Proving the Business Case for the Internet of Things

Survey finds three quarters of M2M projects lead to new business model or paid service

Steve Rogerson
February 4, 2015
Three quarters of M2M projects lead to a new business model or a new paid service, according to analysis by German companies M2M-Concepts and Exceet Secure. It also found that 18 per cent of such projects are already generating data that can be used as an independent product.
The analysis “Benefits of M2M Solutions for Medium-Scale Industry” reveals the potentials inherent in M2M communications and illustrates the benefits M2M can offer to providers and potential users. It is said to be the first study that focuses on the real-world added value that mid-size enterprises can gain from M2M.
The study found that in 87 per cent of projects evaluated, M2M is used for operative purposes such as remote maintenance, event alarming or automated transmission of invoicing data. But in 18 per cent, the machine-generated data are already being used as an independent product. For providers, this opens up entirely new markets and target groups.
The analysis also shows that the diverse benefits of M2M are transferable to other M2M projects, even across industry segments. These benefits can be divided into machine, process and business groups, and are illustrated by the M2M Benefits Radar.
“The M2M Benefits Radar offers users and providers an instrument for identifying their own M2M potential, or for evaluating implemented projects in terms of target fulfilment,” said Jan Behrmann of M2M-Concepts.
In addition to providing a structured radar view of all added value, the analysis shows the types of benefit most frequently achieved by M2M projects. These include monitoring and localisation (57 per cent) as well as means for ensuring the availability of machinery (52 per cent). In process terms, documentation and statistics generated particularly strong benefits (63 per cent) and facilitated compliance with statutory requirements. In business terms, M2M is particularly effective in defining better selling propositions (75 per cent) and offering new services (62 per cent).
In 75 per cent of projects reviewed, sustainable new business models or new paid services were generated. The product business is undergoing fundamental change – a process during which service-oriented business models can help to secure enterprise competitiveness. New, additional services were created in 63 per cent of analysed projects, and pay-per-use or contracting services were generated in 13 per cent of cases. The possibilities inherent in M2M permit the enterprises to offer comprehensive service packages, attract customers by way of new business models, or use interpreted data for consulting purposes.
Although M2M can automatically deliver extensive information on machine use and performance, only eight per cent of projects exploit this capability to define requirement management aspects for future product generations. Yet such information – for example on usage rates, configurations or machine downtimes – can provide product managers and developers with a reliable decision-making basis for future product generations.
“Many enterprises face the challenge of transforming the potential inherent in the growth of digitalisation into new business models,” said Christian Methe, CEO of Exceet Secure in Düsseldorf. “Nevertheless, M2M is currently being marketed exclusively on the strength of its technological benefits. The actual benefits of M2M for decision-makers are often not considered in detail. For the first time, this analysis provides an orientation for ways on how future M2M projects can be successfully implemented as part of the digital transformation.”
The survey analysed 60 M2M projects that have been successfully implemented by medium-size enterprises in the German-speaking part of Europe. These included enterprises from the transport, agriculture, industry, commerce, health, building management, utilities and waste disposal as well as services and construction sectors. The analysis was based on a series of structured interviews with M2M providers and marketing experts.