IoT Business Model Logic - sedioben/IoTproject GitHub Wiki

In the following, the fundamental economic principles of IoT will be explained in more detail:

Media-Breaks

The Internet of Things and related technologies bridge the gap between the Internet and the real world. This dramatically reduces the cost of media disruptions. A media break occurs when information is transferred between one medium, e.g. the barcode, and another medium, e.g. a database. When physical things become computers, the media breaks disappear along with the costs they cause. [1]

In the case of a "self-cooking scenario", the following media breaks occur:

  • Selection of the meal to be cooked
  • Check whether the groceries are available at home
  • Grocery shopping to get the missing groceries
  • Cooking and preparation of the selected meal
  • Set the table to eat the meal
  • Cleaning and tidying up the kitchen

In the case of a "delivery service scenario", the following media breaks occur:

  • Check the delivery services and their menus
  • Order the food via an app
  • Specify a time at which the food is to be delivered
  • Wait at home until the delivery service arrives
  • Set the table and unpack the food to eat the meal

With the digital service "Come'N'Eat" the mentioned media breaks can be solved as follows:

  • Individual meal suggestions through analysis of the personal profile (health data, fitness data, movement data, etc.)
  • Auto-detected Just-in-Time delivery by the delivery service
  • Direct delivery and placement of the meal in the dining room by the delivery service

Rebound Effect

With an automated acquisition of sensor data at the object as well as at an increasing number of locations, the transaction costs decrease. The price for a sensor event thus decreases and it becomes more attractive to record the current status much more often, which is called the rebound effect. [2]

With Come'N'Eat the following scaling effects can be achieved:

  • With an increasing number of customers using our service, the operation of our platform will become cheaper
  • The more customers use the app, the better the recommendation engine works and enables higher quality meal suggestions resulting in more orders and transactions

High-Resolution Sensing

The impact of high-resolution sensing leads to a complete monitoring of all objects of a business process in real-time if the inspection can be performed at any location and independently. [2]

In the case of Come'N'Eat, the following parts of the service can be monitored in real-time:

  • Seamless monitoring of user eating behavior and eating habits
  • Seamless tracking of the delivery chain

Value Driver

The value drivers for applications in the Internet of Things can be divided into the two classes "Machine-to-Machine" and "User Integration". The M2M based approach aims at the detection of objects and environments for the automated control of business models. IoT technologies identify the object as a process participant (either discretely in terms of location and time or permanently), the sensors encompass the environmental conditions and thus ensure the integrity and product origin. In comparison, the user integration process focuses on the Internet of Things providing feedback to the users, making processes and conditions visible and thus influencing or changing the users' behaviour. [2]

In the case of Come'N'Eat, the following value drivers can be identified:

  • Machine-to-Machine:

    • NFC Tag towards Smartphone: Authentication of the delivery service to grant access to the customer's home
    • Nuki towards Alexa: Trigger the welcome for the delivery service, when entering the apartment

  • User Integration:

    • Smartwatch/Smartphone towards Customer: Selection and ordering of the meal based on the individual meal suggestions
    • Alexa towards Delivery Service: Deliverer receives the information where the meal should be placed.

Fleisch Formula

On a very abstract level, the logic of business models in the Internet of Things can be reduced to a simple formula, the so-called "Fleisch formula". It describes the logic of IoT business models as a hybrid solution of physical products and digital services that can be expressed as follows: [3]

It states that the value of an IoT solution on the manufacturer's side consists of the combination of a classic product that has not been linked to the Internet in the past and which is refined with IT. This value unfolds on the customer side as the benefit of the physical product and the associated digital services. The formula was applied to Come'N'Eat, as mentioned below:

Sources: [1] https://wirtschaftslexikon.gabler.de/definition/medienbruch-51830 [2] Decker, C.: Lecturer Slides: Chapter 06 - IoT BusinessModels (2019) [3] https://www.iot-lab.ch/wp-content/uploads/2014/09/GM-im-IOT_Bosch-Lab-White-Paper.pdf