Developing smart products

1© The Economist Intelligence Unit Limited 2015
Developing smart products
Contents
Executive summary 2
About this report 4
Introduction5
Business model revolution 7
Infrastructure and design 10
Expanding ecosystems 12
Conclusion14
Appendix: Survey results 15

2 © The Economist Intelligence Unit Limited 2015
Executive
summary
In an age of low-cost electronic components
and almost ubiquitous wireless connectivity,
it is now both technically and economically
feasible to embed computing and networking
functionality into almost any object – from
industrial equipment and vehicles to clothes and
accessories.
The resulting smart products could prove
revolutionary. However, they will also radically
change the way companies interact with
customers, how they bring products to market,
and how entire industries operate.
Companies that are pursuing smart-product
strategies therefore face profound questions
about their role in the value chains in which they
participate. Indeed, companies face a wave of
disruption equal to the turbulence first created
by the Internet over 20 years ago.
This report explores how the smart-product
revolution is unfolding. Written by The Economist
Intelligence Unit (EIU) and sponsored by
Cognizant, it is based on a survey of over 200
RD and product-design professionals in Europe
and the US, desk research and interviews with
innovation professionals at major international
businesses, the report explores how the smart-
product revolution is unfolding.
The key findings are as follows:
For companies involved in their development,
smart products are a strategic priority. The
majority of respondents report that the CEO owns
their organisation’s smart-product strategy, a
sign that companies see smart products as critical
to their long-term interests.
Smart products will reinvent the relationship
companies have with their customers. Almost
three-quarters of respondents say that smart
products are allowing them to interact directly
with customers for the first time, and almost
half say that smart products provide customer
insights that were previously impossible to
acquire.
Reinventing customer relationships will
reshape organisations and their business
models. Over 50% of respondents say they have
adopted a subscription-based business model as
a result of selling smart products. More change
is on the way, as companies are evidently still
wrestling with the financial consequences of
smart products.
Companies are rebalancing their capabilities
for the smart-product era. Smart products
require new approaches to design; they require
new technical infrastructure; and they demand

ten say they have established joint go-to-market
strategies with new partners.
Smart products look set to have just as much
of an impact on business ecosystems as the
Internet. In the era of digital business, analysing
web traffic and online behavior has become
critical to understanding customers. Smart
products will make this kind of analysis vital for
product development and distribution, customer
service and support, and many other corporate
functions.
that the information produced by smart products
is effectively integrated into business processes.
No wonder companies are looking to both upskill
and partner to improve their capabilities.
The structure of entire industries will evolve
as smart products reconﬁgure value chains.
Smart products will unleash new dynamics in the
sales channel, such as putting manufacturers in
direct contact with their customers. Nearly half
of respondents say they are selling their smart
products through new channels, while four in

l Jeroen Tas, CEO, informatics solutions and services,
Philips Healthcare
l Venky Balakrishnan, global vice president, digital
innovation, Diageo
l Kyle Nel, executive director, Lowe’s Innovation Labs
The EIU would like to thank these interviewees for their time
and insight.
The report was written by Jessica Twentyman and edited by
Pete Swabey.
Developing smart products is a report by The Economist
Intelligence Unit, sponsored by Cognizant. The report
investigates the challenges and opportunities that
companies face in designing, selling and supporting
products with added digital functionality.
The research draws on a survey of 205 senior RD,
innovation and product-development executives from
companies in the retail, healthcare and manufacturing
industries in the US and Europe.
It incorporates interviews with the following executives:
About this report

Introduction
Futurists have been predicting the advent of
smart products – from refrigerators that know
when you are running out of milk to lawnmowers
that cut your grass automatically – for decades.
The revolution is now under way, according to
a new survey of senior executives in research
and development (RD) and product design,
conducted by The Economist Intelligence Unit
(EIU) and sponsored by Cognizant.
The EIU surveyed 205 RD, product-design and
innovation executives from companies in the
healthcare, retail and manufacturing sectors
who are involved in developing smart products.
Of these companies, 74% say they have already
successfully developed such products.
Deﬁned as products that incorporate computing
components (sensors, data storage, embedded
operating systems, for example) and network
connectivity, smart products offer consumers
new functionality, new information and greater
ease of use. For manufacturers and retailers, they
provide a direct link to customers, capable of
delivering valuable data about their products and
their customers.
Companies evidently recognise the potential and
the stakes. In our survey, 59% of respondents
say the CEO is the owner of their organisation’s
smart-product strategy.
So why, given this momentum, are we not already
surrounded by smart products? According to
Jeroen Tas, CEO of the healthcare informatics
business at Dutch electronics giant Philips, it is
partly a matter of market acceptance. Consumers
are not yet clamouring for products to be
smarter.
“But I feel we’re at a tipping point,” he adds. “As
people become accustomed to the enhanced
‘smartness’ of a product, they get more use from
it. And as they get more use from it, they get
Who among the C-Suite owns the
smart-product strategy at your
organisation?
(% respondents)
Chart 1
CEO
Chief innovation
officer or equivalent 15%
Chief technology
Chief marketing
Chief information
Chief strategy
Chief digital
59%
Source: The Economist Intelligence Unit.

