The Pursuit of Manufacturing IoT Commercialization. February 15, 2018

Transcription

1 The Pursuit of Manufacturing IoT Commercialization February 15, 2018

2 Monetizing the Industrial IoT Steve Pillsbury, PwC Strategy & Operations Consulting Partner

3 Our discussion today Has the Industrial IoT become mainstream for businesses? Is anyone making money with IIoT? How does the journey start (and accelerate)?

4 A: Yes. Has the Industrial IoT become Mainstream for Businesses? Growth Adoption Connect & Optimize

5 For US manufacturers, IIoT adoption has already mainstreamed 38% of manufacturers now offer IIoT-driven products and services 48% are currently in the process of developing them Meanwhile nearly 90% are using or exploring the use of IIoT tech to enhance operations 5

6 The Industrial IoT ecosystem is growing swiftly and widely 8.4 billion connected things in 2017 (about one-third for business or industrial application; two-thirds for consumer products) 20 billion by 2020 (Source: Gartner estimates) Venture capital investment hit $2.5 billion in US companies developing IoT products and services, double from 2012 (Source: PwC/CBI Insight MoneyTree report data) 6

7 IIoT is not simply just another technology; it s perceived as a driver of new sources (revenue, cost-savings) of profitability Competitiveness and ROI are top motivators for IIoT adoption Based on PwC / MAPI Survey Results Competitive Pressures Add l Revenue / attractive ROI 61% 61% Customer Demand Commoditization Pressures Market Expansion 42% 42% 49% Disruptive Competition 32% Other 7% 7

8 The buzzwords have actual meaning Big Data and Internet of Things represent truly transformational possibilities for businesses Data Available From Everywhere Data Captured / Analyzed in Powerful Ways Innovations and Solutions Built from The Data Insights Easy, Affordable Access to Data, Solutions, Platforms Solution Solution Solution Internal Company Solutions Communications Infrastructure Solutions Platform External Company Solutions Solution Solution Solution Interfaces and Apps

9 Key Concept behind IIoT Connect To the products you make, sell, or lease To your customers To your partners in the value-chain To your operations & Optimize The generation of insight The performance of your assets Your ability to serve customers Your ability to capture economic rent Workflows To create outcomes not previously possible

10 Connect & Optimize: The Connected Farm OUTCOMES FOCUS: FARM PRODUCTIVITY & YIELD PwC Digital Advisory Services

11 A: Yes. Is anyone making money with IIoT? Increased investment Monetization models Product/service bundling

12 If companies can t get this right, they will be at a competitive disadvantage ED ABBO PRESIDENT & CTO, C3 IoT INVESTING 4 of 5 Investing in product development Four in five manufacturers are investing in IIoT product and services development REVENUE 41% R&D Up to 20% Of R&D budget being allocated 40% earmarking up to 20% of their total research and development budgets to IIoT development GROWTH 1o - 20% Generated IIoT Revenue last year Among those offering IIoT products and services, 41% of respondents indicated that those generated up to 5% of total revenue last year. % of Total Revenue of the next 5 years Over the next five years, 42% expect between 10-20% of total revenue from IIoT products and services

13 Bundling products and services is the most common business model Which IoT-driven business model is your company currently deploying? Bundled Products & IoT Services Products-asa-service 30% 47% About half of manufacturers currently offering IoT products and services are selling customer-managed IoT platforms Other 19% Also, nearly one in three manufacturers is deploying products-as-a-service as their IoT business model Fully-integrated Service 4%

14 There are a number of IIoT business models; each monetizing their offerings using a combination of products and services Product Performance Monitoring Data analysis from Manufacturer IoT-driven field services The Pay-Per Model Real-time customer access to data Remotely managed data with alerts & insights Remotely managed enterprise-wide solutions Customer pays per: -hour, -unit, -alert, etc. Separate premium for a suite of services or upfront premiums for IoT-enabled asset at the point-of-sale Subscription basis for IIoT products and services, or on contingency based on performance outcomes Subscription basis, complete suite of IoT products and services, or on contingency based on performance outcomes Based on customer usage, or when customer receives alerts on performance, or insights on gaining efficiencies Digitizing Operations Optimizing Costs and Service

15 Connect & Optimize: Digital Aviation UPTIME, COST & SERVICE OPTIMIZATION MONETIZATION: USE, SHARE & SELL

16 There are a number of IIoT business models; each monetizing their offerings using a combination of products and services Product Performance Monitoring Data analysis from Manufacturer IoT-driven field services The Pay-Per Model Real-time customer access to data Remotely managed data with alerts & insights Remotely managed enterprise-wide solutions Customer pays per: -hour, -unit, -alert, etc. Separate premium for a suite of services or upfront premiums for IoT-enabled asset at the point-of-sale Subscription basis for IIoT products and services, or on contingency based on performance outcomes Subscription basis, complete suite of IoT products and services, or on contingency based on performance outcomes Based on customer usage, or when customer receives alerts on performance, or insights on gaining efficiencies Digitizing Operations Optimizing Costs and Service

