Where are the new business models?

Where are the new business models?

This article was first published in Computer-Automation.de by Michael Mansard, Principal Business Transformation & Innovation, Zuora and Jean-Michel Cagin, Senior Partner, Roland Berger. 


The hallmarks of an Industry 4.0 environment are the ever-changing new business models. But to date, only a few companies have seen it. Schneider Electric now has a couple of models running.

New business models have been dramatically transforming many areas for several years. The Subscription Economy subsumes all business models that are monetized via digital add-on services, flexible subscription models or pay-per-use. In addition to new sales opportunities, this offers further advantages: the providers of such models can analyze the use of their products by the user much more precisely and thus adapt it exactly to the customer’s needs. This makes true customer orientation possible, which until now has often been just wishful thinking. But how does this transformation succeed for providers of classic industrial products – ie physical goods?

In the past 7.5 years, companies in the subscription economy have grown on average five times faster than the S&P 500 and U.S. Retail Sales

In the manufacturing industry, digital transformation programs have been launched in almost every company. The Industrial Internet of Things, Artificial Intelligence, Cloud Solutions and Blockchain are the key technology drivers of Industry 4.0. That data is an important resource is clear to all concerned. But developing suitable business models that turn these data into profitable revenue is often still in its infancy. In new business models, however, lie the greatest opportunities for digital transformation. How successful companies can be in further developing their business models towards flexible subscription and pay-per-use models is shown by the Subscription Economy Index, which is regularly collected by Zuora.

However, developing new business models in the manufacturing industry is a complex task. As material goods are concerned, the solution approaches of the software and media industry can not be transferred one-to-one. The focus is not only on the new opportunities for monetization, but also on what changes are necessary within the corporate structure. In any case, leadership rethinking value creation and value creation is urgently needed.

Prime example Schneider Electric
Schneider Electric, one of the world leaders in energy management and industrial automation, has already converted numerous offerings to flexible usage models. The company aims to drive forward the digital reorientation of energy management and automation technology and ensure that IoT-enabled solutions can be seamlessly networked to capture and analyze data in real-time. For example, with its EcoStruxure Facility Advisor, Schneider Electric helps building owners or operators improve the energy efficiency of small to medium-sized buildings, ensure smooth operation and optimize operating and maintenance costs. The Advisor is one of numerous EcoStruxure platform solutions available in 480. 000 properties are used worldwide and connected to more than 1.6 million devices. Over 20,000 partners and system integrators support customers with this platform. The Advisor works with cloud-based software that accesses data in buildings in real-time and evaluates them using modern analysis methods. The customer receives valuable information that supports him in the optimal operation of the building. At the same time, the partners and system integrators receive valuable information about the needs of their customers. This information is helpful when it comes to selling additional services or equipment. The software is available as a subscription, works with both new and existing hardware, and is vendor-independent.

Another example is TelevisBlue, which is a retrofit solution for monitoring small and medium-sized refrigeration systems. The devices enable connectivity with cloud-based software over a cellular connection. Designed specifically for tablets and smartphones, the platform provides access to all equipment and provides the information anytime, anywhere. With this plug & play solution, users can easily implement temperature monitoring of their existing cooling systems and also increase their energy efficiency. TelevisBlue already includes a service term of twelve months. Small and medium retailers can use the service immediately. All you have to do is register online, the payment is self-service, not bureaucratic by credit card.

Adjust billing systems
One of the important aspects of the transformation to new business models of the Subscription Economy is the adaptation of the business systems of the manufacturing companies. Traditional processes are based on classic ERP systems. They are defined by the steps from quotation through order and delivery to debtor management. However, in modern flexible business models, traditional ERP systems are reaching their limits, as they are not designed for recurring sales with flexible subscription models. So companies need a solution in addition to their ERP and CRM systems to easily implement such new business models and respond flexibly to customer needs. At Schneider Electric, the Zuora billing system helps the previous business to expand models with regular sales. With the flexible billing solution, offers can be adapted to individual customer requirements. The result: responsive prices and offer packages, unified customer insight and settlement in different currencies. With this flexibility, Schneider Electric can quickly and easily introduce new offerings and become active in different markets.

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