IoT applications include IoT powered servitisation of manufacturing (Rymaszewska et al, 2017) and real-time production logistics synchronisation (Qu et al, 2016).…”

“…, 2020). Furthermore, it has been suggested that IoT has the ability to connect the physical and virtual world thereby enabling “things” to communicate automatically (Markfort et al. , 2022).…”

Spiraling between learning and alignment toward digital service innovation

“…Both trends impact on each other, thereby generating new business opportunities and disruption in markets (Frank et al, 2019;Kolagar et al, 2021). The latest digital technologies, such as the Internet of things (IoT), cloud computing and artificial intelligence (AI), enable companies to provide more and better value for customers through smart products and advanced services (Ardolino et al, 2018;Vendrell-Herrero et al, 2021a, b), often enabled by digital platforms (Cusumano, 2022;Markfort et al, 2021). Digital service innovation (DSI) combines both digital and service innovation logics, leading to digital servitization and other innovative, digitally enabled business models (Opazo-Bas aez et al, 2021;Raddats et al, 2019;Vendrell-Herrero et al, 2023).…”