NTT DATA Business Solutions
Marco Emmenegger | June 14, 2018

Cracking the IoT Code - Part 3 - Create New Revenue Streams with Pay-Per-Use


Traditionally, pay-per-use models are associated with utilities such as electricity. Now, companies from all sectors are looking at the possibility of using this concept for products to revolutionize business models and create new revenue streams. In the third part of our IoT series, we take closer look in our roundtable discussion.

Watch the Video with our IoT Experts


Following on from the potential of the IoT in manufacturing, I will address how pay-per-use models facilitated by IoT can help your enterprise unlock its true potential and to adopt new business models. But what exactly are pay-per-use business models? Exactly what they sound like. It is where services are metered, meaning your customers only pay for what they use. This seems to be the way the tide is flowing, and many people I speak to predict that IoT will mean the majority of capital goods will be on a pay-per-use basis – and therefore available as a service. So what are the implications for your business and how can this benefit you?

Ensure Customers Feel They’re Getting Good Value

Let’s face it, nobody wants to pay for something they don’t use. This is what makes pay-per-use so appealing to customers and businesses alike. Linked to the IoT, sensors and applications collect data on how a service is used and calculates billing accordingly. Consumers are not left contemplating whether a product they are receiving is worth the reoccurring installment as they are charged for the exact amount they have consumed. If your customers are happy and feel they are getting good value, they will continue to use your product as a service – something that is vital to business success.

“By adopting pay-per-use models, customers and businesses both benefit. Greater transparency and more accurate billing mean that both parties are getting good value and satisfaction remains high.”

Gökhan Yılmaztürk, Innovation Manager for Industry 4.0, NTT DATA Business Solutions

Streamlining Billing for Greater Transparency

Furthermore, adopting pay-per-use makes the billing process so much simpler. IoT provides the data for service usage and this information can be directly charged. This format is incredibly clear, increases transparency across the whole billing cycle, and accelerates the process. Likewise, if there is room for improvement in terms of rates or tariffs, businesses have the information to identify this and act accordingly.

Reduce Production and Maintenance Costs with Pay-Per-Use

Services or machinery used to achieve better quality are also becoming available on a pay-per-use basis in what is known as equipment-as-a-service or EaaS. This means scalable costs which enable businesses to become more profitable by reducing operational costs. The changes in investments to a EaaS models changes the responsibilities and processes related to maintenance as well. Sensor data from the equipment itself enables predictive maintenance scenarios. The opportunity to make the shift from conventional maintenance models to implement a predictive maintenance program maximizes uptime and reduces costs for repairs. This directly impacts efficiency and quality in the manufacturing processes.

The key to enter this new era is collaboration between operator and supplier. Historical machinery data and sensor data combined with engineering knowledge enables decision makers to implement a predictive maintenance program.

IoT holds the key to getting the most out of pay-per-use and enables organizations to offer customers more, such as providing them with data.

Optimizing Product Quality with IoT-Driven Pay-Per-Use Models

It isn’t just the customer that benefits from these new business models. Your business can also improve its product, create new services, and adopt new business models. A prime example of this is in agriculture. Farmers can now use pay-per-use services supported by IoT for tasks such as oil preparation, harvesting, and post-harvest field management to ensure consistent, high quality. Gone are the days of trial and error. But there are many other examples in different sectors, such as manufacturing. Organizations that produce IoT enabled products can collect data on customer behavior and adapt products according to increase customer satisfaction or choose a more suitable billing model.

Our IoT series is nearly at an end. In the final installment, we will delve into the return of investment of IoT and evaluate real opportunities for making your business more profitable.


What about your company?

NTT DATA Business Solutions’ IoT experts developed a brief check of up to 9 steps for you. It helps you to get a quick understanding of your organization’s digital maturity level and of where you are starting from. The short assessment considers your business model, products and services as well as your processes. The abstract you receive afterwards gives you essential input to identify your organization’s strengths, priorities and weak points, and to define your digital vision.

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