Manufacturers are rethinking the value they can deliver to customers through additional insights gleaned from the Internet of Things (IoT). IoT-connected data from products and equipment is driving differentiation, collaboration, and transformation.
The experience economy has entered the world of the manufacturer. Historically, a manufacturer could primarily focus on making the best quality product to garner the favor of a customer base. Innovation resided primarily in the engineering team and the functions that supported the rollout of products. This model has been turned on its head as product margins shrink and commoditisation has forced manufacturers to rethink differentiation and value. As organisations explore new ways to wow customers and deliver value, they are finding that the bar to deliver exceptional experiences is much higher and more dynamic as expectations and the perception of value can be different for each customer. This disruption demands that manufacturers gain real-time insights into their customers, products, and equipment while being able to adapt to changes in the market at speed and scale.
IDC defines the IoT as "a network of uniquely identifiable endpoints or things that communicate bidirectionally without human interaction using IP connectivity". The IoT opens a path for manufacturers to mitigate some of the challenges associated with disruption. But this doesn't mean manufacturers can overlook the impact of disruptive factors on the business and future growth opportunities. There are more than a few disruptors today for manufacturers, but three stand out as most critical to tackle now. They are:
An IoT strategy must encompass more than just a connection to real-time product or equipment data. The value comes from being able to make better-informed decisions and knowing the optimal next action to take based on the data being captured. To realise ROI from IoT, manufacturers must bridge the chasm between data capture, insight, and action. Achieving this goal requires that the data be properly contextualised and made accessible to functions across the business, such as engineering, sales, marketing, supply chain, and service.
To get maximum value from the volume of data generated by IoT-connected assets, manufacturers should employ a streaming analytics engine. This engine, once tuned correctly, can feed nuggets of insight to less data-savvy functions, reducing the time needed to make the right decision. If service teams must sift through terabytes of data on machine performance, resolution will be no more efficient than if they just used gut feel or trial and error. If the sales organisation needs to pull static reports of product usage, it will be no better off than when sales discussions were based on quarterly business reviews or a 90-day-before-contract-expiration call. The IoT should be used as a real-time window into what makes a customer run, where opportunities exist for improvement, and what services can be bundled to enhance the customer-OEM partnership
Manufacturers often focus on the service implications of the IoT because service provides one of the final links to aid the company in moving from a reactive service model to a proactive and predictive service model. However, many manufacturers are finding that the IoT can transform their businesses and deliver additional value in other ways, such as:
Too often manufacturers see the IoT as a one-time expenditure. Companies think they can execute a pilot, make the business case, and move on. However, the IoT's impact is not confined to an efficiency gain orasingle use case. The effects of the IoT are vast and wide. To gain more than a one-time win (which doesn't lead to transformative growth), manufacturers should consider two critical points:
The IoT is reaching an inflection point for many manufacturers. IDC's research is beginning to see a wave of organisations move from perpetual pilot to production and from singular wins to transformative investment. Early small wins are allowing manufacturers and IT teams to evaluate the possibilities unleashed by the IoT and business transformation. Future success will be measured based on a manufacturer's ability to innovate, integrate, and connect in the following ways:
IoT projects can be daunting prospects. The IoT is by nature complex and dynamic. Once your organisation has committed to developing an IoT strategy, it has to accept the reality of a vastly increased number of devices on its network, ever-changing user bases and ever-moving endpoints, and, crucially, a much, much larger volume of data to process than ever before.
Unfortunately, in many cases, the problems start long before the project has got off the ground. IoT strategies are complex to implement, and a high proportion of them fail before completion. This is costly, can impact on operational efficiency and drag down morale. How, then, can you plan for a successful IoT project? Here are 7 key areas to consider, which we will cover in more detail: