Impact of IIoT based technologies on characteristic features and related options of nonownership business models
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The document explores the impact of Industrial Internet of Things (IIoT) technologies on non-ownership business models (NOBMs) in manufacturing, highlighting the evolution from traditional to advanced service-based models. It discusses a morphological framework for understanding these models, focusing on characteristic features like ownership, operations, and payment options, and finds that IIoT enhances flexibility and efficiency in these areas. The research concludes with a call to adapt and reconstruct existing frameworks to better suit capital-intensive manufacturing companies.
![Methodology - Framework
| 9Karan Menon
allows to describe service/based business models in a structured way. Table 1 illustrates
the basic structure of Lay et al.’s morphological box. This framework is intended to
allow manufacturing companies with limited experience in nonownership business
models to envision their own, unique set-up.
Table 1. Morphological box framework for nonownership business concepts [4]
Characteristic Features Options
Ownership
During the
phase of use
Equipment
producer
Leasing
bank
Operating
joint venture
Customer
After the
phase of use
Equipment
producer
Leasing
bank
Operating
joint venture
Customer
Personnel
Manufacturing
Equipment
producer
Operating joint
venture
Customer
Maintenance
Equipment
producer
Operating joint
venture
Customer
Location of operation
Equipment
producer’s
establishment
Establishment
“fence to fence”
to the customer
Customer’s
establishment
Single/multiple customer
operation
In parallel operation for
multiple customers
Operation for a single
customer
Payment model Pay per unit
Pay for
availability
Fixed rate
Pay for
equipment
Lay et al.’s morphological box depicts five different characteristic features,
ownership, personnel, location of operation, single/multiple customer operation, and
payment model. By “characteristic features”, we mean the central features of novel
manufacturing business-to-business product- related business models, which are
typical, as well as centrally differentiate the different types of novel business models
Morphological box framework for nonownership business concepts (Lay et. al
2009)
Lay, G., Schroeter, M., Biege, S.: Service-based business concepts: A typology for business- to-business markets. European Management
Journal. 27, 442–455 (2009).](https://image.slidesharecdn.com/plm2019-karanmenon-190710085143/85/Impact-of-IIoT-based-technologies-on-characteristic-features-and-related-options-of-nonownership-business-models-9-320.jpg)
![Results
| 10Karan Menon
as per a dedicated timeslot.
Table 2. Impact of IIoT based technologies on characteristic features of advanced business
models
Characteristic Features Impact of IIoT based technologies References
A Ownership
During the
phase of use
Ownership of Data associated with
the process of manufacturing and
condition of the machine
[2, 14, 19,
20, 22]
After the
phase of use
B Personnel
Manufacturing
Adaptive control using predictive
analytics of the machine impacts the
Personnel activities. Predictive
maintenance impacts overall
maintenance activities.
[1, 19, 21,
24, 25]
Maintenance
C Location of operation
Condition monitoring gives more
freedom when it comes to selecting
the location of operation
[2, 23, 24,
26]
D
Single/multiple
customer operation
Real-time or near-real time
monitoring allows multiple customer
operations with ease.
[14, 19]
E Payment model
IIoT based technologies enable
flexible and smart contracts
[27]
For example, if Kaeser has five customers in the same industrial area then it can set
up a compressor system in a manner that all the five customers can use the same
compressor system without purchasing any compressor [14, 19]. Kaeser can monitor
the usage and the wear and tear of the compressor system and control the operation
Impact of IIoT based technologies on characteristic features of advanced business models](https://image.slidesharecdn.com/plm2019-karanmenon-190710085143/85/Impact-of-IIoT-based-technologies-on-characteristic-features-and-related-options-of-nonownership-business-models-10-320.jpg)
![Results
| 11Karan Menon Impact of IIoT based technologies on characteristic features of advanced business models
models
Characteristic Features Impact of IIoT based technologies References
A Ownership
During the
phase of use
Ownership of Data associated with
the process of manufacturing and
condition of the machine
[2, 14, 19,
20, 22]
After the
phase of use
B Personnel
Manufacturing
Adaptive control using predictive
analytics of the machine impacts the
Personnel activities. Predictive
maintenance impacts overall
maintenance activities.
[1, 19, 21,
24, 25]
Maintenance
C Location of operation
Condition monitoring gives more
freedom when it comes to selecting
the location of operation
[2, 23, 24,
26]
D
Single/multiple
customer operation
Real-time or near-real time
monitoring allows multiple customer
operations with ease.
