Business Model Frameworks in IoT Context -- A Literature Review

Employing the Internet of Things (IoT) in business changes the way in which value is offered to customers. To enable and ensure effective value exchange, proper business models are required. In this literature review study (n=56), business model frameworks created for the IoT context were evaluated. The results show that although most of the frameworks emphasize the ecosystemic nature of IoT, even they still largely do not describe the connections, dynamics, and causality between the business model components. While IoT as such does not necessarily need a specific business model, the ecosystemic nature of IoT is bound to influence the business model, thus making IoT business models more integrative, inter-relational, and complex. The results also suggest that the ecosystem-level co-creation of business models needs to be emphasized and studied further

Establishing a Platform Ecosystem: Case Study on Early Adopters

Google, Facebook, Amazon, Apple and many more. The success of companies behind platform ecosystems is widely known. In this context, a platform is considered to be a marketplace where transactions between two or more user groups take place. Platform economy is causing a disruption in the global markets. The mankind is facing the fourth industrial revolution, where the way how people work, live, and even relate to each oth-er is changing dramatically. The accumulation of value in platform ecosystems is no longer linear like in traditional business models, nor is the pricing model as simple as in a traditional supply chain. In this thesis, the learning points from already implemented platform ecosystem projects were collected. The study was conducted as a case study complemented with a comprehensive literature review. A case study was selected as the research method as the aim on this thesis was to find out how the Finnish companies have implemented the plat-forms and also why they decided to utilize this particular business model. The study included two types of companies – international benchmarks and Finnish traditional pipeline companies having some kind of platform. As a result, a list of critical characteristics –a platform canvas – is proposed to facilitate platform creation and development. In addition, this thesis provides a collection of learning points from the case companies, with which current and future Finnish platform owners can avoid pitfalls and gain success with less effort and better probability. There are only a handful of Finnish manufacturing companies that are actively develop-ing a platform ecosystem. Those companies are relatively old, large in size, and have a history of profitable business. The studied companies rely heavily on the implementation of Internet of Things and analyzing of big data. They know well the value the platform can provide as well as the producers and users of the value. However, there is room for improvement in finding the way to capture value to the platform owner as well as exploiting the network effects. The case companies have defined and opened their boundary resources much less than the international benchmarks. This may hinder the expansion – and ultimately the success – of their platforms. The companies need more under-standing about the prerequisites – like value capturing models – of a successful platform ecosystem as well as training and tools to develop the platform

Bridging the Gap at Ecosystem Level : Enhancing Business Model Innovation in Internet of Things-Enabled Platform Ecosystems