more value from it too. Pretty soon, if you’re lucky
and you’ve designed your smart product well, the
customer will feel that they couldn’t live without
it,” he says.
As customer demand grows, so too will the
beneﬁts for businesses, says Venky Balakrishnan,
global vice president of digital innovation at UK-
headquartered drinks manufacturer Diageo.
“We may make a very traditional object – a
bottle of liquid – but it exists in a digital
world of connected supply chains and smart
supermarket shelves. Building even a small level
of intelligence into that bottle allows us to know
more about where it is, the people who buy it,
when they buy it, where they shop. Even a small
amount of intelligence can unlock a Swiss Army
Knife of applications and insight.”
The smart product revolution is “creeping up
on all of us”, Mr Balakrishnan says. “It isn’t
about someone turning on a switch and we all
shift, overnight, into a brave new world of smart
products. But every single day small advances
happen that, over time, amount to big progress.
We’re adding inches daily, and before we know it,
we’ll have covered a huge distance.”
Even a small
amount of
intelligence
can unlock a
Swiss Army
Knife of
applications
and insight.”

BUSINESS MODEL REVOLUTION
1
Smart products have the potential to disrupt
many traditional industries, and companies are
eager to claim the first-mover advantage.
When asked about their strategic objectives in
developing smart products, the top response
is to launch product categories that are new to
the market, cited by over half (52%) of those
surveyed. But being a market leader is never easy,
and there are many challenges to address.
Companies are already wrestling with the
financial impact of smart products. For example,
37% of respondents identify “pricing” as one of
their most difficult operational challenges, more
than any other category.
Most agree that smart products will command a
higher price than their non-smart predecessors:
42% of respondents say they have already
increased the average selling price of products.
But when asked about the likely impact on
revenue, the picture becomes more confused.
Thanks to smart products, 41% expect overall
revenue to increase in the next three years,
but over half (51%) expect it to decrease. The
consensus on costs, by contrast, is clearer:
84% anticipate a rise in costs. This shows that
companies developing smart products are unsure
what the financial benefits will be, but they are
well aware of the costs they face.
“The process of taking any product and making
it smart is expensive,” explains Mr Tas at Philips.
“You have to add smart components, you
have to add connectivity. But you also need to
build software apps to run on the product and
integrate it with your back end. You need to
provide support for your newly smart product on
a 24/7 basis. It all adds up quickly, and that’s the
main reason why the market isn’t yet filled with
these products.”
Launch product categories that
are new to the market
Which of the following are the most important strategic
objectives you are pursuing through the development of
smart products?
(% respondents)
Chart 2
Launch product categories that
are new to your organisation
Improve understanding
of your customers
Gain greater proximity/direct
relationship with customer
Defend against disruption
by rivals
Grow sales/market share in
established product categories
Grow reputation for innovation
Improve the customer
experience
52%
43%
43%
42%
35%
34%
19%
15%

