Growing Opportunities in IoTaaS Subscription Based Business Models

Jacob Varghese

When An Post was founded in 1984, it was the result of a separation of postal services from telecommunications in Ireland. Up until then, the Department of Posts and Telegraphs had handled both.

Just thirty-six years later, the postal service has contracted VT-IoT—the operator of Ireland’s Sigfox 0G network—to track packages, fleet vehicles, containers, and roll cages; all in real-time.

That’s quite a leap from telegraphs!

Ironically, tracking services provided by VT-IoT and other companies often depend on the same networks and cell towers that power our telecommunications today.

It’s funny how some things come full circle.

VT-IoT’s contract establishes it as an IoT-as-a-service (IoTaaS) provider, and An Post is far from the first business to partner with similar providers in this way. IoTaaS is gaining buzz in the business community.

The Internet of Things—a network of connected devices that collect and transmit data—is enabling a number of new innovations and business models.

More businesses and industries have also been innovating around pricing models and have begun tapping into usage based billing, thanks to the tracking capabilities of IoT sensors and devices. 

What is IoTaaS anyway?

Just like software-as-a-service, or SaaS, IoTaaS provides solutions to customers.

In particular, IoTaaS best serves businesses interested in leveraging and monetizing IoT. However, these businesses may lack the time, knowledge, or resources to build the required monetization infrastructure.

Service providers like Microsoft’s Azure IoT Central, have stepped up and offers to help other businesses build industry-leading solutions with a hosted IoT application platform.

This kind of IoTaaS offering is also available from providers such as Amazon and IBM.

What attracts businesses to IoTaaS?

IoTaaS holds many benefits for businesses, including:


Customer usage is constantly changing, and IoT technology is capable of tracking and communicating those changes in real-time. When a company places the IoT at the center of its business model, it lays a foundation of preparation for the inevitable IoT-driven future.


As change drives the requirement for digital transformation, IoT devices and systems can be remotely updated to adapt and scale. This enables businesses to stay relevant and in-touch with their growing number of customers.

The data collected also accumulates as a business grows, revealing trends and insights over time.

Market Demand

In a market that seeks convenience, speed, and customization, pay-per-use is increasingly common. This raises expectations across the board.

Customers only want to pay for what they need; no more, no less. IoT technology makes that possible.


For businesses that have performed due diligence and determined that using the IoT is right for them, the cost of internally executing this decision can be daunting. The talent and resources necessary to collect and convert device data into actionable information can be prohibitive. IoTaaS providers reduce that cost.

These advantages have already attracted businesses in healthcare, agricultural, insurance, energy, and automotive industries to IoTaaS.

For example, patients can wear devices that track health metrics and dole out medication in response. Farmers sell crop and harvest data to commodities traders. Utilities companies track customer usage changes in real-time and charge accordingly. And drivers’ habits are tracked and rated for safety.

It’s only a matter of time before other industries join in.

Challenges SaaS businesses face implementing IoTaaS

Despite the benefits, a few hurdles remain for SaaS businesses seeking to make IoTaaS part of their business model.

Here are a few big ones.

Proof of concept.

Microsoft’s Azure IoT Central homepage opens with the statement, “Proof of concept isn’t your endgame.” At the same time, according to the tech giant’s data, 30% of IoT projects fail at the proof-of-concept phase. In fact, only 26% of projects are eventually deemed successful.

Much of the problem is attributed to IoT innovators’ approach: great ideas don’t always have a clear business case.

A more successful angle may be found by SaaS business leaders. Instead of working to create something new with the IoT, use the IoT to help existing business models work in new or better ways.

Siloed device and system technologies.

As different industries dove into the IoT space, developers created thousands of unique systems to enable devices to operate and gather, store, and relay data. Now, as customers seek solutions that integrate various types of devices and services—such as dashboard cameras that communicate with vehicles’ telematics solutions—they bump into compatibility issues.

For the auto industry, where the entire supply chain is managed by the same manufacturer, this is less of a problem. There have also been creative solutions in the microgrids, utility, and cooling and airflow industries. However, many other fields still have a ways to go.

Competitive IoT business models require integration-friendly devices and systems.

Need for increasing data speed and detail.

Speaking of staying competitive, the way forward in tech has historically been a path of “faster, better.” Until recently, however, our ability to quickly transfer large amounts of detailed data has been rather limited. That’s all about to change.

Edge computing and 5G are two of the top IoT trends to watch in 2020.

Edge computing refers to the ability to compute and analyze ever-closer to the data source—think wearable tech and GPS trackers. 5G is the technology that allows devices to quickly transfer this detailed and straight-from-the-source IoT data.

Thanks to these developments, SaaS businesses are in a better position than ever before to leverage the IoT.

Monetization and billing.

Of course, a common end goal of leveraging IoTaaS in business is to monetize it in the form of usage based pricing.

Usage based billing is tricky though.

While many people are familiar with paying monthly or annually for SaaS subscriptions, the usage based model charges for each minute used, each mile driven, or each megabyte stored, for example.

This kind of usage driven billing means having to keep up with a constantly moving target: usage.

Additionally, many businesses offer subscriptions at different price levels, via different sales channels, or as part of a complex catalog. Sometimes the IoT monetization ecosystem also includes resellers and distributors.

As each customer creates their customized, usage-based account, businesses are left with various interrelated invoicing factors to consider for hundreds or thousands of users. This quickly becomes impossible to do manually.

IoT billing challenges require robust solutions.

Customer concerns.

As much as customers desire the pay-per-use model the IoT enables, they’ll inevitably have questions about data security and how charges are calculated.

As a result, it’s important to use billing software that meets the highest compliance levels for financial data as well as accurately calculates and displays subscription charges.

Adaptive recurring billing software built for usage based billing is critical to operationalizing usage data and contributing to streamlined revenue operations.

A flexible, automated billing platform such as Stax Bill not only reduces mistakes brought on by human error and maintains a high level of security, but it also lightens the load on finance teams that would otherwise manually invoice customers.

The future of IoTaaS is exciting for SaaS

While challenges certainly exist for SaaS businesses looking to implement robust IoT strategies, the hurdles are far from insurmountable.

With the right use case, research, and fintech solution as part of an overall technology stack, entrepreneurs and businesses can develop new markets and gain further insights into their customer usage.

Operationalizing data for insights leads to better decision-making, which creates opportunity for competitive advantages as well as market expansion.


Written by:

Jacob Varghese
Jacob Varghese
SVP Marketing, Stax Bill

Jacob is the former SVP of Marketing at Stax Bill. Jacob is a full-stack, senior B2B marketing executive with proven strategic and execution capabilities. Over the past 15 years, he has successfully developed and deployed various demand generation, lead generation, and customer acquisition strategies that align with business goals.