17 Connect & Optimize: The Connected Vehicle CUSTOMER EXPERIENCE AND ENGAGEMENT MONETIZATION: NEW REVENUE MODELS

18 There are a number of IIoT business models; each monetizing their offerings using a combination of products and services Product Performance Monitoring Data analysis from Manufacturer IoT-driven field services The Pay-Per Model Real-time customer access to data Remotely managed data with alerts & insights Remotely managed enterprise-wide solutions Customer pays per: -hour, -unit, -alert, etc. Separate premium for a suite of services or upfront premiums for IoT-enabled asset at the point-of-sale Subscription basis for IIoT products and services, or on contingency based on performance outcomes Subscription basis, complete suite of IoT products and services, or on contingency based on performance outcomes Based on customer usage, or when customer receives alerts on performance, or insights on gaining efficiencies Digitizing Operations Optimizing Costs and Service

19 Connect & Optimize: Smart Factory PRODUCTION OPTMIZATION MONETIZATION: COST REDUCTION, IMPROVED CUSTOMER SERVICE

20 A: Get Smart, Get Moving. How does the journey start (and accelerate)? Outcomes-back Fail fast and learn Digital IQ

21 Common Challenges Capturing the value Recognizing the gap between value created and value captured Running the business with two different commercial models and the transition that has to happen Getting organized Operating model and organization capabilities Impact on Financials Who owns the asset and impact on revenue models (transfer of product versus provisioning of service) 21

22 Five recommendations to advance your position in the IIoT race Identify Entry Points Define Value Develop go-tomarket strategy Create Business Model Learn & Improve Identify do-able, realistic entry points (or expansion plans) into the IoT products & services market Define & demonstrate how IoT products & services create value for your customers & your company Develop effective IoT go-to-market strategies to effectively support your IoT products and services offerings Create scalable & future-proof IoT business models & promote a culture of entrepreneurship to develop them Learn from your products and your customers to improve, accelerate, & scale up your IoT products & services 22

23 Your Questions Hopefully Covered Today Worth Mentioning Now Requires a Richer Discussion How can a traditional manufacturing company change its business model to get significant revenue growth through IIoT? How companies are creating value through IIoT and digitalization strategies. Potential new business models emerging. How to generate revenue streams for services from the availability of data from IoT What are the overarching themes that drive the ability to commercialize IoT? How to balance investment in future growth via digital products vs. investment required for current products Price point or application tipping points where IIoT capabilities are expected, differentiator or not applicable 'today'&5 yrs Do customers know they need IoT? We haven't heard much demand for IoT How do you gauge customer interest if similar products do not exist in the market yet? What are the main arguments to convince an enduser to use IIoT solutions. How do you identify early adopter customers who want to participate in agile IIoT solution devmn t? What can IT organizations do to help facilitate IoT in our manufacturing facilities - how can we also best stay out of the way. We sell through distribution - How can we better support the online specification/decision-making process without owning POS? What key areas can we focus on to get an initial payback that will help fund additional activities! ie energy, efficiency, maint Would like to hear the most common uses of IoT for manufacturers driving revenue and used internally to reduce costs. Real examples of manufacturers with a business case Benefits/disadvantages of managing other company's data on your own server Cybersecurity Data ownership How to address inter-operability? Are there any open standard communication protocol that the industry is migrating towards? Transition from independent locally housed equipment control and monitoring to a hosted cloud based interconnected solution Use on manufacturing equipment for predictive maintenance and processes to fingerprint data collected What are key information security considerations for IoT and how is it evolving over the last few years? Interested in case studies - how others have developed and launched a strategy around smart connected products and factories 23

24 Thank you! Steve Pillsbury Principal, PwC PwC. All rights reserved. Not for further distribution without the permission of PwC. PwC refers to the network of member firms of PricewaterhouseCoopers International Limited (PwCIL), or, as the context requires, individual member firms of the PwC network. Each member firm is a separate legal entity and does not act as agent of PwCIL or any other member firm. PwCIL does not provide any services to clients. PwCIL is not responsible or liable for the acts or omissions of any of its member firms nor can it control the exercise of their professional judgment or bind them in any way. No member firm is responsible or liable for the acts or omissions of any other member firm nor can it control the exercise of another member firm s professional judgment or bind another member firm or PwCIL in any way MAPI Presentation.

25 Looking forward Upcoming Webinars Economic Disruptors: Globalization and Technology March 6, 2pm ET Upcoming Events ManufacturED Summit Chicago, IL For manufacturing executives May 22-24

26 Thank you.