What impact do you expect smart products to have on your
revenues and costs in the next three years?
Revenue Costs
(% respondents)
Increase
No change
DecreaseDecrease
Decrease
Chart 3
84%
51%41%
Increase
10%
6%
No change
5%
Indeed, when asked about the organisational
challenges they face in developing smart
products, almost half (47%) say that they do not
have the budget or that it is too costly.
Addressing the financial consequences of smart
products requires more than just money. For
many, they demand an entirely new business
model, such as subscription-based pricing, in
order to pay for the ongoing data services that
accompany them.
Philips, for example, is already selling MRI
systems to hospitals worldwide on a subscription
basis, charging them per use, rather than
demanding an upfront multi-million-dollar
investment. Over half of survey respondents
(52%) say that they have adopted a subscription
model for smart products.
But switching to that new model, while delivering
financial results that investors want to see, is not
easy. “The economics question is a tough one
to answer for many organisations,” says Mr Tas.
“The market looks quarterly at your revenue, and
in many cases you’ll be moving to a subscription
model, where revenue and costs are spread
out over the lifetime of a smart product. New
financial patterns are bound to emerge that don’t
correspond to the patterns that came before.”
The financial implications of smart products
are foremost in the mind of many companies
developing them, but it may be their impact
on customer relationships that proves more
disruptive.
Smart products create a new connection between
a manufacturer and its customers, an exchange
of data that becomes a new facet of the customer
relationship. This is not just a side-effect of
digital connectivity: for many companies, it is
the primary driver for launching smart products.
Forty-three percent of those surveyed state
that one of their smart-product goals is to
improve their organisation’s understanding of its
customers. Almost as many (42%) report a desire
to achieve a closer, more direct relationship with
customers.
In this respect, they are already seeing solid
results: almost three-quarters (74%) say smart
products allow them to interact directly with
customers for the first time, while 46% report
that smart products are giving them information
about customers that it was previously not
possible or cost-effective to acquire.
When asked how they use or plan to use the data
received from smart products, the most popular
answers relate to the customer relationship:
the data are used to automate customer service
(40%) and to analyse how customers use
their products (39%). This promises to have a
revolutionary impact on the way many markets
operate.
In the consumer product industry, for example,
the customer relationship is traditionally
mediated by retailers. Manufacturers have relied
on retail partners not only for sales but also for
market insight and, in some cases, the ability
to communicate with customers. The direct
customer connection enabled by smart products
promises to redraw the power balance in the
relationship.

Which of the following effects have
smart products already had on your
relationship with customers?
(% respondents)
Chart 4
Allow us to interact directly
with our customers for the
first time
Allow us to earn more
revenue per customer
Give us information about our
customers it was not previously
possible or cost effective to
acquire
Require us to spend more on
customer service per unit sold
Grow customer referrals
Improve customer satisfaction
Require us to change our brand
identity and marketing messages
74%
46%
48%
39%
38%
37%
20%
Retailers have much to gain too, according to
Kyle Nel, executive director at Lowe’s Innovation
Labs, the innovation division of US-based DIY
retailer Lowe’s.
Currently, he says, many customers arrive at
their local branch of Lowe’s having thoroughly
researched their purchases online, often on
customer-review sites.
“The perfect next step in the retail evolution is
to take insight from manufacturers when we’re
setting up shelves and integrate it with the
shelves themselves, so that a customer can see
how other customers use that product and its
competitors, comparing their own intended use
with that of others and delivering a new level of
understanding.”
According to Mr Nel, smart products are already
having an impact at Lowe’s and will soon be the
norm. The challenge now emerging is to develop
systems and business practices that make use
of this growing “smartness”. He adds: “The next
evolution is about ﬁguring out how to integrate
smart products with intelligent systems.”
The next
evolution is
about figuring
out how to
integrate
smart
products with
intelligent
systems.

INFRASTRUCTURE AND DESIGN
2
Introducing “smartness” to a conventional
product also introduces a whole new technical
and organisational infrastructure that is
necessary to collect, integrate, analyse and
make proﬁtable use of the data it produces.
Unsurprisingly, this presents a raft of challenges.
When asked about their organisation’s weak spots
when it comes to developing smart products,
28% of respondents point to the design and
deployment of back-end data systems. And
their most difﬁcult operational challenges in
developing smart products, after pricing, are
data management/analysis and IT security, each
cited by 36% of respondents
They are right to worry, says Mr Tas. “Before you
start selling a smart product, there’s a whole lot
of IT work that needs to take place behind the
scenes,” he explains.
This includes a database to store a smart
product’s communications, analytics tools to
interpret these data, a platform for building
software applications, and a rules engine
that dictates how the product should be used,
supported and serviced. All of this must integrate
with existing systems.
“The big challenge here is about linking smart
products into your existing environment and
Which of the following do you consider
to be the most difficult operational
challenges in developing smart
products?
(% respondents)
Chart 5
Pricing
Data management
and analysis
Information
security
Customer privacy
User interface
design
Technology
integration
Selecting and
managing partners
Product design
Marketing
Identifying market
opportunities
37%
36%
36%
34%
28%
25%
24%
22%
15%
13%
value chain,” Mr Tas explains. “If you can’t do this
very well, it’s unlikely that your smart product
will be a success in the market, because you
won’t be able to support it well. In that case, the
product may as well be dumb.”

