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How smart connected products are transforming competition
- 1. HOW SMART, CONNECTED PRODUCTS ARE TRANSFORMI NG COMPETITION PRESENTED BY– • ABHISHEK ARORA • BIPLAB BHATTACHARJEE • ROHIT KULKARNI • SOUMYA BANDYOPADHYAY
- 2. AGENDA • INTRODUCTION TOSMART, CONNECTED PRODUCTS • DRIVERS FOR THE ADVENT OF SMART DEVICES • REDIFINING INDUSTRY BOUNDRIES AND COMPETITION • IoT TO IOT • STRATEGY FOR SUSTAINABLE COMPETITIVE ADVANTAGE • Q&A • REFERENCES
- 3. A PEEK INTOTHE FUTURE…
- 5. The Internet ofThings (IoT) is a system of interrelated computing devices, mechanical & digital machines, objects, animals or people that are provided with unique identifiers & the ability to transfer data over a network without requiring human-to-human or human-to-computer interaction. Internet of Things (IoT) Social Media Mobile Computing & Communication Analytics Cloud Computing DEFINITIO N
- 7. DRIVERS FOR THEADVENT OF SMART DEVICES Cheap connectivity ports, low cost wireless technology Big data analytics Energy efficiency of sensors and batteries IPv6 internet registration system Breakthroughs in performance and miniaturization
- 8. THE NEW TECHNOLOGYSTACK
- 9. CAPABILITIES OF SMART,CONNECTED PRODUCTS Monitoring • Sensors and external sources provide monitoring of product’s condition, operation & usage Control • Build ICT capabilities for customer centric products and improve operational efficiencies Optimization • Enhance product performance and allow predictive diagnostics, service and repair Autonomy • Autonomous product operation, self coordination with other systems, diagnosis and service
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- 12. FIVE FORCES THATSHAPE INDUSTRY COMPETITION Rivalry among existing competiti on Threats of new entrants Bargainin g power of buyers Threat of substitut e products or services Bargainin g power of suppliers
- 13. MANUFACTURING OPERATIONS MANAGEMENT BATCH CONTROL CONTINUOUS MANAGEMENT DISCRETE CONTROL ANEW PERSPECTIVE ON I‘O’T Level 0: Production Process Level 1: Sensing & Manipulating the Production Process Level 2: Monitoring, supervisor control & automatic control of the production process Level 3: Manging workflow & maintaining records Level 4: Establishing the basic plant schedule production, material use, delivery & shipping, determining inventory levels Level 5: Managing commercial activities as well as product development
- 14. IOT IN INDUSTRIALPERSPECTIVE
- 15. MOTIVATION FOR THECONVERGENCE Cost reduction Risk Reduction Enhanced performance Flexibility gains
- 16. CHALLENGES IN IMPLEMENTATIONOF I‘O’T STRATEGIC CHALLENGES ORGANISATION AL CHALLENGES TECHNOLOGY CHALLENGES & TRENDS
- 17. CONVERGENCE STRATEGIES Central Data andSecurity Management Harmonization of Strategies, Processes and Organization: 1. Duplication 2. Key performance indicators (KPIs) 3. Common governance mode Re-skilling of Resources
- 18. IMPLEMENTATION OPPORTUNITIES Opportunities for the Energy, Mining& Utilities Market Smart mining Smart metering Smart oil exploration and production Smart grid
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- 20. • “The Internetwill disappear… you won’t even sense it, it will be part of your presence all the time.”— Eric Schmidt, Google chairman • “If you think that internet has changed your life, think again. The IoT is about to change it all over again!” — Brendan O’Brien, Co-Founder, Aria Systems • “The IoT will augment your brain” — Eric Schmidt, Google chairman • “IoT is changing & transforming everything from business to life”— Mehul Nayak, Tech.co • “IoT is bringing more and more things into the digital fold every day,
- 21. SUSTAINABLE COMPETITIVE ADVANTAGE After- Sales Service MARK ETING DESIG N HR SECU RITY Operate atlower costs! Differentiate itself from rivals & thus command a price premium! Achieve superior and sustainable profit & growth relative to the industry! Reinventing internal business processes
- 22. What Capabilities & Features to be perused? Extentof functionalit y embedded in the product vs cloud? Open or Close system? In-house developmen t or sourcing from Vendors? What data to be captured, secured and analysed? Ownership & access rights to the data? Disintermedia te distribution channels or service networks? Change the business model? Monetizing data through outside parties? Scope Expansio n? STRATEG Y
- 23. EXAMPL ES AO Smith RolexGE Healthcare Philips Healthcare Tesla Motors Capabilities & Features Open or Closed System Disintermediate distribution channels SONOS Bose Functionality in Cloud vs Product Carrier Corp. Scope Expansion SPECTIO TECH. Spectio Tech. Inhouse or Outsource Pepsi Americas
- 24. CHALLENGES….. Political & Civilcommitment: A strong will from the government & public to overcome efforts to block progress. Deployment of IPv6: The world ran out of IPv4 addresses in February 2010. While no real impact has been seen by the general public, this situation has the potential to slow IoT’s progress since the potentially billions of new sensors will require unique IP addresses. Standards & Regulations: While some progress has been made, more is needed, especially in the areas of security, privacy, architecture, and communications.IoT has the potential to change the world as we know it today—for the better. How quickly we get there is up to us...
