When companies are able to tap into a continuous stream of live data from their products, the value creation potential is tremendous. This connectivity opens up access to areas that are of significant importance to companies including product performance, product usage, customer experience etc.
While the quantum of value extracted from smart products will vary based on the product type, pricing model and customer acceptance levels, the nature of value generated can be categorized as detailed below:
1. Enhanced Product Revenues
Enterprises can tap into insights enabled by data exchanges with the product. The insights extracted from data can help companies create personalized features, value added services and also enable cross-sell and upsell opportunities. In today’s digital world, data is the new oil and data monetization is increasingly becoming a priority for organizations globally
2. Operations Excellence
When enterprises face challenging economic situations, they prioritize the reduction of operational costs and other overheads. By enabling data exchanges, product owners can track key product performance metrics and take necessary actions to drastically lower maintenance costs and simultaneously improve product servicing capabilities.
3. Condition Monitoring
Remote monitoring allows the manufacturer to gain real-time visibility into usage and health of the product. This gives the technical product teams sufficient information to take appropriate corrective action in case of failures without having to waste time on carrying out root cause diagnostics
4. Preventive Maintenance
Through advanced analytics, manufacturers can identify problems even before they occur and proactively schedule maintenance/ product servicing tasks to prevent any form of future breakdown or downtime
5. New Products
The data extracted from smart products may be of significant value when combined with the capabilities of a different product, function or organization. It is in this context that intelligence enabled by smart products is in turn driving the creation of new products. For example, data from connected vehicles when shared with insurance companies helps design better usage-based insurance products. Additionally, smart product data can itself be sold as a stand-alone service
6. Product Innovation
The tradition model of sales being a one-time transaction is fast becoming obsolete. By creating a ‘digital feedback loop’, a continuous, iterative cycle of product enhancements is made possible. A continuous product improvement and innovation strategy can be enabled by:
Connected product usage and analysis:
Continuous Quality Analysis
Performance Enhancements and Robustness Upgrades
Organizations can gain new insights into their products’ performance, understand their customer’s expectations and gather a rich library of data to form as foundational inputs for further rounds of ‘informed’ product innovation. This facilitates the development of significantly enhanced products and services that will ultimately help improve product life.
7. Enhanced Customer Experience
Personalization and customization of products is key towards establishing market differentiation and creating a competitive advantage. The demand for customization has proliferated across industries ranging from automotive to consumer appliances. By tapping into product usage data, product manufacturers can curate uniquely personalized customer experiences through value added services. The automotive industry has certainly been an early adopter of this model, where customers today have the choice to walk-in to a ‘virtual showroom’, view models in augmented reality, virtually test drive cars and even order the car online by selecting from a range of additional features, specifications and functionalities. This type of enhanced customer experience is going to become central to the sales and customer experience strategy of organizations globally. Customer experience can be enhanced by offering:
Safety: Smart Intelligent products increase customers safety by continuously monitoring the component usage data, determining potential risks and sharing safety critical information with concerned stakeholders
Product Personalization: By analyzing the usage pattern and customer preferences, these connected intelligent products enables personalization and customization features, thereby enhancing customer convenience and satisfaction
Self-servicing features: Smart products can offer self-diagnosis and self-servicing features to the customer giving them extend levels of control and comfort
8. Social and Regulatory Impact
Smart Products is becoming an enabler to create social impact. For example, just within the automotive industry, research states that by 2025, up to 4.3 billion euros in material and damage costs will be saved by connected assistance systems, 70 million driving hours can be spared by connected parking functions in the US, China and Germany, nearly 400,000 tons of CO2 will be spared by connected mobility and more than 11,000 people can be saved by connected driving assistance systems.
Additionally, smart products can also address rapidly evolving governmental mandates pertaining to emissions, safety and quality. The real-time insights from smart products can be directly made available to regulators in order to continuously meet compliance requirements
Key Takeaway
By leveraging smart, connected product ecosystems, manufacturers can create new and more effective business models, improve operational excellence, and design and develop better products and services that align with customer needs and preferences.
It’s becoming clear that for most product manufacturers, rolling out Smart Products should no longer be a question of ‘if’, but more about ‘when’.