The technological challenges that smart products
present are on the agenda for companies
developing them, and they recognise the need to
improve their capabilities as a result. When asked
which adaptations they need to their company’s
product development capabilities, almost half
of respondents (48%) say they need to increase
their software development resources.
Four out of five respondents agree that extracting
value from data through analytics is an intrinsic
part of their smart-product business model.
Hence 44% report that, over the next three years,
they will need to hire more data scientists.
Equally critical to the success of a smart product
is its design. A poorly designed product, however
sophisticated its technical infrastructure, is
unlikely to succeed in the market.
Respondents are confident in their product-
design capabilities: one-third agree that product
design is their number-one strength with respect
to developing smart products, while 81% agree
that they have the required product-design
capabilities in-house.
It is testament to the significance of design in
any smart-product strategythat many companies
expect to expand their capabilities in the future.
Over the next three years, 43% of respondents
plan to hire more product designers. Nor will they
keep the process entirely in-house: half have
already outsourced some element of product
design and development.
Successfully designing smart products is not
simply a matter of scaling up the design practices
of old. Indeed, three-quarters of respondents
(75%) agree that the design challenges
associated with smart products are unique.
This explains the appetite for new approaches
to product design. Over half of respondents
have used open-source hardware (56%), while
42% that say they use hardware-in-the-loop
simulation, a technique that uses mathematical
models to simulate the performance of embedded
systems under different conditions.
Perhaps the most significant new approach
that companies are applying to smart products
is involving customers in collaborative and
crowdsourced design, as used by 53% of
respondents. This reflects not just the fact that
crowdsourcing has become significantly more
viable in the digital age, but it also underlines the
particular importance for smart-product design
to reflect customer needs.
The good news is that the very nature of smart
products means that customer needs can
be ascertained by analysing the data they
produce. “You can constantly probe customers
as to what more they want, what they’d like
to see improved,” says Mr Tas. “It’s a kind of
crowdsourcing.”
Open source hardware
Which of the following tools and techniques have you successfully
applied during smart product development?
(% respondents)
Chart 6
Collaborative/crowd-sourced
design incorporating customers
Outsourced product design
and development
Collaborative design with
one or more partners
Hardware-in-the-loop
simulation
Open source software
Rapid prototyping/
3D printing
56%
53%
50%
44%
42%
28%
19%

EXPANDING ECOSYSTEMS
3
A smart-product strategy has many facets,
including commercial, organisational and
technological components. This is not a journey
that most companies can undertake alone.
Which of the following are the most important kinds of
organisation to partner with when developing smart products?
(% respondents)
Chart 7
Product design agency
Systems integrator
Hardware manufacturer
Information security
provider
Analytics provider/
consultancy
Market researcher
Cloud service provider e.g.
Amazon Web Services
Consumer web service
provider e.g. Google
Telecommunications service
provider e.g. Telefonica, Verizon
Advertising agency
Management consultancy
52%
45%
45%
38%
23%
22%
12%
12%
12%
9%
8%
The vast majority (93%) of survey respondents
agree that smart products will require them
to expand their partner ecosystems. The most
important partners, they say, will be product-
design agencies (52%), with systems integrators
and hardware manufacturers in joint second
place.
The three executives interviewed for this report
expect that smart products will have signiﬁcant
implications for their partners’ ecosystems.
At Diageo, Mr Balakrishnan anticipates closer
collaboration with the company’s supply-chain
and retail partners, so that smart bottles of drink
can be delivered in the right quantities to the
right location.
Mr Tas of Philips predicts that smart healthcare
products – a smart medication dispenser, for
example – will be a point of connection not just
between Philips and individual patients, but also
the medical staff, homecare providers and health
insurance companies that serve them.
“We need to create ecosystems,” say Mr Tas. “A
car isn’t just a car: it’s a product that’s supported
by its manufacturer, by services organisations,
by insurance companies, road-toll organisations.
How can I connect this product in a way that
everyone wins in that ecosystem? You need to
go back to the drawing board, design a new way