[14, 19]
E Payment model
IIoT based technologies enable
flexible and smart contracts
[27]
For example, if Kaeser has five customers in the same industrial area then it can set
up a compressor system in a manner that all the five customers can use the same
compressor system without purchasing any compressor [14, 19]. Kaeser can monitor
the usage and the wear and tear of the compressor system and control the operation
using IIoT based technologies.
advanced business models
C.F.* Options
Impact of IIoT based
technologies
A
Equipmen
t producer
Leasing
bank
Operating
joint
venture
Customer Condition Monitoring
and Predictive
Maintenance enables
the equipment producer
to take more risk in
ownership
Equipmen
t producer
Leasing
bank
Operating
joint
venture
Customer
B
Equipment
producer
Operating joint
venture
Customer
Adaptive control allows
the equipment producer
to take control of the
manufacturing process
and maintenance
Equipment
producer
Operating joint
venture
Customer
C
Equipment
producer’s
establishment
Establishment
“fence to fence”
to the customer
Customer’s
establishment
Optimization,
prediction and geo-
localization allows the
equipment producer to
operate the machine at
any location
D
In parallel operation for
multiple customers
Operation for a single
customer
Usage monitoring,
intensity assessment
and condition
monitoring allows the
equipment producer to
serve multiple
customers with the
same machine.
E
Pay per
unit
Pay for
availability
Fixed rate
Pay for
equipment
Smart contracts based
on all the IIoT based
capabilities allows
flexibility in payment
contracts.
* C.F. – Characteristic Features as in Table 2
Finally, IIoT based technologies in combination with Blockchain technology can
lean-up the payment model for the manufacturer. Manufacturers can use smart contracts
Characteristic Features Impact of IIoT based technologies References
A Ownership
During the
phase of use
Ownership of Data associated with
the process of manufacturing and
condition of the machine
[2, 14, 19,
20, 22]
After the
phase of use
B Personnel
Manufacturing
Adaptive control using predictive
analytics of the machine impacts the
Personnel activities. Predictive
maintenance impacts overall
maintenance activities.
[1, 19, 21,
24, 25]
Maintenance
C Location of operation
Condition monitoring gives more
freedom when it comes to selecting
the location of operation
[2, 23, 24,
26]
D
Single/multiple
customer operation
Real-time or near-real time
monitoring allows multiple customer
operations with ease.
[14, 19]
E Payment model
IIoT based technologies enable
flexible and smart contracts
[27]
For example, if Kaeser has five customers in the same industrial area then it can set
up a compressor system in a manner that all the five customers can use the same
compressor system without purchasing any compressor [14, 19]. Kaeser can monitor
the usage and the wear and tear of the compressor system and control the operation
using IIoT based technologies.
Table 2. Impact of IIoT based technologies on characteristic features of advanced business
models
Characteristic Features Impact of IIoT based technologies References
A Ownership
During the
phase of use
Ownership of Data associated with
the process of manufacturing and
condition of the machine
[2, 14, 19,
20, 22]
After the
phase of use
B Personnel
Manufacturing
Adaptive control using predictive
analytics of the machine impacts the
Personnel activities. Predictive
maintenance impacts overall
maintenance activities.
[1, 19, 21,
24, 25]
Maintenance
C Location of operation
Condition monitoring gives more
freedom when it comes to selecting
the location of operation
[2, 23, 24,
26]
D
Single/multiple
customer operation
Real-time or near-real time
monitoring allows multiple customer
operations with ease.
[14, 19]
E Payment model
IIoT based technologies enable
flexible and smart contracts
[27]
For example, if Kaeser has five customers in the same industrial area then it can set
up a compressor system in a manner that all the five customers can use the same
compressor system without purchasing any compressor [14, 19]. Kaeser can monitor
the usage and the wear and tear of the compressor system and control the operation
using IIoT based technologies.
real time or near real time monitoring of the machine use. This allows the manufacturer
to create a system where multiple customers in the same location can use the machine
as per a dedicated timeslot.
Table 2. Impact of IIoT based technologies on characteristic features of advanced business
models
Characteristic Features Impact of IIoT based technologies References
A Ownership
During the
phase of use
Ownership of Data associated with
the process of manufacturing and
condition of the machine
[2, 14, 19,
20, 22]
After the
phase of use
B Personnel
Manufacturing
Adaptive control using predictive
analytics of the machine impacts the
Personnel activities. Predictive
maintenance impacts overall
maintenance activities.
