Layer 3: Regulatory compliance
All businesses in regulated sectors, with safety procedures or maintenance requirements, currently have to hire technicians to perform the required work. But with IoT devices that can control specific hardware parameters, this can be done remotely.
To reach this layer, IoT data needs to be completely credible and indisputable. One way this could happen is through the integration with blockchain, which has the required capabilities and could also help reduce the cost of overall control activities. However it happens, without this element of credibility, no governmental institutions will allow IoT technology to replace certified technicians. This is especially true for institutions responsible for the safety of people.
However, this convergence could create “the internet of trustworthy things.” Interactions between connected things, underpinned by “smart contracts,” could establish a foundation for “decentralized autonomous organizations” (DAO). And this would begin the era of the true machine economy.
Layer 4: Data-based economy
Digital disruption has already created new categories of assets with no physical representation. Physical assets and products cannot be “cloned” — when sold, an organization transfers ownership of the asset to a buyer and cannot use it any longer. However, selling digital assets — i.e., data — does not mean losing access to it. And the selling organization can still use the asset to create income, and in other ways of their own choosing.
For example, one well-known delivery company optimized its vehicle fleet operations using data from sensors — reducing maintenance time and costs, fuel consumption and accidents. They then built their business around that data, publishing information about the attractiveness of business areas, based on the patterns of parcels delivered.
Layer 5: IoT value chain integration
Value chain integration is particularly relevant for organizations in business-to-business (B2B) industries. It enables direct interaction with end consumers by extending cooperation to a business-to-business-to-consumer (B2B2C) model.
IoT devices embedded within or integrated with physical products enable organizations to extend their value chain beyond direct buyers or suppliers in the chain. For example, a brewery could fit IoT sensors in a beer barrel to monitor certain parameters during transit and check that the delivery company is handling it correctly (B2B).
Layer 6: Value net integration
The combination of mobility with data analytics can enable a more customer-centric approach. Organizations that occupy the same customers’ value network can exchange data about them and their behavior, with benefits for everyone, including the customer.
Organizations that control these integrated value nets will claim the predominant position in the business ecosystem — with the potential to monetize it, whether through internal cost reductions, or new revenue from value net partners or stakeholders.
Layer 7: Digitized asset economy
Low-cost infrastructure assets can move from being treated as indirect costs to the business, to revenue generators in themselves, by way of improving customer experience. IoT devices integrated with blockchain capabilities, in particular cryptocurrency wallets, open up possibilities for micropayments such as charging for Wi-Fi in cafes or paying for services in a smart city. Also, revenue from asset utilization can fund maintenance and failure management tasks handled by local stakeholders. These stakeholders could keep assets running for much lower costs than the asset owner.
Layer 8: IoT stack commercialization
In the evolution to a data-based economy, the endgame is to control the flow of data. We can already see the strategic importance of this control as some major and well-known players are gathering gigantic volumes of data to be the subject of multi-perspective analytics. In this way, by securing their access to actively acquired data, they are securing their position as a potential leader of virtually any market in which they wish to compete.
However, rapidly expanding IoT infrastructure allows potentially any organization to take a similar strategic position by controlling a substantial part of connectivity or end devices (IoT). This translates into control over a huge amount of passively acquired data, and therefore control over major data flows.
Flow control guarantees that all necessary data required for services is consistently available, and it gives the organization the predominant position in the value net ecosystem. By sharing one or more layer of the IoT technology stack (including sensors and actuators, communication, data lake, data analytics and human-machine interface), organizations can build highly competitive positions. And with effective commercialization of such sharing services, they can reduce the cost of developing and maintaining their IoT infrastructure.
Very few organizations have established methods for data asset management. It is not enough for data to be used only for the purposes of monitoring and maintaining physical assets. That data needs to be monetized. This, in part, is a process of generating new revenues from data that currently serves another purpose.