Digitaalinen murros haastaa yrityksiä ja yhteisöjä tarjoamaan innovatiivisia palveluita asiakkailleen ja lisäämään omaa kannattavuuttaan uusia liiketoimintamalleja luomalla. Esineiden internet (IoT) on tunnistettu potentiaaliseksi uudenlaisen arvon mahdollistajaksi. Odotetuista hyödyistä huolimatta onnistuneesti toteutettuja IoT:llä varustettuja alustaekosysteemejä on toistaiseksi vähän. IoT-tutkimus on pääosin keskittynyt teknologisten edistysaskeleiden ottamiseen, kun taas liiketoimintamallien innovaatioiden merkitys on suurelta osin sivuutettu. On kuitenkin muistettava, että teknologian onnistunut käyttöönotto on suurelta osin kiinni hyvin määritellystä liiketoimintamallista ja sen arvolupauksen onnistuneisuudesta Sosiaalisen vaihdannan teoria (SET) on olennainen IoT:llä varustettujen alustaekosysteemien kontekstissa. Sen mukaan toimijoiden tulee kokea arvon vaihtaminen oikeudenmukaiseksi eli kokea saamansa arvo riittäväksi tekemiinsä panostuksiin nähden. Tätä teoreettista viitekehystä hyödynnettiin tässä tutkimuksessa selvitettäessä, miten digitaalisen murroksen aikoina liiketoimintamallien innovointia (BMI) voitaisiin parantaa IoT:llä varustetuissa alustaekosysteemeissä. Siten toimijoiden pysyvyyttä voitaisiin parantaa ja verkostojen ulkoisvaikutuksia lisätä. Tämän tutkimuksen tulokset lisäävät teoreettista ymmärrystä arvon vaihtamisesta IoT:tä hyödyntävien alustaekosysteemien kontekstissa. Tutkimuksessa tunnistettiin sosiaalisen arvon dimensiolle kaksi erilaista tulkintaa. Tutkimuksen perusteella voidaan myös todeta, etteivät teoriat – saati käytännön tekijät – huomioi ehdollista arvoa alustakontekstissa. Tutkimus tunnisti monitieteellisesti IoT:n ja alustaekosysteemien liiketoimintamalli-innovaatioiden luomiseen tarvittavat osat. Lisäksi tutkimuksessa luotiin uusi malli BMI:lle, joka yhdistää kaksi uutta työkalua eli ekosysteemin arvotaseen ja alustakanvaasin. Käyttämällä mallia iteratiivisesti strategisena työkaluna luodaan arvokasta näkemystä ekosysteemin toimijoille, minkä avulla he voivat luoda yhdessä yhteisen arvolupauksen ja mahdollistaa positiiviset verkostovaikutukset. Lisäksi tämä tutkimus edistää tutkimusmenetelmiä esittämällä uuden tavan tarkentaa konseptien ominaisuuksia kirjallisuuskatsauksen avulla. Parannettu menetelmä on yhdistelmä lumipallomenetelmää, Porter sanarunkohaku-algoritmia ja temaattista analyysiä. Näitä hyödyntämällä voidaan luoda kattava ja strukturoitu synteesi oleellisesta kirjallisuudesta ja edistää monivivahteisempaa ja syvempää ymmärrystä tutkimusaiheesta. Menetelmää voidaan hyödyntää myös muilla tutkimusalueilla täsmällisten kirjallisuuskatsausten tekemiseen. Tämä tutkimus avaa väylän arvolupausten arvioinnin tutkimiseen IoT:llä varustetuissa alustaekosysteemeissä. Lisää tutkimusta kuitenkin tarvitaan ennen kuin liiketoimintamahdollisuudet realisoituvat odotetusti. Ehdotettua mallia tulee tutkia vielä useammilla ja pidempikestoisilla tapaustutkimuksilla. Lisäksi monialainen tutkimus voisi tunnistaa yhtäläisyyksiä ja eroavaisuuksia IoT:llä varustettujen alustaekosysteemien haasteissa ja mahdollisuuksissa. Lisäksi tulisi tutkia, miten uudet ja tulevat teknologiat vaikuttavat arvolupauksen muodostamiseen ja arvon tuottamiseen. Tämän tutkimuksen tuloksissa korostetaan ekosysteemissä toimimisen vaatimaa kulttuurimuutosta. Perinteisesti yritykset ovat keskittyneet oman voittonsa maksimoimiseen, mutta ekosysteemeissä tulisi keskittyä koko ekosysteemin kokonaisarvon maksimoimiseen. Tämän kulttuurimuutoksen tarvetta ja sitä, miten muutos voitaisiin saada aikaan, tulisi tutkia lisää. Yhteenvetona voidaankin todeta, että tämä tutkimus edistää niin liiketoimintamallien innovoinnin teoriaa kuin käytäntöjäkin IoT:llä varustetuissa alustaekosysteemeissä. Se tarjoaa BMI-mallin, joka rakentuu ekosysteemin arvotaseen ympärille. Se mahdollistaa ketterän mallin, jolla IoT:llä varustetun alustaekosysteemin toimijat voivat iteratiivisesti luoda ja kehittää arvolupaustaan. Tämä tutkimus myös kirkastaa käsittelemiään konsepteja ja tarjoaa tuoreen lähestymistavan kirjallisuuskatsauksen tekemiseen. Tämä tutkimus voi auttaa yrityksiä ja yhteisöjä ymmärtämään liiketoimintamallien innovoinnin merkityksen ja näin johtaa ne luomaan kestävämpiä ja kannattavampia ekosysteemejä.Digital transformation