[1, 19, 21,
24, 25]
Maintenance
C Location of operation
Condition monitoring gives more
freedom when it comes to selecting
the location of operation
[2, 23, 24,
26]
D
Single/multiple
customer operation
Real-time or near-real time
monitoring allows multiple customer
operations with ease.
[14, 19]
E Payment model
IIoT based technologies enable
flexible and smart contracts
[27]
For example, if Kaeser has five customers in the same industrial area then it can set
up a compressor system in a manner that all the five customers can use the same
compressor system without purchasing any compressor [14, 19]. Kaeser can monitor](https://image.slidesharecdn.com/plm2019-karanmenon-190710085143/85/Impact-of-IIoT-based-technologies-on-characteristic-features-and-related-options-of-nonownership-business-models-11-320.jpg)
Impact of IIoT based technologies on characteristic features and related options of nonownership business models
- 1. Impact of IIoT based technologies on characteristic features and related options of nonownership business models Karan Menon1, Hannu Kärkkäinen1, Sameer Mittal2, Thorsten Wuest2 1Tampere University, Finland 2West Virginia University, USA IFIP 16th International Conference on Product Lifecycle Management 8-12 July 2019, Moscow, Russia
- 2. About Me Karan Menon ØBachelor’s in Chemical Engineering, India ØMaster’s in Material Science, Tampere University, Finland ØPhD Fellow, Unit of Information and Knowledge Management, Tampere University ØResearch funded by Business Finland & Academy of Finland Projects, Finnish Cultural Foundation (Suomen Kulttuurirahasto), The Jenny and Antti Wihuri Foundation (Jenny ja Antti Wihurin rahasto), The Finnish Foundation for Technology Promotion (Tekniikan Edistämissäätiö) ØTopics: Industrial Internet, Industry 4.0, Business Models, Platforms ØCollaborators: Beckhoff Automation Oy, West Virginia University (USA), Copenhagen Business School (Denmark), ETLA (Helsinki) Email– karan.menon@tuni.fi Twitter - @menonkaran Slideshare - https://www.slideshare.net/menonkaran | 2Karan Menon
- 3. Agenda | 3Karan Menon • Introduction • Research Gap • Research Question • Methodology • Results • Conclusions • Future directions
- 4. Introduction: Why is industrial internet so good for business? a sharp decline in the cost of sensors and, thanks to advances in cloud computing, a rapid decrease in the cost of storing and processing data Machines have become Predictive, Reactive and Social Source: https://archive.org/details/MarcoAnnunziata_2013S | 4Karan Menon
- 5. Introduction: Change of traditional product boundaries Porter, Michael E., and James E. Heppelmann. "How smart, connected products are transforming competition." Harvard business review 92.11 (2014): 64-88. | 5Karan Menon
- 6. Introduction: Evolution to non-ownership business models | 6Karan Menon Traditional selling based business model Rental / Leasing Pay-per- Use (PPU) Pay-per- Outcome (PPO) Pay-per- Output Hybrid Business Models
- 7. Research Gap based on the Literature review | 7Karan Menon 1. Ehret, M., Wirtz, J.: Unlocking value from machines: business models and the industrial internet of things. Journal of Marketing Management. 33, 111–130 (2017). 2. Ardolino, M., Rapaccini, M., Saccani, N., Gaiardelli, P., Crespi, G., Ruggeri, C.: The role of digital technologies for the service transformation of industrial companies. International Journal of Production Research. 56, 2116–2132 (2018). 3. Arnold, C., Kiel, D., Voigt, K.-I.: How the industrial internet of things changes business models in different manufacturing industries. Int. J. Innov. Mgt. 20, 1640015 (2016). • Academia and managers expect to have a lot of benefits of IIoT based technologies, towards business and technical processes (Ehret et al. 2017, Arnold et al. 2016) • However, when it comes to Non-ownership business models (NOBMs) these benefits are difficult to realize and complex because of lack of knowledge on how the IIoT based technologies impact these NOBMs (pay-per-use, pay-per-output and pay-per-outcome type business models) (Ardolino et al. 2018, Arnold et al. 2016) • Hence, in this paper, we explore the current academic literature, especially case study literature to understand the role of IIoT in NOBMs for manufacturing companies, specifically, capital intensive manufacturing companies
- 8. Research Question investigated in the paper | 8Karan Menon “How do IIoT- based technologies impact the characteristic features and related business model enabled options of the nonownership types of advanced business models of business-to-business manufacturing companies?”
