Despite the demonstrated opportunities for revenue enhancement through digitalization, companies often experience a digitalization paradox. This paradox suggests that although companies may invest in ...digitalization, they often fail to achieve the expected revenue enhancement. In reporting research on 52 companies, we make the following four contributions: First, we focus on industrial companies in the business-to-business context, which largely have been neglected in previous research on digitalization. Second, we introduce the digitalization paradox as an important phenomenon in the discussion of revenue enhancement through digitalization. Third, we describe three growth paths: (1) commercializing digital solutions, (2) utilizing product connectivity, and (3) establishing an IoT-platform-based application business. For each growth path, the article takes a dynamic perspective on business models, highlighting triggers and modifications in business-model components (including value proposition, value-creation activities, and profit equation). Fourth, while the described modifications require initial investments to let these growth paths develop, we highlight how growth traps can prevent investments in business-model modifications from leading to revenue enhancement and how they can ultimately lead to the digitalization paradox.
Equipment manufacturers are currently utilizing new digital technologies such as the Internet of Things (IoT), Artificial Intelligence, or Big Data, for new digital offerings. However, these ...offerings seldom enhance revenue, because companies struggle with business model (BM) dynamics. By analyzing 27 companies through an explorative case-study approach, the authors consider how companies can successfully achieve revenue enhancement through digital offerings. The result is a threefold framework for revenue enhancement through digital offerings. First, this framework distinguishes between three phases of BM dynamics: 1) augmenting products through a “hardware plus” logic, 2) developing a portfolio of multiple logics for creating customer value, 3) integrating this portfolio through platform logic. Second, the framework emphasizes that three barriers, which we refer to as confidence, mixing, and collaboration barrier, limit the progress from Phases 1 to 3. Third, the framework reveals that each phase contains certain modifications of BM components. In the first phase, companies adapt their BM components slightly, so as to advance toward a “hardware plus” logic. In the second phase, companies embrace more radical BM innovations in order to convert services into an outcome-based BM and develop a new software subscription BM. In the third phase, companies modify BM components in order to integrate the BMs internally and to open them up for external collaboration partners.
•We explore how equipment-manufacturing companies can successfully achieve revenue enhancement through digital offerings and we develop a threefold framework.•Our framework distinguishes between three phases of BM dynamics: 1) augmenting products through a “hardware plus” logic, 2) developing a portfolio of multiple logics for creating customer value, 3) integrating this portfolio through platform logic.•We emphasize three barriers limiting the progress from phases 1 to 3, which we refer to as confidence, mixing, and collaboration barrier.•The framework reveals that each phase contains certain modifications of BM components.•Our findings enhance the multifaceted nature of BM dynamics and the interplay between holistic business logic, management cognition and BM components.
Overview: The Internet of Things (IoT) offers product companies the opportunity to develop an IoT business. Existing performance measurement systems (PMS) are unsuitable for measuring and managing ...the business logic of IoT business. Based on research conducted with 31 product companies, we present three measurement traps, a key performance indicators (KPI) set suited for steering IoT business in product companies, and three recommendations for implementing the KPI set. Companies can use the KPI set to manage their IoT businesses more effectively and avoid the measurement traps.
Overview: The Internet of Things (IoT) offers product companies the opportunity to develop an IoT business. Existing performance measurement systems (PMS) are unsuitable for measuring and managing ...the business logic of IoT business. Based on research conducted with 31 product companies, we present three measurement traps, a key performance indicators (KPI) set suited for steering IoT business in product companies, and three recommendations for implementing the KPI set. Companies can use the KPI set to manage their IoT businesses more effectively and avoid the measurement traps.
Geld verdienen im IoT – aber wie? Wortmann, Felix; Bilgeri, Dominik; Gebauer, Heiko ...
HMD. Praxis der Wirtschaftsinformatik (Internet),
2019/12, Volume:
56, Issue:
6
Magazine Article
Peer reviewed
Unternehmensberatungen, Marktforschungsinstitute und Technologie-Evangelisten haben sich in den letzten Jahren mit positiven Prognosen zum enormen Geschäftspotenzial im Internet der Dinge (aus dem ...Englischen Internet of Things, IoT) gegenseitig übertroffen. In der Tat eröffnen vernetzte IoT-Lösungen neue Geschäftspotenziale und sind derzeit im Begriff ganze Branchen zu disruptieren. Jedoch zeigen neuste empirische Forschungsergebnisse und bisherige Erfahrungen, dass Unternehmen diese Chancen viel langsamer realisieren als erwartet. Selbst IoT-Pioniere wie General Electric sind mit ihren ambitionierten Digitalisierungsinitiativen vorerst gescheitert und sehen sich gezwungen, ihre kommunizierten IoT-Pläne deutlich anzupassen. In Anbetracht dieses Digitalisierungs-Paradox, mit hohen Investitionskosten und niedrigen Erträgen, suchen Unternehmen heute mehr denn je nach neuen Möglichkeiten, die über bekannte Produkt- und Dienstleistungsinnovationen hinausgehen. Der vorliegende Grundlagenbeitrag widmet sich den Fragen, wie das IoT die zentralen Geschäftsmodellelemente von Unternehmen beeinflusst und wie das Digitalisierungs-Paradox überwunden werden kann. Darüber hinaus reflektiert der Beitrag erfolgsversprechende Vorgehensweisen auf dem langen Weg zur Profitabilität im Internet der Dinge.
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