A Digital or Connected Company is one that understands that technology has fundamentally altered the way that we communicate – not simply because so many companies and people are interconnected, but because all of our applications, devices and data are interconnected as well – the so called “Internet of Everything.” And this creates radical new opportunities. The Internet of Everything enables companies to use sensors, software, machine-to-machine and other technologies to gather and analyze data from physical objects or other large data streams – and then use those analyses to manage operations and in some cases to offer new value-added products and services.
To drive maximum revenue for connected products&data, it is critical to be focused on value creation. Where there is value, there is a business model. Pursuing growth rather than value creation is a single-minded approach to a multi-dimensional opportunity.
We identify several important conditions for connected products value creation and a methodology for creating a business case.
Embracing the new connected normal
With the ability to deliver new features and data in real time, companies are facing a much more complicated marketplace. Despite this complexity, connected products are quickly becoming the new table stakes for many industries. Some industries are already more mature in terms of their move towards connectivity, process&data sharing. In order to remain succesfull, companies must be prepared to embrace the new connected normal in their future product offerings.
Aligning the organisation
While designing a connected product or service is already hard enough, preparing an organisation to market, sell,and support it is even harder. However, by aligning the organisation on value creation, companies can change industries by being agile as opposed to merely being big.
Capitalizing on the value of data
Connecting products is a first step, it is initiating data collection that can ultimately be turned into actionable insights. Making the transition to a data-driven company requires a long-term view. Organisations must think what they will become the next 5 to 10 years. Companies must also be prepared to make ongoing investments in technology, people and process improvements that align with a centralized organizational strategy. With the mass collection of data from products and consumer behavior, the ability to automate and assist intelligent decision-making processes carries the promise of transforming business, industries and lives. Embrace the journey of creating value with data, and it will pay dividends to the next generation of business.
Indentifying & creating value
ROI business models are fundamentally centered on creating value within the context of data-driven experiences. In the world of connected products and data, there is an entirely new landscape of value that can be created to drive revenue, reduce expenses, or capture market share.
GetAllConnected has helped companies deploy a variety of connected products in different industries.
We have seen business models and monetizatin strategies based on different types of value creation:
- New revenue streams
- Lean operational efficiencies
- Strong competitive positioning
- Sticky brand loyalty
- Measured risk reduction
- Steamlined regulatory compliance
- Faster time to market
- Quantifiable product quality
- Relevant customer service & insight
Modeling value
Once value has been identified, it is important to build a realistic model that shows how that value is quantified and captured.
Quantifying value is a critical part of building a business case. E.g. connected products improve brand loyalty, this might be quantified as: customers or x % more likely to repead purchase connected products, leading to an average of € y additional total customer value.
With a clear understanding of that value, a customer can then organizationally optimize for value. E.g. the connected product may enable better insight in usage patterns, and enable predictive (failure) analytics. The customer can invest in customer service desk integrations and promoting a brand image that communicates risk reduction and trust.
Capturing value
Creating value is one thing, capturing value is another. Pricing models, bundling options, and partnership strategies are all part of the effort to capture value.
For companies launching their first connected product, there is significant infrastructure and organizational alignment that must be achieved in order to design, develop, launch and support it.
Foundaton for a data-driven future
Building connected products brings value for today, but also promises value in the future. In order to make connected products successful, you must have a long-term objective to revolutionize the company and the industry based on data analytics.
Data maturity is a measurement of the extent to which an organization is utilizing their data. To achieve a high level of data maturity, data must be deeply ingrained in the organization, and be fully incorporated into all decision making and practices.
Gartners model on data analytics defines four stages of maturity:
- Descriptive analytics: what happened?
- Diagnostic analytics: why did it happen?
- Predictive analytics: what will happen?
- Prescriptive analytics: what should I do?
Of course, connected products must pave the way for a future of data-analytics that can revolutionize the way users engage with products and services.
With a good understanding of connected product value creation, a solid model to turn value into profitability, and a long term perspective on the importance of data, companies can not only create products that connect with customers, but also build a foundation to lead their market into future growth.
