Connected. This one word is reshaping our personal and business lives. Industry projections consistently show that by 2020 there will be 200 billion connected “things” in the Internet of Things (IoT). That is, billions of devices with sensors that enable them to not only perform their basic functions, but add the functionality, connectivity, and ‘intelligence’ to operate at higher levels. So, the IoT boom reflects a seismic shift in how manufacturers are moving to sensor and connect their products and shift their business models. At the heart of this, leaders within the manufacturing industry, each sector and every organization, are rethinking strategies and figuring out how their organizations can win the future by launching new product and service initiatives.
The stakes couldn’t be higher. Organizations that get this right will dominate the markets of the future. As with other major industry shifts, many will miss out and become less competitive and ultimately lose the battle for their markets. Some will wait too long to start the transformation; others will overinvest in ill-formed ventures or improbable technology strategies. So, what I hear over and over from business leaders is what I call THE BIG IoT QUESTION, “Where to begin?” I’m writing this blog to help answer that question.
Let’s set the stage. You are a multi-billion-dollar manufacturing company and your parts and services division is the highest gross margin and least well optimized of your operations. This seems like the obvious place to invest in IoT; but what’s the right strategy and what are the next steps? That depends on a few underlying business and market factors. Here are some key considerations:
- Life Cycle Margins - First look at your business model from a life-cycle margin perspective. If the aftermarket parts and service business is key to your overall profitability you need to find a replacement model that works… predictive maintenance may seem like a step in the wrong direction, at least in the transition stage. Find the areas of opportunity – they exist.
- Market & Customer Readiness - Next look at your markets/customers for readiness to change. Some will be immediately ready to embrace your IoT services; but many customer environments may not yet be ready to share data from their operations through cloud-based technologies. They face security, safety and even competitive threats that are inhibiting their movement toward IoT. Nonetheless, we have found that with secure cloud platforms there are almost always some places to get a win.
- Economics of Change - Then look at the economics of change. You’re investing in new products and services, so it’s key to have the analytics and economics in view. There are surely opportunities where higher intelligence and efficiencies will benefit both your customer and your company. So find out by fully analyzing and rethinking the full life-cycle value in your own operations and within your market segments. Identify viable looking opportunitie..
- Into Action – Don’t wait. With clarity on the above factors develop your initial strategy to prove your assumptions in your markets and learn as you go – our mantra these days is, “Think Big, Start Small, Move Fast, and Scale Proven Results”. Once you’ve hit these topics start a proof of concept or launch a test case – that should let you identify your first Minimum Viable Solution. We recommend that you first look for a good product fit and then launch into a small but focused project.
Are you ready to get connected? Learn how to get a smart product connected in just two weeks using the Azure IoT platform for remote monitoring and get started on a journey for connected services with the eLogic IoT Quick Start.
This blog series is co-written by Mike Shields and David Kohar.