Advanced

The Business Impact of Internet of Things

Dahlin, Annie and Lindgren, Josefin (2016) MIO920
Production Management
Abstract
Problem Description
Both academic researches and consulting firms claim that Internet of Things will come to change the society we live in, as well as create entirely new business opportunities for companies. However, there is little research that analyzes the actual benefits with Internet of Things, how companies should act in order to find these benefits, and in what way their business models must be adjusted to fit in the new era of Internet of Things. This thesis aims to fil that gap. An empirical study, with the aim to identify, concretize and estimate the potential of Internet of Things in a business context, has been conducted. More specifically, the thesis identifies how a technology-based manufacturing firm with a service... (More)
Problem Description
Both academic researches and consulting firms claim that Internet of Things will come to change the society we live in, as well as create entirely new business opportunities for companies. However, there is little research that analyzes the actual benefits with Internet of Things, how companies should act in order to find these benefits, and in what way their business models must be adjusted to fit in the new era of Internet of Things. This thesis aims to fil that gap. An empirical study, with the aim to identify, concretize and estimate the potential of Internet of Things in a business context, has been conducted. More specifically, the thesis identifies how a technology-based manufacturing firm with a service business can capture value from implementing Internet of Things.

Purpose
The purpose of this thesis is to investigate whether Internet of Things will change existing business models of technology-based manufacturing firms with a service business. The study also aims at examining how three parts of the Business Model Canvas – Cost Structure, Value Proposition and Revenue Streams – will be affected by Internet of Things.

Delimitations
This study focuses on Internet of Things in a business context, with a focus on service business, i.e. how manufacturing firms should act in order to capture value from Internet of Things. The study might touch but will not focus on technology, system integration, security, patents, infrastructure and marketing.

Methodology
This study mainly has an exploratory research approach, where an embedded case study of ASSA ABLOY Entrance Systems (AAES) has been performed. A literature study, qualitative interviews with employees and one customer interview have been conducted. Quantitative data in terms of statistics of service history has also been analyzed. The Business Model Canvas (BMC) has been used as a theoretical framework, with a focus on the three parts: Cost Structure, Value Proposition and Revenue Streams. The research questions have been answered and recommendations have been given to AAES about how to exploit value from Internet of Things. Future research as well as academic contribution have been discussed.

Conclusion
Internet of Things does not necessary change the business model of a firm, it rather triggers a transformation. Manufacturing firms need to transform their business models in order to stay viable in an Internet of Things context over the long term. This master thesis has proved a cost savings potential of 11-17 % per year and customer when introducing Internet of Things in the service business of a manufacturing firm. The cost savings arise from the possibility to eliminate certain service visits. Internet of Things can also enable new ways to deliver value to customers, for example through maximizing uptime of equipment or creating customized solutions. Finally the thesis has showed that the introduction of Internet of Things brings a large focus on basing prices on value instead of costs. (Less)
Please use this url to cite or link to this publication:
author
Dahlin, Annie and Lindgren, Josefin
supervisor
organization
course
MIO920
year
type
M1 - University Diploma
subject
keywords
Internet of Things, Business Model, Cost Structure, Value Proposition, Revenue Streams, Servitization, Lean Service, Pricing Strategy
other publication id
16/5554
language
English
id
8892341
date added to LUP
2016-09-23 09:57:11
date last changed
2016-10-03 07:44:06
@misc{8892341,
  abstract     = {Problem Description 
Both academic researches and consulting firms claim that Internet of Things will come to change the society we live in, as well as create entirely new business opportunities for companies. However, there is little research that analyzes the actual benefits with Internet of Things, how companies should act in order to find these benefits, and in what way their business models must be adjusted to fit in the new era of Internet of Things. This thesis aims to fil that gap. An empirical study, with the aim to identify, concretize and estimate the potential of Internet of Things in a business context, has been conducted. More specifically, the thesis identifies how a technology-based manufacturing firm with a service business can capture value from implementing Internet of Things. 

Purpose 
The purpose of this thesis is to investigate whether Internet of Things will change existing business models of technology-based manufacturing firms with a service business. The study also aims at examining how three parts of the Business Model Canvas – Cost Structure, Value Proposition and Revenue Streams – will be affected by Internet of Things. 

Delimitations 
This study focuses on Internet of Things in a business context, with a focus on service business, i.e. how manufacturing firms should act in order to capture value from Internet of Things. The study might touch but will not focus on technology, system integration, security, patents, infrastructure and marketing. 

Methodology 
This study mainly has an exploratory research approach, where an embedded case study of ASSA ABLOY Entrance Systems (AAES) has been performed. A literature study, qualitative interviews with employees and one customer interview have been conducted. Quantitative data in terms of statistics of service history has also been analyzed. The Business Model Canvas (BMC) has been used as a theoretical framework, with a focus on the three parts: Cost Structure, Value Proposition and Revenue Streams. The research questions have been answered and recommendations have been given to AAES about how to exploit value from Internet of Things. Future research as well as academic contribution have been discussed. 

Conclusion 
Internet of Things does not necessary change the business model of a firm, it rather triggers a transformation. Manufacturing firms need to transform their business models in order to stay viable in an Internet of Things context over the long term. This master thesis has proved a cost savings potential of 11-17 % per year and customer when introducing Internet of Things in the service business of a manufacturing firm. The cost savings arise from the possibility to eliminate certain service visits. Internet of Things can also enable new ways to deliver value to customers, for example through maximizing uptime of equipment or creating customized solutions. Finally the thesis has showed that the introduction of Internet of Things brings a large focus on basing prices on value instead of costs.},
  author       = {Dahlin, Annie and Lindgren, Josefin},
  keyword      = {Internet of Things,Business Model,Cost Structure,Value Proposition,Revenue Streams,Servitization,Lean Service,Pricing Strategy},
  language     = {eng},
  note         = {Student Paper},
  title        = {The Business Impact of Internet of Things},
  year         = {2016},
}