I²M²—The Future of Industrial Internet Monetization
As a result, the promise of many highly
innovative systems is never realized due to
their high risk. Or, in order to build a lower
cost system, the builder has to provide a
significant discount which is also passed on
to the suppliers of the integrated
components (devices, software, complex
control equipment, etc.). With this one-time
payment upfront, there is also no contingent
relationship between the system and
component builders during the operational
phase of the system. As a result, there is no
sharing of the operational risks, nor is there
sharing of the operational opportunities of
the built system either.
I NTRODUCTION
With the evolutional change of industrial
systems to connected IIoT systems, many
innovations in the industrial world will be
possible, such as long-range information
exchange, data analytics in the cloud or
sophisticated automatic remote control.
This article describes another direction:
Innovation in the method in which industrial
systems will be paid for in the future as these
systems and their components will soon be
connected to the Internet.
M OTIVATION
How great would it be if the system was paid
for based on operational usage rather than
the large upfront payment: The operational
user would pay for the usage of the system
out of the revenue generated by the system.
This is different from the traditional leasing
system, which still has full upfront payments
to the system builder with an upfront loan,
which is paid back in fixed intervals by the
operational user. Instead, our visionary
model would pay the system builder and all
the component builders based on usage.
This approach strengthens the bond
between user and builders who share the
risk and opportunities of the operation. For
example, the operator of an oil refinery
could pay the builders the actual usage costs
as part of his revenue, thus relieving the
operator of the large upfront investment in
the equipment while providing builders with
additional risks and opportunities due to a
fluctuating oil price.
Industrial systems are typically large and
expensive to build. Most payment is done
upfront – after the system is built and ready
to use, the operational user takes
“ownership” by paying for the entire system
upfront – before the system returns any
revenue. It could take years before such a
system finally turns the first profit defined as
return on investment (ROI). All of the
financial risk is on the operational user’s side
– if the operation of the system permanently
fails or is not profitable, there is the risk of
high financial loss or even bankruptcy. If the
operational user does not have the capital to
pay for the system, a loan is required,
provided typically by banks or venture
capital groups. If the profitability of the
planned system is at high risk, banks are
usually very restrictive with such loans
regardless of the level of innovation or
potential advantages for the human
community or environment. Venture capital
groups are more risk-orientated but their
financial capabilities are limited.
IIC Journal of Innovation
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