Business enabled by the Internet of Things, despite its vast potential, has fallen short of expectations. About a decade ago, a future was envisioned where refrigerators automatically order replenishments from the store based on households' food needs, preferences, and store offers. However, many such IoT-based business models have not come to fruition.
Master of Science (Eng.) Krista Sorri explored in her dissertation the reasons behind the slower business growth and how companies could create effective business models around IoT.
"It's not enough to just add sensors to various devices. The data they gather means nothing if it does not create value for the users and other stakeholders. Companies have left the job half done by focusing on data collection. They should collaborate as an ecosystem to approach business from the value they jointly produce," Sorri says.
She also emphasizes that value isn't just money or functionality; it has epistemic, social, and emotional dimensions.
"For example, the sense of belonging, the precision of marketing targeting, and the reduction of environmental impacts are just as relevant value elements as money. A user stays on social media, even if they don't earn a penny from it, because they can easily stay connected to their friends and family on the platform. The effort is less than the benefit obtained," Sorri explains.
Sorri created a development tool based on the balance of ecosystem value, which platform owners can use in collaboration with other stakeholders to create a business model.
"In platform ecosystems, value creation is based on collaboration. Many companies that have adopted the Internet of Things have not understood that an effective business model requires the creation of an ecosystem to make the value sufficiently interesting for users," Sorri continues.
Although Sorri's dissertation focuses specifically on the business of Internet of Things enabled platform ecosystems, her development tool can be used to create the business model of any platform.
"Platform economy differs from traditional supply chain-focused economy, especially in terms of culture. Value should be maximized for the entire ecosystem, not just for some of the players. This requires new thinking that challenges traditional businesses."
Sorri, who hails from Säkylä, works at the Pori University Consortium in the Information Management Unit of the Tampere University as a university teacher.
Public defence on Friday 13 October
Master of Science (Eng.) Krista Sorri's dissertation related to information management titled Bridging the Gap at Ecosystem Level: Enhancing Business Model Innovation in Internet of Things-Enabled Platform Ecosystems will be publicly examined at the Faculty of Management and Economics of the University of Tampere on Friday, 13th October 2023, at 12 noon. The venue is Auditorium 125 of the Pori University Consortium (Pohjoisranta 11A, Tampere). The opponent is Professor D K Arvind from the University of Edinburgh. The custos is Professor Marko Seppänen from the Faculty of Management and Business of the Tampere University.
The public examination can be followed via a remote connection.
Photograph: Päivi Elonen