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- 26. REFERENC ES How smart, connectedproducts are transforming competition, Michael E. Porter & James E. Heppelmann, HBR Article No. R1411C, Nov 2014. “The Internet of Things (IoT): Applications, investments, and challenges for enterprises”, I. Lee, K. Lee, Business Horizons (2015) 58, pp. 431- 440, Kelly School of Business. “Spectio: A Digital Lighting Company”, Rajiv Lal & Sarah Mcara, HBS Case No. 9-517-002, Sept 23, 2016. “IT/OT Convergence – Bridging the Divide”, Derek R. Harp & Bengt Gregory-Brown, NexDefense. “The Internet of Things - How the Next Evolution of the Internet Is Changing Everything”, Dave Evans, Cisco Internet Business Solutions Group (IBSG), April 2011. http://www.dyogram.com/2015/09/the-industrial-internet-the-next-
Editor's Notes
- #14 Disconnection: Separate IT and OT Silos: Technology Misalignment ; Ownership and Governance; Cultural Aspects
- #22 Foundation of competitive advantage is Operational Effectiveness & developing a distinctive strategic positioning! If a company is not continuously OE, it will fall behind rivals in cost & quality. Yet this alone is not sustainable as rivals will adopt best practices themselves & catch-up. To move beyond OE a company must define a dist. Strat. Positioning. Doing things well + doing them differently! To achieve success in implementation of IOT – Design – Achieve hardware standardization through software based customization. Harmonization of the hardware & software development/updation cycle. Marketing – Analyse data to understand how to create value for customers. Mare tailored marketing strategies. HR – Recruit new skill sets – Most manufacturing don’t have software developers, big data analytics, relationship managers. Security – Protecting data is now a serious issue. Data flowing from products to the cloud needs to be protected from hackers and unauthorized access. After Sales – Predictive maintenance. Early warning of impending failures.
- #23 The path to competitive advantage ultimately rests on strategy. So most industries face 10 strategic choices. Each decision involves a trade-off & hence must reflect the company’s unique circumstances. Together they form a coherent strategy for the success of IOT. Capabilities & Features – what will add value to the customers? What market segment it wants to serve? Reinforce competitive positioning? Functionality in product vs cloud – Whether the enabling tech. for each feature should be embedded in the product (raising cost) vs delivered through cloud or use both? Closed o open? – Closed: Aims to have customers purchase the entire IOT products system from a single manufacturer. Open: enables the end users to assemble the parts of solution from different companies. In-house or outsource? Most successful is a combina tion of both. Which data? Collecting data requires sensors adding to cost. Also more sensitive data needs more securtity. Ownership – Maintain transparency in collection of data and establish a joint ownership. NDAs, right to share / sell etc. needs to be established. Middlemen – both pros & cons. Business Model: From product to product as a service. Instead of selling spare parts, companies like whirlpool can retain ownership of the product and charge only for usage. Middle path a better option. Selling data to 3rd party – Firm could hide individual data and sell combined or bundled data. Scope expansion: going from product to a whole set of solutions across the value chain. Carrier as intelligent HVAC systems. But is has not moved into smart building or home automation space. Why? Capabilities required a different and also the cost.