Question

Briefly Describe three potential concerns that buyers of these smart connected products might have about this trend to smart, connected products.

Answer 1

To fully grasp how smart, connected products are changing how companies work, we must first understand their inherent components, technology, and capabilities

All smart, connected products, from home appliances to industrial equipment, share three core elements: physical components (such as mechanical and electrical parts); smart components (sensors, microprocessors, data storage, controls, software, an embedded operating system, and a digital user interface); and connectivity components (ports, antennae, protocols, and networks that enable communication between the product and the product cloud, which runs on remote servers and contains the product’s external operating system).

Smart, connected products require a whole new supporting technology infrastructure. This “technology stack” provides a gateway for data exchange between the product and the user and integrates data from business systems, external sources, and other related products. The technology stack also serves as the platform for data storage and analytics, runs applications, and safeguards access to products and the data flowing to and from them.

Smart, connected products offer exponentially expanding opportunities for new functionality, far greater reliability, much higher product utilization, and capabilities that cut across and transcend traditional product boundaries. The changing nature of products is also disrupting value chains, forcing companies to rethink and retool nearly everything they do internally.

Smart, connected products raise a new set of strategic choices related to how value is created and captured, how the prodigious amount of new (and sensitive) data they generate is utilized and managed, how relationships with traditional business partners such as channels are redefined, and what role companies should play as industry boundaries are expanded.

The New Technology Stack

Smart, connected products require companies to build and support an entirely new technology infrastructure. This “technology stack” is made up of multiple layers, including new product hardware, embedded software, connectivity, a product cloud consisting of software running on remote servers, a suite of security tools, a gateway for external information sources, and integration with enterprise business systems.

This infrastructure enables extraordinary new product capabilities. First, products can monitor and report on their own condition and environment, helping to generate previously unavailable insights into their performance and use. Second, complex product operations can be controlled by the users, through numerous remote-access options. That gives users the unprecedented ability to customize the function, performance, and interface of products and to operate them in hazardous or hard-to-reach environments.

Third, the combination of monitoring data and remote-control capability creates new opportunities for optimization. Algorithms can substantially improve product performance, utilization, and uptime, and how products work with related products in broader systems, such as smart buildings and smart farms. Fourth, the combination of monitoring data, remote control, and optimization algorithms allows autonomy. Products can learn, adapt to the environment and to user preferences, service themselves, and operate on their own.

Reshaping the Manufacturing Company

To create products and get them to customers, manufacturers perform a wide range of activities, which generally take place in a standard set of functional units: research and development (or engineering), IT, manufacturing, logistics, marketing, sales, after-sale service, human resources, procurement, and finance. The new capabilities of smart, connected products alter every activity in this value chain. At the core of what is reshaping the value chain is data.