How the IoT data ecosystem is going to change the B2B market
In fact, growth in digital technologies is bringing about a profusion of data that can generate further benefits for players in all business sectors.
As the Boston Consulting Group's strategy think-tank, the Henderson Institute is dedicated to exploring and analyzing important new information from the worlds of business, technology, and science.
In an article published on July 27, 2018, the Boston Consulting Group focused on how companies can capture the value of data generated by IoT activities. Whereas direct data exchange is undeniably a new revenue source for companies, processes that are more complex require data ecosystems to be created in which multiple players are involved with the data value chain. An essential step for maximizing revenue, the data ecosystem is on the verge of transforming the B2B market.
Data, a new source of revenue
As a result of the digital revolution, companies today are becoming technology organizations that create data. One consequence of this evolution is that the volume of data generated by IoT activities has increased, which, in turn, has significant impact on how companies manage their business.
One of the first impacts actually concerns clients. Companies are forced to adopt new business models, which requires new tools for continuing to improve the client experience. To start, companies can identify the data generated by their internal environment in order to be able to more easily target areas of improvement for products and services.
However, beyond the internal environment, companies have an interest in collaborating with outside partners, even in different business sectors, to create new data ecosystems that will enable them to generate high-margin recurring revenue streams.
It may be hard to extract value from data in B2B environments because companies need expertise in the field to develop new solutions based on data. Specific new ecosystems are needed for companies to be able to sell or acquire complementary data capable of generating new revenue, improving productivity, reducing production costs, and more.
Many companies in the B2B sector are just now starting to leverage data generated by smart products and machines. Relatively few companies focus on IoT data for developing business models with goals other than improving processes for their existing products and business activities.
Monetizing IoT data therefore represents a long-term competitive advantage for companies seeking to generate additional revenue from their data. Boston Consulting Group (BCG) identified four major steps for developing data monetization:
Identifying high-potential data
Logically, the first step in developing a company's data monetization is to identify the data most likely to generate revenue. For that, the company needs to assess the data it produces in order to have a global overview of what it has to offer. For example, smart objects – such as products and industrial equipment – often generate data. If the business opportunity for generating revenue is large, it may be worth pursuing significant investment.
Leveraging data for in-house use
Companies are in the ideal position to leverage their own data. Leveraging data for in-house use can lead to many benefits, such as helping to lower production costs, increase product quality and performance, improve decision-making, and optimize maintenance systems. The internal environment is somewhat limited, however, as competitors will soon be doing the same thing. Companies need to find ways to expand their horizons.
Monetizing external data
Monetization generates recurring revenue streams and financial results that can be even more beneficial than a company's regular business activities. According to BCG, monetizing a company's data externally can yield a raw profit margin of 15% to 25%. New revenue from monetizing data can have significant impact on the overall financial performance of B2B companies. For example, generating 1% of additional revenue from data could lead to a 10% increase in profit and an increase of over 25% in value.
Monetizing data externally enables companies to: Take advantage of unique data Target new markets, notably by offering alternative data Integrate related services to improve the customer experience
Orchestrating the data ecosystem
While companies can provide simple data products and services themselves, more complex offerings generally require them to establish partnerships with other players to cover every step in the data value chain: data acquisition, data product and service development, and sales and support for data products and services.
Companies can find a variety of partners in a data ecosystem, including analysts, digital platform suppliers, data brokers, and Cloud integrators.
All stakeholders are likely to benefit from the data ecosystem, but the greatest benefit is perceived by the organizer, the player at the heart of interactions who coordinates activities with the other stakeholders, aggregates their data, and provides robust data products and services for end-customers. Another key point is that the organizer's position is strengthened as the data ecosystem grows.
At this time, IoT data ecosystems in most B2B industries are still emerging or have not yet been fully developed. Companies therefore have every interest to use structured data exchange platforms such as that provided by Dawex.
Reasons to use the Dawex data platform
The Dawex global data marketplace enables companies in B2B industries to meet and exchange their data directly in a secure and reliable environment. With the 5,000 private companies and public organizations already present on Dawex coming from all types of business sectors, members are able to acquire data that can bring them strategic value added to maximize their own revenue, improve productivity, understand the market, and fine-tune their offerings.
Dawex platform features enable members to:
- Find out whether their data is likely to interest other companies
- Meet and discuss directly with interested companies
- Buy or sell data that has the potential to generate revenue and other benefits
- Become the organizer of a data ecosystem comprised of various partners
For the Boston Consulting Group, there is no doubt that data ecosystems based on IoT activities will transform the B2B market. While this approach is still in its early stages, all the right elements are in place to ensure that those ecosystems become essential. B2B companies have everything to gain by getting involved with this field to optimize their business activities. The Dawex global data marketplace is the ideal tool for reaching those objectives.