A licence for new IoT revenue streams

For a number of years, there’s been talk about digital transformation and the impact it is having on businesses across all sectors. Yet, as many organisations have embraced the cloud, new working processes and the internet of things (IoT), one point has become abundantly clear: it’s no longer just about the “things” themselves, but the value and insights that can be gleaned from their use.

However, as organisations look to maximise the opportunities that data can bring, they face a major mindset challenge – moving from product-based sales models to a service or software-based approach. What’s more, migrating a hardware offering to software is a logistical, technical and business challenge, and requires expertise and insight.

In both cases, however, changing consumer behaviour means that solving difficulties in generating new revenue streams are often complex. These include making sure products are being used per the terms of their licence, protecting that software against fraud, and understanding which features customers are using.

In fact, by understanding how customers use their products, companies can adapt how they develop, package, control, manage and track their offerings. For example, they could prioritise investment in regularly used features, or instead offer multiple versions of the same product by giving customers the option to pay for individual add-ons. This ensures that businesses are only providing services and products that their customers will use – potentially bringing in extra revenue and reducing the chances that a new product will fail. What’s more, organisations can reduce their cap-ex by not having to redevelop bespoke products time and time again to offer new services.

So, what does this mean for the IoT?

Licensing the internet of things

The IoT has long been heralded as an opportunity for enterprises to use technology to improve efficiencies and offer new services. As sensors get cheaper, and networks grow, manufacturers are increasingly turning “dumb” devices into connected smart things to help speed up processes and productivity. This means that the IoT’s potential is far greater than previously imagined. But, as more organisations implement these devices into their ecosystems, it’s the software that will add the extra value to both the end user and manufacturer.

While there are lots of opportunities to understand user behaviour – we create five quintillion bytes of data every day – it’s important to remember that the IoT is not just about delivering new and improved services, but opening up new revenue streams for businesses. As such, one of the most effective ways to ensure this happens it to monetise licensing effectively.

With increasing demand for a personalised service, the approach that software vendors have traditionally taken – a one-size-fits-all licensing solution – has become a barrier to building trust and relationships with their customers. Today, IoT software vendors need to look at licensing as a way to distinguish themselves from their competitors and provide a rich user experience, and think about offering:

  • Equal experience Users expect a single personalised licensing experience, regardless of how or from where they access software. This includes being consistent across on-premises, cloud and hybrid environments
  • Universal access Once a customer has purchased a software licence, they expect to be able to access their software from any device at any time, whether on-premises, in the cloud or a hybrid of the two

Moving from a hardware to a software-based model opens up many opportunities for businesses – but only if it’s done correctly. The ability to activate and provision in the cloud, protect IP and introduce IoT capabilities are all possible, but first businesses must put the necessary process in place, with KPIs to match. Once this has been done, businesses can take advantage of new models that will help them innovate more quickly and provide stronger data that can be used to protect and grow.

For more information, please click here.

by Jamie Longmuir, Regional Director, Software Monetisation, Gemalto


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