- 9. Methodology - Framework | 9Karan Menon allows to describe service/based business models in a structured way. Table 1 illustrates the basic structure of Lay et al.’s morphological box. This framework is intended to allow manufacturing companies with limited experience in nonownership business models to envision their own, unique set-up. Table 1. Morphological box framework for nonownership business concepts [4] Characteristic Features Options Ownership During the phase of use Equipment producer Leasing bank Operating joint venture Customer After the phase of use Equipment producer Leasing bank Operating joint venture Customer Personnel Manufacturing Equipment producer Operating joint venture Customer Maintenance Equipment producer Operating joint venture Customer Location of operation Equipment producer’s establishment Establishment “fence to fence” to the customer Customer’s establishment Single/multiple customer operation In parallel operation for multiple customers Operation for a single customer Payment model Pay per unit Pay for availability Fixed rate Pay for equipment Lay et al.’s morphological box depicts five different characteristic features, ownership, personnel, location of operation, single/multiple customer operation, and payment model. By “characteristic features”, we mean the central features of novel manufacturing business-to-business product- related business models, which are typical, as well as centrally differentiate the different types of novel business models Morphological box framework for nonownership business concepts (Lay et. al 2009) Lay, G., Schroeter, M., Biege, S.: Service-based business concepts: A typology for business- to-business markets. European Management Journal. 27, 442–455 (2009).
- 10. Results | 10Karan Menon as per a dedicated timeslot. Table 2. Impact of IIoT based technologies on characteristic features of advanced business models Characteristic Features Impact of IIoT based technologies References A Ownership During the phase of use Ownership of Data associated with the process of manufacturing and condition of the machine [2, 14, 19, 20, 22] After the phase of use B Personnel Manufacturing Adaptive control using predictive analytics of the machine impacts the Personnel activities. Predictive maintenance impacts overall maintenance activities. [1, 19, 21, 24, 25] Maintenance C Location of operation Condition monitoring gives more freedom when it comes to selecting the location of operation [2, 23, 24, 26] D Single/multiple customer operation Real-time or near-real time monitoring allows multiple customer operations with ease. [14, 19] E Payment model IIoT based technologies enable flexible and smart contracts [27] For example, if Kaeser has five customers in the same industrial area then it can set up a compressor system in a manner that all the five customers can use the same compressor system without purchasing any compressor [14, 19]. Kaeser can monitor the usage and the wear and tear of the compressor system and control the operation Impact of IIoT based technologies on characteristic features of advanced business models
- 11. Results | 11Karan Menon Impact of IIoT based technologies on characteristic features of advanced business models models Characteristic Features Impact of IIoT based technologies References A Ownership During the phase of use Ownership of Data associated with the process of manufacturing and condition of the machine [2, 14, 19, 20, 22] After the phase of use B Personnel Manufacturing Adaptive control using predictive analytics of the machine impacts the Personnel activities. Predictive maintenance impacts overall maintenance activities. [1, 19, 21, 24, 25] Maintenance C Location of operation Condition monitoring gives more freedom when it comes to selecting the location of operation [2, 23, 24, 26] D Single/multiple customer operation Real-time or near-real time monitoring allows multiple customer operations with ease. [14, 19] E Payment model IIoT based technologies enable flexible and smart contracts [27] For example, if Kaeser has five customers in the same industrial area then it can set up a compressor system in a manner that all the five customers can use the same compressor system without purchasing any compressor [14, 19]. Kaeser can monitor the usage and the wear and tear of the compressor system and control the operation using IIoT based technologies. advanced business models C.F.* Options Impact of IIoT based technologies A Equipmen t producer Leasing bank Operating joint venture Customer Condition Monitoring and Predictive Maintenance enables the equipment producer to take more risk in ownership Equipmen t producer Leasing bank Operating joint venture Customer B Equipment producer Operating joint venture Customer Adaptive control allows the equipment producer to take control of the manufacturing process and maintenance Equipment producer Operating joint venture Customer C Equipment producer’s establishment Establishment “fence to fence” to the customer Customer’s establishment Optimization, prediction and geo- localization allows the equipment producer to operate the machine at any location D In parallel operation for multiple customers Operation for a single customer Usage monitoring, intensity assessment and condition monitoring allows the equipment producer to serve multiple customers with the same machine. E Pay per unit Pay for availability Fixed rate Pay for equipment