Industrial Internet of Things -driven business model for manufacturing companies

Abstract

Currently Industrial Internet of Things (IIoT) is radically changing manufacturing industry. The IIoT connects the physical and digital worlds to a wholeness where physical entities like machines and tools have communication, data processing and sensing capability. The IIoT is changing industry structures and the nature of competition, which has led to a situation where companies must redesign their business models. Without adaptation, most companies can no longer survive. However, many companies are struggling on how they can design business around the IIoT. In fact, one of the biggest challenge the companies are facing while implementing the IIoT is how to build a business case. In other words, for the companies it is challenging to design an applicable IIoT-driven business model. This thesis studies what are the needs and challenges of the IIoT-driven business models for the manufacturing companies. The goal of the thesis is to understand what kind of business model can support the IIoT software solution business in a manufacturing company. The thesis is conducted in two parts: literature review part and empirical research part. The reason for conducting the literature review is to gain knowledge about the research area and to guide the empirical research. The empirical research investigates a real-life context using multiple sources of data in order to gain rich understanding. The empirical research is conducted using case study approach with semi-structured interviews in the case company. The case company is a large Finnish company which operates globally. The company produces technology, automation and service offerings in the pulp, paper and energy industries. This research could not reveal fully generalized IIoT-driven business model but characteristics and challenges the company has to take into account while developing IIoT-driven business model and how these affect each other were identified. Also, seven findings were made which describes the IIoT-driven business models. Findings are: 1.) Customer segments affects the implementation of the IIoT. 2.) Existing key resources might enable competitive advantage. 3.) Cost structure, value propositions and customer segment affects the revenue streams. 4.) Customer segments and value propositions affects to the distribution channel. 5.) Value propositions must be attractive enough. 6.) The company must ensure the connection to the customers' data. 7.) Key partners are likely to change. As a conclusion the results indicates that every company must design its own unique IIoT-driven business by taking into account the industry, company’s existing business model and peculiarities of the IIoT-driven business models.