The Harvard Business Review article, How Smart, Connected Products Are Transforming Competition, identifies ten strategic choices manufacturers must make to capitalize on the Internet of Things.
In this fifth installment of a series of video interviews, the article’s co-author Jim Heppelmann describes the variety of data associated with smart, connected products and provides recommendations for how to prioritize it to create value.
What Data Must the Company Capture, Secure, and Analyze to Maximize the Value of its Offering?
There is a variety of data available that can be processed in conjunction with smart connected products.
- There’s external data coming from external data sources that might be available as sources through the Internet.
- There’s enterprise business system data coming from your CRM systems, your ERP systems, and from the systems that you use in engineering, in manufacturing.
- And there’s data coming from the smart connected product itself, so product data is fundamental to value creation, and competitive advantage.
But companies need to consider some of key costs.
- First there are hard costs. Costs like sensors to capture the data, data transmission fees if you’re pushing the data across cellular networks for example. And then all the storage required in the Cloud.
- The second cost is the security, and privacy, and risk mitigation around that. Anything that’s connected becomes a target of hackers. And you have a responsibility, quite frankly, if you collect this data to take good care of it, and protect it.
- And then finally there’s a dependency to have the right set of skills and infrastructure to perform analytics and to actually get value out of data that you’re collecting.
So we think you need to start with your strategy. For example, a strategy that’s focused on product performance might need to analyze data in real time in order to optimize products or to prevent product downtime. On the other hand a strategy that’s focused on expanding into a system of system is going to need to be able to collect many kinds of data from many different sources which would potentially drive the volume and the variety up dramatically.
So our recommendation would be start small, and try to document what are the specific use cases across your enterprise where you can generate real value. It might be automating consumables or dispatching service technicians or performing predictive maintenance and remote diagnostics. Think through those use cases, and try to document the data that would be required to create value.
Then we’d say calibrate the scope of your effort, according to some of the hard costs around data transmission and storage. Then we think as companies mature in their capabilities, and in their understanding, then you can make tweaks to your strategy, and either collect less data or collect more depending upon the value that you now have a better understanding of.
In their upcoming October 2015 Harvard Business Review article, How Smart, Connected Products Are Transforming Companies, co-authors PTC CEO, Jim Heppelmann, and Harvard Business School Professor, Michael Porter, will focus on the impact of smart, connected products on companies’ operations and organizational structure. Reserve your copy››
- Your IoT Plan: Which Product Capabilities Should You Pursue?
- Embed IoT Functionality in the Product or Cloud?
- Open or Closed System for Your IoT Strategy?
- Should You Develop or Outsource Your IoT Infrastructure?
- How to Manage and Share Connected Product Data
- Should You Change Your Business Model with Connected Products?
- IoT Choices: When to Disintermediate a Channel or Service Partner
- Monetizing Connected Product Data for New Business
- Creating New Value with Connected Products and Systems