Session Blog. See overview at IoTMATRIX 2020 Conference Summary
A white paper based on the virtual panel discussion: "Industrial IoT- Business model and pricing strategies" on 11th December 2020. This IIoT webinar was part of the Connected Track IoTMatrix hosted by IoTForum which is a part of TIE Bangalore.
Agenda- Business models, pricing strategies in IIoT
- Scaling IoT solution and finding product-market fit
- Selecting IoT business models and pricing strategies that fit both product and customers.
- Discuss monetization strategies to help create the best possible return.
Panellist: Rahul Raghunathan, Derick Jose, Rahul Mishra, and Rakesh Vij
Moderator: Atul Govil
Several interesting business models and business strategies were discussed by panellists such as:
- Pay as you use by Derick
- Subscription fee-based model by Rahul Raghunathan
- Risk and reward model by Rakesh
- Upfront Capex by Rahul Mishra
- Cloudification by Rakesh
- According to Derick Pay per asset for the month is the business model where a supplier scales user also scales simultaneously. An example is the packaging manufacturer application where software is a CAPEX requirement. The disadvantage of supplier is that there is no surety of when to hit critical mass and its advantage is that lower downtime payment of capital.
- Rahul Raghunathan has a power plant application where there are 200 plus assets to be monitored. Industrial AI is used in the thermal power plant which is massive and complex and key outcomes are to be shown to solve micro problems and get tabulated outcomes. What you need here is a subscription fee business model for software and the idea is to start small with no large upfront cost and give the suspicion benefit to the customer.
- The risk and reward model as explained by Rakesh involves improving the productivity of customer and reducing cost simultaneously
- Rahul Mishra talks about high upfront cost from utilities + small recurring cost suits best. Here the freemium model is applicable as a software subscription model. The issue here is suspicion for success and people look for example in a developed country or utility using the same application
- According to Rakesh, what works best is cloudification where it is usage-based plus risk-based, the idea is to take from POC to product productization
Whether Greenfield or brownfield IIOT projects are taken up for mass adoption:
- Need to seek validation which means Greenfield projects are very less.
- Original equipment manufacturer have mostly brownfield projects and EPC like Thermax for boiler application have them too
- Very less design orientation versus current running equipment which requires digitisation
- Greenfield example is Smart meter replacement instead of retrofit
- Smart Transformer with a large CAPEX involved is mostly brownfield
- Market adoption through brownfield retrofitting existing plants having welding, CNC and lathe applications
- Smart helmet application involving the safety of factory workers, temperature, pulse, camera, geolocation, ring-fencing. The customer is an Insurance
How to demonstrate offering in IIoT to the customer:
- Do a pitch to create value, get to the demo, show a working example, special customer detailing in pilot mode.
- The big 4s have spread a great degree of education and the mantra is seeing is believing
- Mechanical machine to IT infrastructure, biggest adoption is automobile machine level operational efficiency and digitalization
- Asset level tracking, safety attendance electronic leash and machine level operational efficiency
- Company organisation hierarchy to identify the KPIs
- For the top management it is the image of utility, for middle management it is an ROI, AT&C losses and for lower management show the application to the user
Key factors influencing these models:
- Sustainability as one size doesn't fit all
- Industry domain and industry segment
- Appetite to experiment
- The level of implementation
- size of the customer
- Work done by peers
- Cybersecurity
- And many more as success leads to success
Participants questions:
Q1. How do you get in B2B customer to make a sale:
- It depends on the organisation for example HR head or the plant head in the Insurance use case above. We need to know who is the decision-maker and who are the people who care for and against the introduction of new technology. The value you create can make people successful hence one needs to create a good reference
Q2. Why is manufacturing not a great career opportunity in Industry for a new generation?
- The right talent is required to have a degree of attention span for a monotonous job like boiler operation where data has to be constantly monitored which doesn’t interest the new generation much.
Q3. What are the benefits of IoT how Covid has affected us?
- Digitalisation is becoming prevalent, leaders are scared to go shopping floor hence remote operation is required. Also, there are cultural issues, ecosystem requirement for large technology players as their prices are exorbitant
Panellists
Rahul Mishra: Chief Operations Officer at Probus Smart Thin. An alumnus of IIT Delhi has earlier in 3m Deloitte and KPM. Last-mile Probus is on a mission to increase the per capita consumption of electricity in India by 10X, which is presently 1/3 of the global average- by reducing the distribution losses in the Indian electricity distribution grid
Derick Jose: Cofounder Flutura Decision Sciences and Analytics. An alumnus of BITS Pilani has earlier worked in Mindtree as VP. Flutura is an AI Solutions company focused on improving two core business objectives of "Asset Uptime" and "Operational Efficiency"
Rahul Raghunathan: Co-founder – ExactSpac. An alumnus of SP Jain Inst of mgmt has earlier worked in Iqlect, altiiux and directi. ExactSpac build Artificial Intelligence technology that helps the Industries avoid unplanned failures and keep their assets performing at their peak at all times
Rakesh Vij: Co-founder and CEO Truminds Software system alumnus of BITRanchi IMT GZD in Wipro and Hughes and last stint as CBO in Arisen. Truminds not a startup but an early funded company engg solution to digital and connected world through 5G, IoT, ML, A
Moderator Atul Govil: Chief Transformation Officer, Head (SAP and IT) for India Glycols Limited. Graduate engineer with a dual degree in Marketing & HR management. Have Strong, practical domain experience in IT, OT, Operational Excellence & Supply Chain in manufacturing setups.
Many thanks to the panellists and the moderator without which this would have been possible and a special mention of the team behind the curtains which is a force to reckon. Somshubhro (Som) Pal Choudhury Kumaran Venkatesh (Venki) Arvind Tiwary Joy Rajan Cheruvathoor Vinay Dora K Vijetha Shastry Tulika Dasgupta Harvinder Singh Narula Vishant Gandhi