in which you and your partners can do business
together. The changes here are far more profound
than people see on the surface.”
Mr Nel of Lowe’s says that effective collaboration
between smart-product providers is essential
if the vision of the “smart home” – in which
products “talk” to each other to provide useful
outcomes – is to become a reality.
This is why Lowe’s has developed Iris, its own
smart-home management system, which allows
homeowners to control their smart products
through a single mobile app. The fact at that
retailer such as Lowe’s would build this kind of
system shows how disruptive smart products are
already proving to be.
This need for integration has already led to
partnerships that were previously unthinkable.
In June 2014 Nest, a home monitoring
specialist, announced that it was working with
carmaker Mercedes-Benz to allow smart cars to
communicate with its thermostats, so that the
heating or air conditioning in a customer’s home
can be switched on as the customer approaches
his home by car.
This is not unusual. Forty-seven percent of survey
respondents reveal that they are selling products
through new channels, and 42% have established
joint go-to-market strategies with new partners.
The changes
here are far
more profound
than people
see on the
surface.

Conclusion
Smart products present businesses with a long
list of challenges, from practical considerations
to strategic concerns. In the short term, they
require new skills and capabilities. In the medium
term, they will force companies to explore new
business models and partner strategies. In the
long term, they will reshape many industries
beyond recognition, by changing ownership of
the customer relationship and the very nature
of the commercial offerings that companies
provide.
However, if this all sounds rather daunting, there
is also reason for optimism. The very nature of
smart products means that companies face these
challenges armed with an unprecedented level of
insight into the way customers buy and use their
products. Those companies that can extract and
understand these insights and act on them will be
the ones that weather the upheaval.
“We stand at very interesting times,” says
Diageo’s Mr Balakrishnan. “There have been
some phenomenal advances in printing, in
retail technology, in image recognition, in data
analytics. Why would we not take advantage of
them, in getting our products to rise to the same
level of sophistication as the environment they
sit in?”

Appendix:
Survey results
US
UK
Netherlands
Switzerland
Sweden
Finland
Germany
Belgium
Denmark
Iceland
Austria
Norway
Luxemburg
Other
49
21
8
6
3
2
2
2
2
2
1
0
0
0
(% respondents)
In which country are you personally located?

Healthcare, pharmaceuticals and biotechnology
Manufacturing
Retail
Other
45
40
15
0
(% respondents)
What is your primary industry?
$500m or less
$500m to $1bn
$1bn to $5bn
$5bn to $10bn
$10bn or more
50
10
23
6
11
(% respondents)
What are your organisation's global annual revenues in US dollars?
CEO
Other C-level executive
SVP/VP/Director
Head of Business Unit
Head of Department
Manager
Other
37
15
21
3
7
17
0
(% respondents)
Which of the following best describes your title?
Product development
Innovation
Research and development
Other
60
23
17
0
(% respondents)
What are your main functional roles?
Yes, we have already developed smart products
Yes, we are in the process of developing smart products
Yes, we plan to develop smart products in the next 12 months
No
74
22
3
0
(% respondents)
Is your organisation involved in developing smart products, or does it plan to become involved in the next 12 months?

Yes
No
100
0
(% respondents)
Are you familiar with your company’s smart product strategy?
Smart industrial equipment
Smart packaging
Consumer home devices
Consumer wearables
Smart building/smart city products
Other (please specify)
58
57
40
19
5
6
(% respondents)
Which of the following categories of smart product are you developing or have you developed? Tick all that apply
Launch product categories that are new to the market
Launch product categories that are new to your organisation
Improve understanding of your customers
Gain greater proximity/direct relationship with customer
Defend against disruption by rivals
Grow sales/market share in established product categories
Grow reputation for innovation
Improve the customer experience
52
43
43
42
35
34
19
15
0
(% respondents)
Which of the following are the most important strategic objectives you are pursuing through the development of smart products?
Select up to three
Allow us to interact directly with our customers for the first time
Allow us to earn more revenue per customer
Give us information about our customers it was not previously possible or cost effective to acquire
Require us to spend more on customer service per unit sold
Require us to change our brand identity and marketing messages
None/not applicable
74
48
46
39
38
37
20
0
(% respondents)
Which of the following effects have smart products already had on your relationship with customers? Tick all that apply

