The Role of the Internet of Things in the Improvement and Expansion of Business

The Role of the Internet of Things in the Improvement and Expansion of Business

Hodjat Hamidi (Department of Information Technology, Faculty of Industrial Engineering, K. N. Toosi University of Technology, Tehran, Iran) and Maryam Jahanshahifard (Department of Information Technology, Faculty of Industrial Engineering, K. N. Toosi University of Technology, Tehran, Iran)
Copyright: © 2018 |Pages: 21
DOI: 10.4018/JOEUC.2018070102

Abstract

The Internet of Things (IOT) has been examined in several perspectives based on the goals and visions of the present report. First, in this report based on previous studies, the general framework of business models in the Internet of Things has been analyzed, and then the suggested framework is presented. In the following, the business models of the Internet of Things and the impact of Internet of Things on the existing business models are studied. Thus, first of all, recognizing the elements of business models related to the Internet of Things is essential which has been addressed in the report. The results of different studies led to recognition of almost all business models in this field and to stating the most important components of the business models affected by the Internet of Things. The authors are still in the beginning of the process of Internet of Things. Most of the companies are willing to offer and sell the connected products and in near future, the majority of organizations will adopt more complex and ecosystem models. The purpose of this report is to offers social and business ideas to innovators so they can improve business models using the Internet of Things. This report examines the business models and proposed existing frameworks along with the economic energy of Internet of Things according to the successful projects in this scope, and offers the general logic for services or products that can be used as the basis of specific elements and patterns of business models of IOT.
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1. Introduction

Nowadays, the Internet of Things (IOT) is rapidly growing. In the last 5 years, the number of objects connected to the Internet has been tripled. It is estimated that by 2015, 4.9 billion devices get connected to the Internet. As a result, organizations are expected to consider the Internet of Things as an important source of income (Dijkman, et al 2015). Internet of Things is an integral part of the future of the Internet. According to the protocol agreed upon, each article can be connected to another one according to the vast methods of IOT. This is expressed through a wide range of methods and technologies including Radio Frequency Identification (RFID), Near Field Communications (NFC), Infera-red (IR) and many other methods. The paradigm of the Internet of Things is a result of the convergence of three important views: Internet-oriented (middleware) all-oriented (sensors) and semantic-oriented (knowledge). Although common protocol for communication between smart objects has not yet emerged, the Internet of Things as we know it in will change the world according to the Global System for Mobile Communications Association (GSMA) and machine to machine communications (M2M) (Chan, 2015; Vafaei et al., 2012; Wu et al., 2016). (Economist Intelligence Unit, 2013) has pointed out that the most significant motivation that leads to the use of the technology of IOT by the business can be the potential of financial efficiency of the production. In other words, in order to be able to use the Internet of Things fully in the business, financial efficiency can be considered a key factor. So business models and techniques of valuing the Internet of Things technology are required. The introduction of the Internet of Things creates new financial opportunities; something the old business models could not afford. Cisco Company has estimated that the global market of Internet of Things can bring the profit of 14 trillion dollars in the next decade. World Economic Value Added for the market of the Internet of Things is predicted to be $ 1.9 trillion by 2020. The question is what kind of business models can be used for the Internet of Things. (Daraei et al., 2017; Hashemzadeh et al., 2017; Moradi et al., 2107).

First, we propose that in what ways the Internet has affected the development of business models. By answering this question, we come to a clearer vision of the role of Information Technology (IT) in providing new business models. On the other hand, we develop awareness toward business models based on emerging information technologies, especially the Internet of Things. In Figure 1, the transformation of industry is indicted in points showing the impact of information technology over time. Patterns of business models are listed based on the role of Information Technology in them. More than 300 companies have been examined adopting logic at the outset of their job and then tended to shift it. Gassmann et al., 2013, investigated different items in this report to find their common grounds and finally they came to a set of 55 business models. They presented a business model pattern as a clear configuration of four cores (Who are the customers? What has been sold, how it has been produced? How much is the earned income?), which its success had been proven in companies and industries.

Figure 1.

Distribution of review item of industry transformation based on the role of information technology, business model pattern and time (Fleisch et al., 2014)

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