Technological innovation over the past several years has brought about an inflection point where not only consumers are always on and always connected, but increasingly so is everything around then.

The Internet of Things (IoT) comes in many flavours – from healthcare and fitness wearables to smart home appliances, connected cars and the industrial shop floor. While these categories could not be more different, they all have in common an ability to enable new business models as never before.

For companies working to bring IoT from buzzword to booming business, the market potential is huge. General Electric, a pioneer in the Industrial Internet, forecasts that the IoT market will represent at least a $10 trillion in the next two decades.

Global management consultancy McKinsey & Company estimates the wider IoT to generate between $4 trillion and $11 trillion by 2025. This revenue isn’t going to come from device sales alone – it’s going to come from leveraging software as the new supply chain.

>See also: How contextualising data will help monetise the Internet of Things

A new way of thinking

Outside of obvious examples such as Amazon’s Dash buttons, how does a company actually make money from the IoT?  What constitutes a monetised transaction? With all the data captured by these connected devices, how do you track, measure and apply a logical revenue methodology? And how do companies bill consumers and customers in a way that doesn’t lead to confusion and disputed charges?

IoT business architects can seek some inspiration from the complex billing systems developed by the telecom and cable television industries, which have long supported a blend of fixed subscription, pay-as-you-go, on-demand and consumption-based billing models.

Adding yet another layer of complexity, many market segments best suited to IoT are highly regulated and subject to internal and external audits. If not created with all these considerations in mind, a monetisation strategy can result in confusion, earnings re-statements, fines and, potentially, legal action by investors or customers.

IoT companies have a number of choices when selecting a billing platform. Some choose to deploy traditional, on-premise billing solutions, while others develop custom solutions in-house. The truth is both of these options are expensive, inflexible and typically behind where businesses need it to be.

The SaaS advantage

Smart companies will choose software-as-a-service (SaaS) monetisation platforms. By selecting a cloud-based, on-demand solution, companies not only gain the flexibility of software that has been optimised for IoT business models, but also one that can capture, analyse and quantify the massive volume of data generated by connected devices.

On-demand, cloud-based systems have another advantage: agility. An agile monetisation solution that operates in real time is scalable, extensible and configurable. It can be deployed in a variety of industries and across a wide array of companies using other backend and CRM systems.

While these monetisation tactics might seem trivial to many, they are imperative if companies are to seamlessly bill for any and all possible transactions.

Getting these details right can also avoid inducing the ire of customers, critics and regulatory agencies. The ability to handle high volumes of data, as well as challenges with scale and potentially complex product catalogs, is key to identifying the solution that will take a business far into the future.

>See also: The two trends driving the monetisation of the Internet of Things

Turning point for IoT

Companies at the forefront of IoT investment have reached a point in time where they need to determine how to best normalise usage data, monetise user activity and device data, and recognise revenue in a way that meets all legal and regulatory requirements.

To do this, enterprises will need to determine how they will capture and analyse information to best understand user behavior to rapidly build, deploy and manage new products and services that meet market demand.

Ultimately, companies that aren’t billing for their IoT offerings aren’t pursuing good business – they’re just pursuing hobbies.

Sourced from James Messer, CEO and founder, goTransverse