Smart contracts based on all the IIoT based capabilities allows flexibility in payment contracts. * C.F. – Characteristic Features as in Table 2 Finally, IIoT based technologies in combination with Blockchain technology can lean-up the payment model for the manufacturer. Manufacturers can use smart contracts Characteristic Features Impact of IIoT based technologies References A Ownership During the phase of use Ownership of Data associated with the process of manufacturing and condition of the machine [2, 14, 19, 20, 22] After the phase of use B Personnel Manufacturing Adaptive control using predictive analytics of the machine impacts the Personnel activities. Predictive maintenance impacts overall maintenance activities. [1, 19, 21, 24, 25] Maintenance C Location of operation Condition monitoring gives more freedom when it comes to selecting the location of operation [2, 23, 24, 26] D Single/multiple customer operation Real-time or near-real time monitoring allows multiple customer operations with ease. [14, 19] E Payment model IIoT based technologies enable flexible and smart contracts [27] For example, if Kaeser has five customers in the same industrial area then it can set up a compressor system in a manner that all the five customers can use the same compressor system without purchasing any compressor [14, 19]. Kaeser can monitor the usage and the wear and tear of the compressor system and control the operation using IIoT based technologies. Table 2. Impact of IIoT based technologies on characteristic features of advanced business models Characteristic Features Impact of IIoT based technologies References A Ownership During the phase of use Ownership of Data associated with the process of manufacturing and condition of the machine [2, 14, 19, 20, 22] After the phase of use B Personnel Manufacturing Adaptive control using predictive analytics of the machine impacts the Personnel activities. Predictive maintenance impacts overall maintenance activities. [1, 19, 21, 24, 25] Maintenance C Location of operation Condition monitoring gives more freedom when it comes to selecting the location of operation [2, 23, 24, 26] D Single/multiple customer operation Real-time or near-real time monitoring allows multiple customer operations with ease. [14, 19] E Payment model IIoT based technologies enable flexible and smart contracts [27] For example, if Kaeser has five customers in the same industrial area then it can set up a compressor system in a manner that all the five customers can use the same compressor system without purchasing any compressor [14, 19]. Kaeser can monitor the usage and the wear and tear of the compressor system and control the operation using IIoT based technologies. real time or near real time monitoring of the machine use. This allows the manufacturer to create a system where multiple customers in the same location can use the machine as per a dedicated timeslot. Table 2. Impact of IIoT based technologies on characteristic features of advanced business models Characteristic Features Impact of IIoT based technologies References A Ownership During the phase of use Ownership of Data associated with the process of manufacturing and condition of the machine [2, 14, 19, 20, 22] After the phase of use B Personnel Manufacturing Adaptive control using predictive analytics of the machine impacts the Personnel activities. Predictive maintenance impacts overall maintenance activities. [1, 19, 21, 24, 25] Maintenance C Location of operation Condition monitoring gives more freedom when it comes to selecting the location of operation [2, 23, 24, 26] D Single/multiple customer operation Real-time or near-real time monitoring allows multiple customer operations with ease. [14, 19] E Payment model IIoT based technologies enable flexible and smart contracts [27] For example, if Kaeser has five customers in the same industrial area then it can set up a compressor system in a manner that all the five customers can use the same compressor system without purchasing any compressor [14, 19]. Kaeser can monitor
- 12. Conclusions | 12Karan Menon • Objective of the morphological box (originally by Lay et. al 2009) was to demonstrate the larger variety of possible different types of NOBMs, making use of the characteristic features and related options • According to the results demonstrated in previous slides, IIoT- enabled technologies and facilitated process capabilities impact the above-mentioned characteristic features and related options in a way that this enables the implementation of a larger variety of NOBMs, such as, the pay-per-use, pay-per-output and pay-per-outcome business models, as well as a variety of options related to them. • On a broader level, IIoT technologies have and will impact the Ownership, Operations and Payment related characteristic features and related options • There is a need to re-construct the morphological box for NOBMs for manufacturing companies especially capital intensive manufacturing companies. Lay, G., Schroeter, M., Biege, S.: Service-based business concepts: A typology for business- to-business markets. European Management Journal. 27, 442–455 (2009).
- 13. Future work and proposed design of the new morphological box - Work in progress -- confidential / do not circulate -
- 14. Contact Information Email– karan.menon@tuni.fi Twitter - @menonkaran Slideshare - https://www.slideshare.net/menonkaran Kiitos! Thank you! ध"यवाद | 14Karan Menon