The effect of IoT on revenue streams and product features within the mechanical industry : Development of a business model

Sammanfattning: A mechanical industry company’s need for an effective and suitable business model is higher than ever before due to new emerging technologies, especially within digitalization and Industry 4.0. As the Internet of Things (IoT) trend is emerging, companies need to identify new value propositions and adapt their offerings and revenue models in order to meet the customers’ new demands. The current amount of studies that have been conducted in the area of new business models and product offerings with regards to the IoT technology are limited. Therefore, this study has examined and analyzed how a new business model should be designed and what kind of new product offerings a company in the mechanical industry should offer in the area of IoT and servitization. The literature study contains information about Industry 4.0, Internet of Things and Servitization while the theory study addresses theories regarding the business model canvas together with the KANO model. The study has been executed by conducting eleven semi-structured interviews, where nine of the interviewees were employees at our commissioner and the remaining two were customers of our commissioner. The internal interviews were held with executives and managers who represented eight different divisions as well as three different nationalities. The customer interviewees represented two different companies with different sizes and ownership structures. The results of the study indicate that the IoT technology contributes to several new possible product and service offerings, together with new revenue streams, as well as a need for implementing a new servitized business model. Conclusively, offerings such as predictive maintenance, remote assistance, and machine optimization among others, can be offered to the customers with the help of the IoT technology. Furthermore, new payment models such as upfront payments together with a service agreement with monthly payments, are vital parts of a new business model that has to be implemented. In addition, a closer customer relationship is required when moving towards servitization in the area of digitalization and IoT.