is challenging businesses and societies to offer innovative services to customers and to increase profitability through the development of new business models. The Internet of Things (IoT) has been identified as a potent enabler for novel services and businesses. However, despite the potential benefits, successful implementation of IoT-enabled platform ecosystems remains scarce. Research on IoT has mainly focused on technological advancements, while the importance of business model innovation has been largely overlooked. The research in the field of IoT has predominantly focused on technological advancements, disregarding the critical aspect of business model innovation. However, successful implementation of technology largely relies on a well-defined business model that delivers outstanding value propositions. Social Exchange Theory (SET) is a theoretical framework that is pertinent in the context of IoT-enabled platform ecosystems. According to SET, actors in value exchange should find the distribution of value equitable vis-à-vis the effort invested in value creation. Therefore, in the present research, SET is adopted as a conceptual framework to explore how ecosystem-level business model innovation (BMI) in IoT-enabled platform ecosystems could be enhanced to increase actor retention, and to internalize network externalities to increase the positive network effects during times of digital transformation. The contribution of this research extends beyond the theoretical development of value exchange in the context of IoT-enabled platform ecosystems. This research identifies two different views of social value and recognizes that in the ecosystem context, conditional value is often overlooked in theoretical discussion and neglected by practitioners. This research also contributes to BMI theories in the IoT-enabled platform ecosystem context by identifying, in an interdisciplinary manner, the required building blocks, i.e., characteristics of a platform ecosystem BMI, and IoT. Further, a model for BMI is created, which combines two novel frameworks, namely, the Ecosystem Value Balance and the Platform Canvas. This provides ecosystem actors with valuable insights to co-create a joint value proposition and enable positive network effects by utilizing the model iteratively as a strategic tool. In addition, this research advances research methodologies by presenting a novel approach to clarifying concepts through literature reviews. The method involves a combination of snowballing, Porter stemming, and thematic analysis, which enables a comprehensive and structured synthesis of relevant literature and promotes a more nuanced and deeper understanding of the research topic. This approach can be applied in other research fields, too, to achieve more rigorous and accurate literature reviews. Although this research opens up avenues for researching value proposition evaluation in IoT-enabled ecosystems, more attention to the business opportunities that can be realized is necessary. The proposed model needs validation with more and longer-term cases, and a cross-industry study could explore potential similarities and differences in the challenges and opportunities of IoT platform ecosystems. Moreover, further research is required to validate the proposed model, explore potential similarities and differences in IoT platform ecosystems, and investigate the role of emerging technologies in shaping the value proposition and value creation processes. Further, the research emphasizes the need for cultural change in companies operating in ecosystems, as traditionally companies have focused on maximizing their profits instead of maximizing the overall value for the whole ecosystem. In conclusion, this research contributes to the theory and practice of business model innovation in IoT-enabled platform ecosystems by offering a BMI model which relies on value balance in ecosystem contexts and proposes a model for IoT platform ecosystem actors to co-create joint value propositions. It also clarifies related concepts and offers a novel approach to literature reviews. This research can help businesses and societies to understand the importance of business model innovation and to create a more sustainable and profitable ecosystem

