Development of the IoT business models according the BMC template
Authors:   National University «Lvivska Polytechnika», Hlinenko Larysa , Daynovskyy Yurii ,   Lviv University of Trade and Economics
Published: June 2021

The aim of the article. Internet of Things (IoT) technologies deeply affect business development and, as a consequence, business models (BMs) as a way of doing business by its actors. Conventional firm-centric e-business models are not always good for the IoT due to its ecosystem nature; implementing innovative models faces a number of challenges. It is a BMC (Business Model Canvas) template that is mainly used to create business models at enterprise level. Modified in accordance with the specifics of IoT, BMC templates overcome the limitations of the classical BMC and provide interrelated BMC solutions for the different layers of the IoT architecture. However, all of these templates, when modelling value propositions, focus only on the current state of consumer needs. The models ignore the interdependencies between the allowable attribute values of the certain BMC blocks, in particular between key resources, value proposition and revenue model. The article aims to analyse the IoT business models based on BMC, to identify the effective values of individual components of the BMC and the expediency of combining them within a particular BM and to specify means of taking into account the changing state of consumer needs in the formation of the BMC components. Analyses results. The IoT outlines a paradigm relying on a continuous set of things which interact with forming a worldwide dynamic network. The functionality of the IoT device sets the technological constraints and perspectives for value propositions and revenue generation modesl. The analysis of the proposed variants of IoT BMC and their successful implementation cases provided for clarification and generalisation of effective value propositions consistent with IoT specificity. For each of these value propositions the compatible revenue models and required functions of IoT devices were identified. In accordance with the proposed sophisticated classification of the IoT device functionalities, the valid types of IoT devices as a key resource for the realisation of a particular value proposition were identified. The formation of the BM should start from developing the concept of value offered to the consumer. To be effective the creation of the value proposition should be preceded by the identification of the consumer need and the state of its satisfaction by existing means. This state can be the following one: the need exists, but is not recognized by consumers and is not satisfied by existing means at all; the need exists and is identified by consumers but is not satisfied by existing means at all; the need is clear to consumers but is not fully satisfied by existing means. In the first two cases, the value proposition should ensure meeting the need at a minimum sufficient level. In case the means of satisfying the need exist, it is necessary to assess the current state of satisfying the need and to determine the extent to which the proposed IoT solution would change this state. The lines of development of needs and means of their satisfaction, adapted to the specifics of the particular need and IoT at large, are proposed to be used for assessing the state of need satisfaction. Specificity of IoT requires supplementing the set of lines of development of needs and satisfaction means with the lines launched by IoT possibilities. Several such lines, in particular, the line of increasing the consumer's awareness and the line of increasing the ideality of the final need satisfaction, have been proposed. A matrix of need parameters has been developed to simplify the consideration of the content and state of need in the formation of value and revenue models. Conclusions and directions for further research. The importance of taking into account the characteristics of needs in value proposition design makes it necessary to identify "Needs" as a distinct BMC component described by a set of specific attributes. The values of these attributes, together with the resources of the participants, provide the basis for the value proposition content and affect the choice of the revenue model. Setting the attribute values requires determining the current and expected state of needs and the means of meeting them on relevant lines of development, the further elaboration and parameterisation of which, taking into account the specificity of IoT, is the subject of further research. The result of the digital service provided by the IoT device appears to be a key innovative element of the IoT value proposition. That suggests the separating the "IoT contribution" element in the "Value proposition" component of the BMC or introducing it as a BMC component to reflect the relevant digital service. The content of the service will determine the functionality of the IoT device and the IT infrastructure requirements. When defining the value proposition, the real change in the state of all the components of the IoT ecosystem causing changes in the prioritisation of individual needs should also be considered. Clarifying the concept of the value proposition, the needs it satisfies and the specific "IoT component" of value creates the basis for identifying consumer segments and the ways of interacting with them. Compatibility and effectiveness of the joint use of specific value propositions and revenue models as well as compliance of the value proposition content, cost and promotion to the target consumer demands should be also considered when specifying the blocks of BMC. The BMC is to be built for each of the ioT ecosystem partners. The present research recommendations refer mainly to developers and manufacturers of IoT devices and service providers; the construction of the BMC for other IoT system key players (platform providers/providers, system integrators and marketplace providers), as well as the problem of these models coordination, should be the subjects of separate research. Keywords: Internet of Things (IoT), business model, Business Model Canvas (BMC), value proposition, revenue model