The following IoT strategies can be used to ensure an organization is focusing on value capture as opposed to merely going through a simple pricing exercise in which margin is added to a base cost:

For companies launching their first connected product fleet, there is significant infrastructure and organizational alignment that must be achieved in order to design, development, launch, and support a successful IoT strategy. Much of this organization alignment can be leveraged for future connected product offerings and so represents more of a foundational shift for an organization to invest in. If not addressed properly, the business case for a connected product fleet can accidentally conflate business-wide concerns and product-specific concerns, which ideally would be modeled independently.

As if creating value with a connected product offering is not difficult enough, capturing value is yet another science to conquer. IoT business models, bundling options, and partnership strategies are all part of the effort to capture value. An in-depth discussion of pricing strategy is outside the scope of this blog, but it is useful to understand a few reasons why it can be a difficult exercise:

Now that you have been able to properly identify your IoT business model, it’s time to optimize for value.

Step one is making sure you have a clear understanding of how your connected product offering adds value in the IoT marketplace. Second, which is arguably even more important, is understanding the value you are providing to your end users, as ultimately you are going to need them to adopt your product as they hold the keys to your success. Once this has been fully understood, a model should be built for quantifying what that value represents. If these are in place, an OEM can then organizationally align to optimize for value.

Customer service teams are finding themselves right in the middle of a company’s connected product strategy. In addition to augmenting support staff with the new skills, processes, and documentation necessary to support connected products, it is also important to recognize the opportunity to create value by delivering better customer service that is more relevant and efficient.

For many industrial applications like engine designs for mobile landscaping or street sweeping equipment, enterprises often have limited knowledge about product quality outside of product returns and consumer reviews. Remotely monitoring devices and equipment via an IoT platform provides an opportunity to create value by understanding product quality at a deeper level, including:

MINNEAPOLIS, Minnesota (October 8, 2015) – Exosite is excited to serve as a Silver sponsor at the Amazon Web Services (AWS) re:Invent conference and exhibition at The Venetian in Las Vegas, Nevada, October 6th – 9th. Exosite will unveil cutting-edge demos that leverage the IoT-optimized platform services it has built on AWS. These services enable original equipment manufacturers (OEMs) to easily manage manufacturing, device provisioning, and fleet management for any connected product deployment.

The time it takes to get a product to market is crucial to a product’s financial success. If time to market can be reduced, the product will have more exposure to the market, which leads to higher sales. A fast time to market can also establish a firm competitive foundation by securing the critical first or second mover advantage. Connected products enable enterprises to create value by shortening product time to market in a number of ways, including:

Adhering to regulatory requirements, like those created by the FDA, can be onerous. However, one IoT business strategy is to use connected products to create value by streamlining the compliance and reporting process. For example, remotely monitoring the temperature and environment of food as it is transported from the farm, to the grocery store, and ultimately to refrigeration cases can be used to:

For some applications, the reduction of risk is a key value proposition of a connected product offering. Risk can be reduced in a variety of areas, including:

An Exosite customer that is a Fortune 500 company in the industrial market found that after a mass connected product deployment with Exosite, end customers spent 20% more on replacement parts and accessories than those with non-connected varieties. The same end customers were also 25% more likely to purchase follow-on connected products from the same brand family. This data shows that organizations leveraging connected products and building IoT strategies are enabling brands to reach further into the consumer experience and create deep connection points that are valuable and sticky.

Although the IoT landscape is fragmented and confusing today, connected technology is becoming easier to integrate and deploy. As a result, the threat of new market entrants has never been higher, and consumers have never had more choices. This requires business leaders not only to build strong businesses, but also to defend their position in the marketplace. In the past, large companies could outdo small ones simply based on their size. In the future, however, agility will determine success, with responsive companies outdoing those that are slow to change.

The first and most obvious type of value creation is revenue generation from the end customer or business that is the target of the connected product offering. At the highest level, revenue is typically collected at product purchase (pre-paid) or on an on-going basis (recurring), although a number of hybrid models also exist. A full list of the available IoT strategies and revenue stream models and is outside the scope of this white paper, but some examples include:

Connecting products is the first step in a sequence of a maturity process that ends with intelligent control and decision-making support. Although the near-term focus may be on connecting the first product family to meet the expectations of a particular IoT business model, it is laying the foundation for future connected products and initiating data collection that can ultimately be turned into actionable insights.

Connected product fleets are a new endeavor for many enterprises. While designing a connected product offering is hard enough, preparing an entire organization to market, sell, and support it is even harder. Many organizations face similar challenges when designing their enterprise IoT strategy, including: