Planning for Smart, Connected Products

In a new four-part video series, Jim Heppelmann, CEO of Boston-based tech company PTC and co-author of Harvard Business Review’s November cover How Smart Connected Products are Transforming Competition, talks to McKinsey about how the IoT and smart, connected products impact the design, manufacture, operation, and service of products.

In this, the fourth and final video, Hepplemann gives his thoughts on how companies should move forward with the IoT.

“Manufacturing executives are very intimidated by what’s happening.” Heppelmann begins. “If I were the head of a company that’s been making diesel engines for the past 100 years, my company would know diesel engines. But the definition of what is a diesel engine is now changing quickly.

“In the past ten years, we had the inclusion of embedded software and electronics. But now, when we step across the line from a smart engine to a smart, connected engine, suddenly there’s an explosion of new technological opportunities and concerns. I’m going to need a device cloud and big data and integration and security and applications on smartphones and tablets, Hepplemann continues.

To get the most from the IoT opportunity, manufactures must begin to rethink the structure of their organizations and who the main players are on each level.

“Who in our engineering department understands that technology stack? You know, not many. Maybe you turn to your IT department; it’s actually more like what they do, Heppelmann says. “Maybe you’re going to have to get your IT department involved in engineering your next-generation product.

“My advice would be to try to understand the layers of the technology stack, try to get to the point where you are going to really add value. Putting sensors in your products, collecting data within your products—you can add a lot of value there.

“You’ll probably then want to connect that to some type of cloud solution you probably need to purchase—a device cloud of sorts. You’re going to need some big data analytics, and you’re going to need some investments in big data technology. You’re going to need security and integration technology and, again, that probably needs to come from the outside,” Hepplemann says.

But when it comes to the applications that help you to operate and service and create feedback loops, manufacturers are going to want to get involved again, concludes Heppemann.

“Because who knows diesel engines and how to operate them better than the company that’s been making diesel engines for 100 years?”

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