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Product as a service requires business transformation

The real challenge in implementing product as a service lies in transforming the business to support a new services model.

Manufacturers driving toward a product-as-a-service business model aren't necessarily facing a major IT infrastructure redesign, but rather a need to add incremental layers to the existing technology stack while hammering out new business processes to support the transformation.

That's not to say that reorienting IT strategy to support the Internet of Things (IoT) and subsequent product-as-a-service business models will be easy. On the contrary, there are a host of major IT considerations, including ensuring the proper connectivity; integrating with existing enterprise platforms; addressing security-related concerns; and building out a platform upon which IoT data is stored, managed and analyzed to empower the new service offerings, according to Jeff Kaplan, managing director of THINKstrategies, an independent consultancy focused on cloud computing, IoT and big data.

Although IT is not a stranger to any one of these technologies, the real challenge lies in piecing it all together because no end-to-end solution or single vendor can service the full spectrum of needs, Kaplan said. "No one vendor has all of the parts, which means everything from the sensors to the back-end systems has to be cobbled together," he said. "The good news is that consultants and integrators are getting smart about this stuff and can help you figure out which pieces work for your business."

From the device level and beyond

While engineering will devise the optimal sensor plan for a product, IT should steer the connectivity strategy, determining which technology -- cellular or wireless, for example -- is best suited for the bandwidth needs of a particular business initiative. There is also a requirement for software that securely transmits data to and from the cloud, a cloud-based platform for storing and managing data, analytics capabilities, and application development tools for creating the customer-facing services that leverage the IoT data, noted Rob Black, IoT product management senior director at PTC.

Beyond those core systems, service platforms also can be a core part of the mix, including such technologies as field management software, issue and case management tools, and customer communities, said Chuck Malone, marketing director at Etherios, a division of Digi International. "It doesn't mean you have to do it all at once, but you do need to have a roadmap of the different things that should be in place to meet this need," he explained.

One of the biggest IT challenges is integrating the IoT-based service offerings with the corporate enterprise systems, according to Ted Graef, president of All Traffic Solutions, a manufacturer of traffic and safety signs, which now markets a range of complementary services designed to help customers remotely manage and maintain their assets.

"Integration with enterprise systems is a key component that not a lot of people think about," Graef said. "They just want connectivity, but they don't know why yet. A true connected product needs to be integrated with the enterprise because what you are trying to do is monetize it and if it's not part of your business systems, that's really tough."

All Traffic Solutions leverages PTC's ThingWorx IoT platform for storing and managing data collected from its smart traffic signs as well as to create the customer-facing apps for its services. It also employs the Devicify SaaS-based connected product management platform, which fosters direct integration with its Salesforce enterprise system.

At En-Gauge, the transformation from a family-owned manufacturer of pressure gauges to a provider of IoT-based solutions for safety assets like fire extinguishers has been critical to differentiate the company from low-cost competition in China, according to Brendan McSheffrey, the company's CEO. The company began moving in this direction around 2008, well before sensor-based connected products were even referred to as IoT, he explained, and there were a lot of false starts along the way.

"It took two generations of product, a lot of end user meetings, and a lot of going out and understanding the market," McSheffrey said. Although the technology was a struggle because much of it was still evolving at the time, the real test was figuring out what problems end users had and coming up with services that could help. "For us, it meant exploring what the problems were and the challenges related to maintaining and managing a fleet of safety assets," he said. "It meant taking that feedback and using it to design a product and service that really solves their issues."

Today, En-Gauge's cloud-connected gauges for fire extinguishers and medical oxygen units automatically anticipate when a problem might occur based on usage patterns, helping organizations schedule proactive, preventive maintenance as well as ensuring compliance with industry regulations.

Identifying customer pain points and developing services that can help is what IoT and product as a service is all about and where companies will struggle most, noted Tony Rizzo, entrepreneur in residence at Blue Hill Research. "The biggest challenge is not to think in terms of technology, but in terms of business transformation," he said. "It's not about grabbing data, but how to intelligently use that data so that customers can actually benefit. It's really 99% about business transformation."

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