40
F. Firouzi et al.
• System Integration – The stakeholders of this layer play a large role in the IoT
ecosystem because not all IoT components are plug-and-play right out of the box.
Therefore, system integrators are needed to enable individual IoT components to
collaborate in the best possible way. System integrators should identify a specific
niche and then make partnerships with other stakeholders.
1.5.2 Complete Solution and Product Provider: Additional
Revenue
IoT solutions are addressing business problems across several vertical markets from
health to smart building, transportation/logistics, energy, and manufacturing. In this
context, many companies, incumbents and startups, seek to create revenues from
smart connected products. This could include enhancing the companies’ already
existing products with embedded systems (e.g., sensors, connectivity, etc.) in order
to enable new features or digital services. But it could also mean developing entirely
new connected offerings.
One of the main challenges for such an endeavor lies in handling the rather
complex IoT value stack. A company from the digital or Internet world or a startup
would need to develop and produce the connected thing, which would mean to enter
the hardware world, with comparatively high upfront investments for development
and production setup. A manufacturing company needs to complement its hardware
expertise with the required skills on the connectivity, analytics, and service layer,
which includes user front ends like apps as well. A second aspect which might be
new for many manufacturing companies is the fact that servers and their software,
as well as apps and other user front ends, need to be operated and maintained
throughout the whole usage phase. This poses two challenges. On the one hand,
the organization has to bear operating cost over the whole lifetime of the offering.
And, on the other hand, the organization needs to have the capability to perform
the abovementioned operations. Especially manufacturing companies might need to
install new units taking care of those tasks [26].
The upside of smart connected products is new revenue sources which wait
to be captured by an appropriate business model [23]. It provides a hybrid value
proposition consisting of physical and digital parts. Both parts can be monetized
either in a product (one-time payment and transfer of ownership) or service manner
(continuous payments and usage rights). This opens up a space of four potential
revenue sources. Especially in B2B scenarios, vendors manage to monetize two or
more of those revenue sources. But even if only the hardware is being monetized,
prices for connected products are, in many cases, much higher compared to similar
non-connected products. For example, connected Philips Hue light bulbs sell for
much higher prices compared to not connected light bulbs [27].
It should be noted that the creation of IoT products currently is not directed
by specific guidelines or a systematic method. The application of a traditional
F. Firouzi et al.
• System Integration – The stakeholders of this layer play a large role in the IoT
ecosystem because not all IoT components are plug-and-play right out of the box.
Therefore, system integrators are needed to enable individual IoT components to
collaborate in the best possible way. System integrators should identify a specific
niche and then make partnerships with other stakeholders.
1.5.2 Complete Solution and Product Provider: Additional
Revenue
IoT solutions are addressing business problems across several vertical markets from
health to smart building, transportation/logistics, energy, and manufacturing. In this
context, many companies, incumbents and startups, seek to create revenues from
smart connected products. This could include enhancing the companies’ already
existing products with embedded systems (e.g., sensors, connectivity, etc.) in order
to enable new features or digital services. But it could also mean developing entirely
new connected offerings.
One of the main challenges for such an endeavor lies in handling the rather
complex IoT value stack. A company from the digital or Internet world or a startup
would need to develop and produce the connected thing, which would mean to enter
the hardware world, with comparatively high upfront investments for development
and production setup. A manufacturing company needs to complement its hardware
expertise with the required skills on the connectivity, analytics, and service layer,
which includes user front ends like apps as well. A second aspect which might be
new for many manufacturing companies is the fact that servers and their software,
as well as apps and other user front ends, need to be operated and maintained
throughout the whole usage phase. This poses two challenges. On the one hand,
the organization has to bear operating cost over the whole lifetime of the offering.
And, on the other hand, the organization needs to have the capability to perform
the abovementioned operations. Especially manufacturing companies might need to
install new units taking care of those tasks [26].
The upside of smart connected products is new revenue sources which wait
to be captured by an appropriate business model [23]. It provides a hybrid value
proposition consisting of physical and digital parts. Both parts can be monetized
either in a product (one-time payment and transfer of ownership) or service manner
(continuous payments and usage rights). This opens up a space of four potential
revenue sources. Especially in B2B scenarios, vendors manage to monetize two or
more of those revenue sources. But even if only the hardware is being monetized,
prices for connected products are, in many cases, much higher compared to similar
non-connected products. For example, connected Philips Hue light bulbs sell for
much higher prices compared to not connected light bulbs [27].
It should be noted that the creation of IoT products currently is not directed
by specific guidelines or a systematic method. The application of a traditional