Establishing a Platform Ecosystem: Case Study on Early Adopters

Google, Facebook, Amazon, Apple and many more. The success of companies behind platform ecosystems is widely known. In this context, a platform is considered to be a marketplace where transactions between two or more user groups take place. Platform economy is causing a disruption in the global markets. The mankind is facing the fourth industrial revolution, where the way how people work, live, and even relate to each oth-er is changing dramatically. The accumulation of value in platform ecosystems is no longer linear like in traditional business models, nor is the pricing model as simple as in a traditional supply chain. In this thesis, the learning points from already implemented platform ecosystem projects were collected. The study was conducted as a case study complemented with a comprehensive literature review. A case study was selected as the research method as the aim on this thesis was to find out how the Finnish companies have implemented the plat-forms and also why they decided to utilize this particular business model. The study included two types of companies – international benchmarks and Finnish traditional pipeline companies having some kind of platform. As a result, a list of critical characteristics –a platform canvas – is proposed to facilitate platform creation and development. In addition, this thesis provides a collection of learning points from the case companies, with which current and future Finnish platform owners can avoid pitfalls and gain success with less effort and better probability. There are only a handful of Finnish manufacturing companies that are actively develop-ing a platform ecosystem. Those companies are relatively old, large in size, and have a history of profitable business. The studied companies rely heavily on the implementation of Internet of Things and analyzing of big data. They know well the value the platform can provide as well as the producers and users of the value. However, there is room for improvement in finding the way to capture value to the platform owner as well as exploiting the network effects. The case companies have defined and opened their boundary resources much less than the international benchmarks. This may hinder the expansion – and ultimately the success – of their platforms. The companies need more under-standing about the prerequisites – like value capturing models – of a successful platform ecosystem as well as training and tools to develop the platform

Co-creation of Ecosystem-level Value Propositions

A joint value proposition has been claimed to be a fundamental part of ecosystems' success. The propositions have been either end-customer or ecosystem leader-centric and focusing on functional and financial value. However, according to social exchange theory, the ecosystem actors are likely to expect to be equally rewarded from their value creation efforts and thus the value propositions should be evaluated on ecosystem-level. Secondly, the value denotes much more than just functional and financial value. This study proposes that also emotional, and social value propositions should be included when designing an ecosystem. The study was conducted in two phases. First, the ecosystem value proposition literature was reviewed to define the required value dimensions. After that, the dimensions were applied in a multiple case study. The results show that emotional, epistemic, and social dimensions, as well as ecosystem-level value propositions, require more scholarly attention.acceptedVersionPeer reviewe

Conceptual Model of the Ecosystem Value Balance

Despite the growing interest in ecosystems, research on ecosystem-level value distribution is still scant. Value creation and different value dimensions have a relatively wide knowledge base in the context of dyadic relationships and networks. However, the existing ecosystem literature does not recognize these dimensions at the ecosystem level. This article proposes an initial framework for assessing the value, particularly at the ecosystem level. Furthermore, the majority of the existing literature focuses merely on financial and functional values. This framework denotes also social, emotional, and epistemic dimensions of value. The framework is built as a constructive process. This study presents a theoretically founded iterative design phase followed by the first empirical test with one case ecosystem. The findings indicate the value balance exists in a case ecosystem, which is in a stable and established state. The article also proposes the next steps to develop the framework further. These include e.g. testing the framework with ecosystems, which are in more volatile phases (i.e. pioneering or renewal phase) and developing a measurement regime for evaluating the importance of each different value dimension.acceptedVersionPeer reviewe

Business model innovation with platform canvas

Purpose: This paper offers a literature review and explores a business model innovation for platform business. It also suggests a practical tool, Platform Canvas, to support implementation activities. Design/Methodology/Approach: A literature review was conducted in fall 2016 that resulted in the tentative canvas approach, which was evaluated in seven real company cases. Findings: The study identified the eight most important characteristics of a platform business model innovation. To support the innovation and development of successful business models in a platform ecosystem, the Platform Canvas tool was created. With guiding questions, Platform Canvas allows for an ecosystemic approach to business model innovation: it helps to understand the value creation and capture for multiple actors. Originality/Value: The unique result is a practical tool, Platform Canvas, which facilitates business model creation in platform ecosystems.publishedVersionPeer reviewe

Prospects of CPQ: evolving toward industry platforms

Since CPQ (Configure, Price, Quote) suppliers are often referring to their products as platforms, a question arises as to what extent present CPQs have such characteristics supporting platform ecosystems. In this paper, the features of seven case CPQs are compared to each other and to the critical characteristics of a multisided platform. CPQs have diverse features, and most are very similar to their competitors. CPQs are internal platforms, but they typically do not have the characteristics of industry platforms that enable multisided ecosystems. Some CPQs are clearly on the way to becoming true multisided platform ecosystem enablers, but none of the case CPQs studied was ready yet.publishedVersionPeer reviewe