Require us to spend more on customer service per unit sold
Allow us to earn more revenue per customer
Give us information about our customers it was not previously possible or cost effective to acquire
Require us to change our brand identity and marketing messages
Allow us to interact directly with our customers for the first time
None/not applicable
46
40
40
36
35
21
11
2
(% respondents)
Which of the following smart products effects do you expect will occur in the next two years? Tick all that apply
Adopting a subscription model for smart products
Increasing the average price of your products
Selling products through new channels
Joint go-to-market strategy with new partners
Selling data and/or insights extracted from smart products to third parties
None of the above
52
28
42
42
48
40
42
35
26
30
0
2
1
4
Already adopted Expect to adopt in next 2 years
(% respondents)
How, if at all, have you changed your business model as a result of selling—or deploying—smart products? Tick all that apply
More competition
Higher margins
Less competition
Lower margins
Consolidation within the industry
Market growth
Increase industry collaboration
Reduce industry collaboration
None of the above
49
48
38
35
29
27
27
23
1
(% respondents)
What impact do you think smart product development will have on your industry? Please select the three most important

Decrease 5% to 15% Decrease up to 5% No change Increase up to 5% Increase 5% to 15% Increase 15%+
Revenue
Cost
415
366
236483
151041
(% respondents)
What impact do you expect smart products to have on your revenues and costs in the next three years?
Physical products excluding smart products
Smart products
Internal tools and processes
Digital interfaces (mobile/app)
Other (please state)
40
34
20
5
0
(% respondents)
Which of the following is the number one priority for your innovation and RD efforts?
Product/UX design
Product manufacture
Business model design Weakest
Product testing
Data back-end design and deployment
Data back-end support and maintenance
Sales and marketing
33
29
16
7
5
4
4
(% respondents)
Which of the following capabilities do you think is your organisation’s strongest with respect to smart products?
Data back-end design and deployment
Data back-end support and maintenance
Product testing
Sales and marketing
Product/UX design
Product manufacture
Business model design Weakest
28
17
14
10
9
9
5
(% respondents)
Which of the following capabilities do you think is your organisation’s weakest with respect to smart products?
Strongly agree Agree somewhat Disagree somewhat Strongly disagree Don't know/can't answer
We have the product design capabilities required by our smart product strategy in house
Effectively integrating multiple stakeholders in the design process is critical to success
The design challenges associated with smart products are unique
Few individuals have all the skills required to effectively design a smart product
1
19
1
314
22
332
41
51
51
33
39
30
24
31
(% respondents)
To what extent do you agree with the following statements regarding your organisation’s use of design?

Open source hardware
Collaborative/crowd-sourced design incorporating customers
Outsourced product design and development
Collaborative design with one or more partners
Hardware-in-the-loop simulation
Open source software
Rapid prototyping/3D printing
None of the above
56
53
50
44
42
28
19
0
4
(% respondents)
Which of the following tools and techniques have you successfully applied during smart product development?
Tick all that apply
Increase software development resources
Introduce new project management techniques
Increase electronics/hardware resources
Hire market researchers
Hire specialist project managers
Hire product designers
Hire data scientists
Acquire one or more specialist company
Reorganise the product development function
Outsource product development
None of the above
48
35
34
29
26
24
24
22
21
9
1
1
(% respondents)
Which of the following adaptations to your product development capabilities have you made in order to pursue your smart
product strategy? Please select the three most important

Hire data scientists
Hire product designers
Hire market researchers
Increase electronics / hardware resources
Introduce new project management techniques
Reorganise the product development function
Acquire one or more specialist company
Hire specialist project managers
Increase software development resources
Outsource product development
None of the above
44
43
39
28
25
23
22
18
16
6
0
0
(% respondents)
Which of the following adaptations to your product development capabilities do you expect to make in order to pursue your
smart product strategy in the next three years? Please select the three most important
Extracting value through data analysis is an intrinsic part of the business model for our smart products
We have internal employees with the technical skills required to effectively process and manage the data from our smart products
We have internal employees with the analytical skills required to effectively analyse the data from our smart products
Effectively analysing data from smart products requires “big data” technology – eg, Hadoop, non-relational databases, in memory computing
A lack of common data standards hinders our smart product strategy
1
1
21654
11941
222354
333237
372744
26
37
19
25
18
(% respondents)
To extent do you agree with the following statements regarding your organisations’ use of data analytics in connection with
smart products?

