Over the past two decades, subscription-based billing of services has picked up in almost all sectors. With more businesses opting for the digital wave, they found newer and innovative ways of selling to consumers via subscription packages – either directly or through partners.
As we move into another decade, a different breed of businesses is taking shape wherein consumers are provided with access to actual physical hardware rather than just digital services for use. It is none other than the Internet of Things (IoT) driven businesses. By 2024, it is estimated that the IoT market size will surpass USD 1.4 Trillion globally.
We are now moving towards a future where everything from cars to washing machines and home security devices can be sold by manufacturers as subscription services. It will involve a drastic change in ownership structures that we have been so accustomed to in our lives and organizations selling IoT subscriptions must find new ways for billing and revenue management of their business model.
Let us have a closer look at the challenges in billing and revenue management for IoT businesses:
Service Diversity:
Let us consider the example of a business that offers smart home security services via a collection of smart home devices such as cameras, sensors, and actuators. Each device can have a say in the final service being offered to the customer. For example, an event of trespassing may be detected by a motion sensor, which in turn activates or directs the camera to record the scene in the area where the motion was detected, and another alarm may sound to warn residents about the intrusion. Now each service such as recording, streaming the content over the internet to smartphone apps of residents, the time for which the alarm or motion sensor, is put to use all form further components in the pricing structure. Some services may not be needed all the time and some need to be focused on monitoring the house at all times. The wide variations within the services offered require a more flexible approach to billing by IoT businesses.
Data Monetization:
IoT systems accumulate tons of data continuously and use this stream to drive actions or alerts for end consumers. This collected data may find different uses based on different parameters such as time of collection, consistency, accuracy, targeted scenarios, and much more. The same data collected at two different time intervals may find itself in a scenario where an end consumer needs just one among them and they do not want to pay for the other. Such complexities in the utilization of real-time data collected by IoT systems can put a strain on traditional billing and revenue management software. IoT businesses need more responsive and adaptive billing systems that can put in microlevel checks and conditions to measure only data that is needed by a consumer and then subsequently bill its usage to the customer.
Complex Stakeholder Network:
An IoT business may involve a number of parties including manufacturers of devices, 3rd party installation or service companies, logistical or network partners, and any hybrid combination of all these parties as well. The dynamics of stakeholders involved in leveraging the revenue generated by an IoT business installation pose a significant challenge. Complex contractual obligations, accurate measurements, unbiased customer billing, etc. can take a toll on conventional billing systems which are far less adaptable to the financial architecture required for such a multi-party operated business environment facilitated by IoT.
Cost Management:
In an IoT business, there is often a need to bill the usage of both hardware as well as the digital ecosystem supported by the hardware. For end-users, all they need is a simple billing mechanism according to predetermined usage plans or contracts without having to worry about how each component of the IoT offering adds up to the final costing. Recognizing revenue will also be complex in the case of IoT business as the hardware may need to be billed from the date of installation and the services only when they actually realize value for buyers. This further complicates the costing structure for IoT businesses and makes it hard for normal billing software to accommodate their nuances.
IoT businesses have a great future ahead as more industries recognize the value connected machines can deliver in their operations. From healthcare to retail, telecommunication, and even finance, newer services are slowly being rolled out on top of IoT infrastructure, thereby creating a need for a more streamlined billing mechanism. Creating holistic revenue management and billing experience for end-users is of top priority for businesses and getting it right will decide who wins the battle for supremacy at an earlier stage.
Take a demo to know how OneBill can help IoT businesses navigate their unique billing & revenue management challenges.