Lecture on Industrial Internet Business Models for master of science students in Tampere University of Technology

1. Industrial Internet Business Models
MEI-62006 Introduction to Industrial Internet
Tampere University of Technology

2. About Me
Karan Menon
Ø Bachelor’s in Chemical Engineering, India
Ø Master’s in Material Science, TUT, Finland
Ø PhD Fellow, Laboratory of Industrial and Information Management, TUT,
Finland
Ø Researcher, DARE Business Data Research Group
Ø Research funded by TEKES & Academy of Finland Projects, Finnish Cultural
Foundation (Suomen Kulttuurirahasto), The Jenny and Antti Wihuri
Foundation (Jenny ja Antti Wihurin rahasto)
Ø Topics: Industrial Internet, Industry 4.0, Business Models, Platforms
Email– karan.menon@tut.fi
Twitter - @menonkaran
Slideshare - https://www.slideshare.net/menonkaran

3. What is Industrial Internet?
5.4.2018 3https://www.youtube.com/watch?v=Cy9DhBab3rc

4. Finland?
5.4.2018
Source: https://hbr.org/2017/07/60-countries-
digital-competitiveness-indexed
4

5. What is the industrial internet market
potential?
5.4.2018 5

6. Why is industrial so good for
business?
5.4.2018 6
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

7. What is a business model?
5.4.2018 7
Model: "a simplified description
and representation of a complex
entity or process".
Business: "the activity of providing goods
and services involving financial,
commercial and industrial aspects".
A business model is a conceptual tool
containing a set of objects, concepts and
their relationships with the objective to
express the business logic of a specific
firm.
Source: Osterwalder, Alexander; Pigneur, Yves; and Tucci, Christopher L. (2005) "Clarifying Business Models: Origins, Present, and
Future of the Concept," Communications of the Association for Information Systems: Vol. 16, Article 1.

8. Business model components & their
relations
5.4.2018 8
Source: Toor, M. Junaid. INDUSTRY 4.0 AS SMART ENABLER FOR INNOVATIVE BUSINESS MODELS.
MS thesis. Universitetet i Agder; University of Agder, 2017.
Relationships
Core Competences

9. 5.4.2018 9
Source: Osterwalder, Alexander, and Yves Pigneur. Business model generation: a handbook
for visionaries, game changers, and challengers. John Wiley & Sons, 2010.

10. Industrial Internet enabled
Business models
5.4.2018 10
• Condition Monitoring – Advanced analytics to monitor the condition of the
machine in order to provide/sell optimal machine control parameters to the
customer and in future develop a customized machine for the customer
• Predictive Maintenance – Instead of scheduled maintenance change it to
maintenance when needed
• Pay-per-use – Customer pays only for the use of the machine
• Outcome based Business Model – Pay for the outcome that the machine
generates instead of paying for the machine itself.
• And others….

11. Industrial Internet based Condition Monitoring &
Predictive Maintenance
5.4.2018 11

12. Power by hour – Rolls Royce
5.4.2018 12
"They pay a fixed charge per hour of operation, per ship,
and Rolls-Royce will monitor the equipment aboard each
vessel from on shore by means of onboard sensors. The
agreement also covers planned maintenance, while day-
to- day maintenance aboard ship will be carried out by
the shipping company itself. The service builds on
experience with similar agreements that Rolls-Royce
Group has had in the airline market for many years.”
Source: https://www.rolls-royce.com/media/our-stories/discover/2017/discover-power-by-the-
hour.aspx

13. Team Work – 15 Mins Max.
5.4.2018 13
Ø Take up one of the models from here or propose a new
industrial internet based BM of your liking and fill up the BM
canvas
• Condition Monitoring – Advanced analytics to monitor the condition of the
machine in order to provide/sell optimal machine control parameters to the
customer and in future develop a customized machine for the customer
• Predictive Maintenance – Instead of scheduled maintenance change it to
maintenance when needed
• Pay-per-use – Customer pays only for the use of the machine
• Outcome based Business Model – Pay for the outcome that the machine
generates instead of paying for the machine itself.
• And others….
Ø Once done, present your group’s canvas to the class in 1-2
mins

14. Take aways
5.4.2018 14
Ø Industrial internet based technologies are interesting and creating worldwide interest
because of the new business opportunities they create.
Ø Novel Business Models such as outcome based, pay per use, condition monitoring,
predictive maintenance and others can be effectively understood if proper tools such
as the BM canvas are used.
Ø Digitalization in manufacturing creates competition from players who traditionally
don’t belong to the industry, such as google, amazon etc.
Ø Digitalization in manufacturing requires the education system to integrate different
streams of engineering such as mechanical engineering, computer science, signal
processing, industrial engineering together.
Ø Job portfolio in manufacturing companies is expanding to data science, data
analytics etc
Ø Novel Business models will be able to create requirements for future automation
systems and machine configurations, hence studying them is important

15. 5.4.2018 15
Contact Information
Email– karan.menon@tut.fi
Twitter - @menonkaran
Slideshare - https://www.slideshare.net/menonkaran
Kiitos! Thank you! ध"यवाद