ROI for IoT Part 2: How the IoT will affect your Business Model
In Part 1 of this 3 part blog series we explored the ROI opportunity around the data being generated by your connected product/IoT experience. For Part 2, let’s take a look at how the Internet of Things can play a role in identifying new opportunities around your current and perhaps new business model.
I’m sure I’m not alone when I say that growing up I always asked “Why can’t this do that or that do this”, or “Why can’t I talk to my house.” Today, with the breadth of technologies available, it is possible to answer each of these questions with “Yes, it can do that and yes you can talk to your house.” This is how I like to think about the opportunity the IoT brings to the enterprise to answer these questions and transform business models. I’ve included a few approaches below that can get you started in thinking about how to find value in applying the IoT to your business. Value can be found by focusing on one or more the following:
- Reinventing existing products and product lines to meet new demands - How would this product be different if it were connected to the internet?
- Keeping your connected product experience up-to-date - How could we continually improve a product if we had the opportunity to do so?
- Creating new products to meet a need and answer “Why can’t this do that?” - If we could enhance our customers’ experience by introducing a new connected product what would that be?
- Adding new services that compliment a connected experience - How can we augment the customer journey with net new services that provide additional value?
I’ve expanded upon each of these below...
Reinventing existing products and product lines to meet new demands
Products are created to meet a specific need. They are launched, used and reach maturity and may eventually die off. As a result of the IoT, companies now have the ability to identify new needs across the customer experience journey that can be met by connecting existing products. For example, we are currently extending our Smart Office platform to the restroom. I know, I know, it sounds silly but, connecting a toilet paper dispenser opens up the ability to create a new service for building facilities management by utilizing stock data to become more efficient at restocking, inventory management and increase tenant satisfaction. In this example, not only would you create a new product that can generate revenue but you are also adding a B2B service that creates a brand new recurring revenue stream. If you’re a product line manager and are working on the next generation of your product(s) you should be thinking about how connecting them can help your customers as well as your company.
Keeping your connected product experience up-to-date
Additional value can also be created by updating the connected product over-the-air. We have the opportunity to remove the “one and done” mode of traditional physical product development by periodically adding new features. These new features can range from functionality on the device, the collection of new information about its usage or even adding connectivity to other products and services a user may be using along side of your product. If we focus on improvement of the product and experience over time we can continue to increase the value to the end user and hopefully keep the product from the decline phase of the lifecycle. As you’re going through the development of your connected product you should be identifying early on what your update process will look like so you can anticipate future customer and business needs.
Creating new products to meet a need and answer “Why can’t this do that?”
It seems like every day there is a new startup entering the connected product market. These products are new additions to many different customer experiences and are primed to disrupt existing companies who are meeting the needs of users along a specific journey. These products, like the Amazon Echo, provide new services that are removing friction from the user journey. They are also integrating with other products and services (IFTTT, WeMo, Pandora, etc…) and thus adding value to the overall ecosystem and giving users access to more information. As you start your journey into the IoT it is important to examine your existing customer experience, identify points of friction and ideate around how a connected experience can remove that friction. This will provide the base for creating new products and experience for your customers.
Adding new services that compliment a connected experience
As mentioned in the connected restroom example above, there is an opportunity to identify points of friction in the customer experience and understand where a new service might be able to relieve some of that friction or create an entirely new model. For example, Kaeser, a German air compressor manufacturer is selling air-as-a-service vs. the end customer owning the compressor itself. This concept is often referred to as product as a service and is poised to change how manufacturers think about their products and operate their business. Another example that comes to mind is Uber. While not the exact definition of an IoT use case they certainly disrupted the taxi industry and are looking into where that industry is headed next by working on autonomous vehicles. Who knows, maybe in a few years car manufacturers will no longer be selling cars, but rather, providing access to autonomous vehicles to get you from A to B. This thought process may be difficult for traditional product companies, but if we focus on the customer experience we’ll be able to identify where it makes sense to introduce a new service to compliment a physical product experience.
Being hailed as the next Industrial Revolution, the Internet of Things will affect your business in some way and for many it will disrupt. This presents a great opportunity to start now on your IoT journey. To help jump start that journey, I’ve outlined a few tactics you can use to work towards the takeaways outlined above.
How you can get started:
- Identify points of friction
- Conduct user research
- Map out the customer journey
- Focus on opportunities to connect existing products
- Speak with other units in your organization that manage different product lines - What are they doing? What are their needs?
- Ideate around the customer experience (after you’ve identified points of friction)
- Start small and build a Proof of Concept for your experience
- Get user feedback
- Build the business case
In Part 3 of this series we take a dive deeper into how focusing on the customer experience can create ROI opportunities around the IoT.