Midmarket and IoT – The Time is Now: Part II

In part one of this series, I made a case for IoT in the midmarket.  With the convergence of lower cost sensors, ubiquitous broadband, the availability of elastic cloud-based services and lower cost software, the affordability threshold has never been lower. This lowering of cost creates a window of opportunity for general manufacturers, manufacturers of industrial equipment, maintenance repair organizations and industrial automation solution providers to lower the costs of maintenance, labor costs and spare parts inventory. For manufacturers of industrial equipment or providers of industrial automation solutions it provides an opportunity to servitize their product offering. Servitization is the act of bundling recurring services into a product to create new, high value business models.

Why Servitize?

Here’s what Cambridge Professor, Andy Neely has to say about it.

  1. Lock in a customer: this method has been used for years. Henry Ford even spoke of it: “A business absolutely devoted to service will have only one worry about profits. They will be embarrassingly large.”
  2. Lock out competitors: the closer you partner with your customers, the more loyal the customer. The more loyal the customer, the more difficult (and expensive) it is for a competitor to take that customer away. ‘Nuff said.
  3. Increase differentiation: fixing maintenance costs and taking on risks is a power combination, something that’s especially powerful for the industrial equipment manufacturers.
  4. Response to customer demand: customers more and more understand the costs and risks associated with service. They are increasingly demanding that these risks be taken on by the manufacturer or a service provider.

Getting Started with Servitization

So where do you start? You’ll probably not be surprised that Harvard Business Review’s Michael E. Porter and James E. Heppelmann have identified an IoT maturity continuum.

IoT Continuum (Image courtesy of Harvard Business Review)
IoT Continuum adapted from How Smart, Connected Products Are Transforming Competition)

Organizations can begin their IoT journey with small changes and yet still have a big impact. In fact, small, agile steps are far more successful than a large, monolithic approach. Below, I have outlined a set of steps that will help you get to the first milestone on the continuum, monitoring your connected assets.

  • Start small – Begin by getting data from your devices stored in a database. Microsoft has a set of cloud-based IoT services that are ideal for these small tests. The beauty of this approach is that there’s no hardware to buy, no software licenses to buy & install, no muss, no fuss. I highly recommend that you use this resource. Once you’ve determined that IoT is worth the effort, you can decide whether to buy or rent the necessary components. For now, rent it using a pay-as-you go pricing model which is relatively low in cost and requires no time commitment. When you’re done, you can turn it off.
  • Get technical assistance – It’s a technical task, so you will need to have the assistance of someone with the technical skills to make the connections from your devices to the Azure cloud services. It involves creating and configuring an Event Hub to begin collecting data streams and then route the data to an Azure SQL Database. You have the option of routing the data through Azure Stream Analytics to permit complex event processing, detecting and responding to conditions in near real time.
  • Produce visual analytics – Once the data is stored, you can use Power BI to begin producing visual analytics.
  • Consider security from the start – You cannot emphasize security enough and want to be thinking about security issues from the outset. Clemens Vasters did a great job of discussing IoT security at the BUILD conference in April 2015.
  • Repeat the process – Once your first IoT project is completed, select another chunk of data from your sensors and devices and add them to the database and your visual analytics for increasingly greater ability to create value for all of your stakeholders.

Get the Most Out of IoT

To get the most value form IoT, remember: start small, keep complexity low.  Start with telemetry and keep security in mind.  In Part III, I will discuss how to begin moving from monitoring assets via their telemetry to managing, optimizing and autonomy and beyond.

Phil Morris
There's nothing Phil enjoys more than helping customers create game-changing solutions to their business problems. He's especially enthusiastic about developing digital business programs that converge business strategy with digital technology to improve customer experience, optimize business operations and develop new business models. Phil is happiest when he's meeting with customers, listening to their stories and digging in and helping. Phil oversees the strategy, business development and finance departments at Mariner, staying focused on new trends in business and technology. Away from the office, he enjoys spending time with his wife, kids and grand kids, crafting award-winning beer and playing guitar in a blues band.
Phil Morris

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