Why Connect Products? On a fast-track to value
In these days of new technologies such as Artificial Intelligence (AI), Analytics, Augmented Reality (AR), Digital Twins, Edge Processing, Hybrid Clouds, and so on — all of which are part of the IoT conversation — many companies, including OEMs that manufacture machines and other high value assets, have yet to offer connected versions of their products. This means they are not only losing out on the high value service opportunities that this creates, but that they are potentially setting themselves up to lose market share to their competitors who have connected their machines and do have an ongoing IoT strategy. There is now no doubt that, for OEMs, connecting their products unleashes a whole new range of opportunities and competitive advantages that is transforming traditional product markets.
Those that do not are taking an increasingly large risk of their products becoming disrupted and uncompetitive in the future
Do or Die?
For product manufacturers (OEMs), there has never been a greater need or opportunity to connect their products to the Internet. A product that is not connected stands or falls by the product offering itself. That offering cannot generate data for new services or be updated with new software features, so will quickly lose its competitive position in the market compared with others that are connected and can do these things. More than this, an unconnected product cannot be remotely maintained either and its performance in the field cannot be assessed. The total value of an unconnected product resides in the product itself, whereas the total value of a connected product includes both the product and all the services created by it being connected.
In essence, that means a product that is not connected is likely to have an increasingly serious competitive disadvantage compared with a similar competitive product that is connected, and is therefore less likely to prevail in the longer term. OEMs in all sectors – Buildings, Consumer, Energy, Healthcare, Industrial, Retail, Security/Public Safety and Transport – must now develop service strategies for their offerings in order to compete in their own future market. That means they must include Internet connectivity for their products.
High Value Services
Apart from providing the means for checking performance of a product in the field, and for updating its software, what else can a connected product offer that an unconnected one cannot? Examples abound. Those products that use consumables – such as printer toner ink, nitrogen for cooling or even coffee cartridges – can indicate when they are getting short and initiate re-ordering to prevent downtime. They can also check that replacement consumables are of known quality to prevent malfunction. In fact, introducing connectivity to a product creates a hierarchy of potential service offerings, each layer offering greater value, and the top layer is
Product as a Service.
There are many examples of products being offered as services in the market. Tractors and construction vehicles are now increasingly being paid for on a time-used basis: when the vehicle is started up, monitoring commences and the transaction completes when the vehicle is switched off. Jet engines on aircraft are being paid for on the basis of thrust produced over a period, avoiding the capital outlay of what is otherwise a large fixed asset. Then there is the classic case of MRI (Magnetic Resonance Imaging) scanners in hospitals and clinics. These scanners are large and expensive physical assets that need constant maintenance, upgrades and replacement of consumables. This represents substantial capital outlay and technical resources support for a hospital. However, by connecting them, manufacturers now offer them as a service. Hospitals pay for their use on a per scan basis, which in turn can sometimes be passed on to the patient and their insurance cover. So what was a straight capital cost is now an operating expense and can even become a profit center.
The Bottom Line
There are now many examples of how, by connecting an asset or product, AssetMinder® core IoT solution, has transformed the market that the product competes in. A connected product enables a range of managed services to be offered that strengthens the product offering in its own marketplace and offers significant competitive advantage. At the top layer of those services is offering those products themselves as a service, rather than as a cost. This concept has already completely transformed some markets and will continue to do so in others. The availability of AssetMinder® core IoT solution, provides a way to achieve all levels of a managed service offering and means that no company need waste time and expense developing their own solution from scratch.
Learn How Smart, Connected Products Are Transforming Companies
In their second Harvard Business Review article, How Smart, Connected Products Are Transforming Companies, co-authors Michael Porter of the Harvard Business School and Jim Heppelmann, President and CEO of PTC, examine the impact of the Internet of Things on companies’ operations and organisational structure.
- Learn how companies transform their organisations to capture the IoT opportunity
- See examples from dozens of companies that have successfully transformed their organisations and provides three models for how companies are making the transition.