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Everything-as-a-Service Changing Monetization Rules for Manufacturers

November 04, 2016

The Internet of Things (IoT) is becoming ubiquitous as mobility, the cloud and a subscription and services-based billing model transform networking and connectivity. The trend has given way to the phenomenon of “everything-as-a-service,” an evolution set to transform pretty much everything about the way hardware and software are developed, delivered, managed and monetized.

Everything-as-a-service is already changing the way manufacturers develop and market their products, and according to a recent blog post from Flexera Software, many traditional companies are moving incrementally toward the software space. Flexera, which specializes in software licensing management and optimization, has observed many manufacturers are beginning to deliver desktop software as well as connect their hardware to the cloud. This enables basic telemetry along with SKU reduction and feature clipping.

This steady process of transformation is giving way to subscription pricing models and pooled capacity licensing. Flexera expects software-defined IoT to become more popular over time, giving way to virtual appliances and device app stores. Function virtualization and elastic computing use cases will also drive management, pricing and licensing of solutions as manufacturers steadily transform their business models to become service providers.

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GE is a prime example of what is taking place in the manufacturing sector, with the company evolving from instrumenting its products to an “as-a-service” model that includes new packages comprised of devices, data and digital solutions. GE is using the Predix IIoT platform to achieve its transformation, impacting not only product development but the way its solutions are managed, marketed and sold to customers.

In order for manufacturers to successfully make the leap to the services economy, they need to make subscriptions and usage central to their business models. That means companies will need a comprehensive view of all their customers as well as their actual usage of hardware, software and blended products to price accordingly. And finally, licensing and security will be paramount to success in the “everything-as-a-service” economy, ensuring steady revenues and an automated solution lifecycle tailored toward the IoT.

The leap from traditional hardware manufacturing to a subscription and services-based model is a large one, and monetization and licensing will be integral to success. Companies playing in the IoT and everything-as-a-service space will need to effectively track licensing, entitlement and usage management to properly monetize and glean maximum value from their solutions.

Edited by Maurice Nagle
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