Automate customer service
Analyse how your customers use products
Share with suppliers to collaborate on products
Analyse product lifecycle
Personalisation of your products or services
Extract information for marketing purposes
Analyse energy consumption
Track your customers’ location
Optimise your product design / performance
Optimise your internal business processes
Improve customer service
None of the above
40
39
32
29
28
26
25
24
19
15
11
0
1
(% respondents)
Which of the following are the most important ways that your organisation uses/will use data collected from smart products?
Select up to three
This function supports our smart strategy well This function supports our strategy adequately
We need to adapt this function somewhat in order to support our strategy We need to adapt this function significantly in order to support our strategy
Recruitment
IT
Finance
Manufacturing
Design
Sales
Marketing
Strategy
Compliance
3223638
1
1
2
2
194332
204234
4173540
1
1
164932
164732
174337
154635
3165226
(% respondents)
To what extent do you believe the following business functions at your organisation support your smart strategy?

We don’t have enough budget/it costs too much
We don’t have the in-house expertise/skills
It doesn’t fit with our existing culture
We’re not agile enough
Our organisational structure isn’t right
It is not considered a priority by the business
C-suite buy-in to the smart products strategy
47
44
39
39
28
24
19
4
(% respondents)
Which of the following do you consider to be the most difficult organisational challenges in developing smart products?
Select up to three
Pricing
Data management and analysis
Information security
Customer privacy
User interface design
Technology integration
Selecting and managing partners
Product design
Marketing
Identifying market opportunities
37
36
36
34
28
25
24
22
15
13
1
(% respondents)
Which of the following do you consider to be the most difficult operational challenges in developing smart products?
Select up to three
CEO
Chief innovation officer or equivalent
Chief technology officer or equivalent
Chief marketing officer or equivalent
Chief information officer or equivalent
Chief strategy officer or equivalent
Chief digital officer or equivalent
59
15
12
7
3
3
0
0
(% respondents)
Who among the C-Suite owns the smart product strategy?

It requires us to expand our partner ecosystem
It requires us to have a more geographically diverse partner ecosystem
It requires our sourcing/procurement function to have more technical understanding
It means that we are more reliant on the innovation of suppliers than before
It requires us to share more intellectual property with partners than we have done in the past
It means we have to manage our supply chain more strategically (eg, mitigate risk, balance cost)
65241
1
1
1
1
1
1
1
1
31946
1
173842
1856
2644
1950
30
24
26
28
(% respondents)
To what extent do you agree with these statements on the impact of your smart product strategy on your partner ecosystem?
Product design agency
Systems integrator
Hardware manufacturer
Information security provider
Analytics provider/consultancy
Market researcher
Cloud service provider e.g. Amazon Web Services
Consumer web service provider e.g. Google
Telecommunications service provider e.g. Telefonica, Verizon
Advertising agency
Management consultancy
52
45
45
38
23
22
12
12
12
9
8
(% respondents)
Which of the following are the most important kind of organisation to partner with when developing smart products
Select the three most important
We understand all the data protection and privacy regulations that apply to smart products in the markets we operate in
The regulatory environment we operate in makes it easy to develop and sell smart products
Our smart products strategy makes it harder for us to comply with data protection and privacy regulation
Building customers’ trust in our ability to protect their privacy is a key success factor for our smart products strategy
1
1
95337
4163346
23194629
21164437
(% respondents)
To what extent do you agree with the following statements regarding regulation?

While every effort has been taken to verify the accuracy
of this information, The Economist Intelligence Unit
Ltd. cannot accept any responsibility or liability
for reliance by any person on this report or any of
the information, opinions or conclusions set out
in this report.

LONDON
20 Cabot Square
London
E14 4QW
United Kingdom
Tel: (44.20) 7576 8000
Fax: (44.20) 7576 8500
E-mail: london@eiu.com
NEW YORK
750 Third Avenue
5th Floor
New York, NY 10017
United States
Tel: (1.212) 554 0600
Fax: (1.212) 586 1181/2
E-mail: newyork@eiu.com
HONG KONG
1301, Cityplaza 4
12 Taikoo Wan Road, Taikoo Shing
Hong Kong
Tel: (852) 2585 3888
Fax: (852) 2802 7638
E-mail: hongkong@eiu.com
GENEVA
Rue de l’Athénée 32
1206 Geneva
Switzerland
Tel: (41) 22 566 2470
Fax: (41) 22 346 93 47
E-mail: geneva@eiu.com

Developing smart products

Recommended

Recommended

More Related Content

What's hot

What's hot (20)

Viewers also liked

Viewers also liked (17)

Similar to Developing smart products

Similar to Developing smart products (20)

More from The Economist Media Businesses

More from The Economist Media Businesses (20)

Recently uploaded

Recently uploaded (20)

Developing smart products