IoT Business Model Impact

Transcription

1 IoT Business Model Impact Andrew Smith Senior Director, Strategy & Operations Microsoft IoT Device Experience

2 IoT Scenarios: Business value

3 The Business of IoT Chase Profits Not Headlines Translating this to that? ROI P&L Impact Opportunity Costs Path of least resistance Business Case Mapping your IoT value beyond the hype

4 Digital Transformation OEM Channel Customer Business Insights Manufacturing Efficiencies New Business Models Features and Rev Streams 1. Business units have access to advanced, real-time analytics for install-base. 2. Understand how products are being used. 1. Manufacturing unit fed real-time data on defects & durability 2. Update manufacturing process - avoid recalls and warranty costs. 3. Experiment with BOM savings informed by live field data 1. Predictive maintenance capability enables referral model with repair companies 2. Enablement of white goods as a service (e.g. lease or pay per use) - increased refresh rate for manufacturer 1. Hotel chain receives device connectivity and usage data 2. Consumer auto-orders consumables after 35 cycles/loads 3. Consumer buys cost saving updates based on usage.

5 Transformation in your market offering profitability customer relationships From MRI Scanner to Remote diagnostics subscription From Industrial Machine to Machine uptime subscription From Thermometer to Temperature Control Service From hardware margin to subscription margin From capex to capex+opex From transaction relationship to annuity relationship From procurement relationship to business owner relationship

6 Example: Sandvik Coromant Field Service

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8 Forefront of metal cutting industry Sensor-equipped tools: Temp, load, vibration Specific knowledge at tooling level Facts out of the machining process Integration to CRM & Call Centre From customer to sales interaction Efficiency of machining process Savings for customers of millions of dollars Instant recommendations about cutting parameters Minimising idle time up to 50% Collect data in real-time Predict When to change a tool; When to order a tool Reinvent the art of manufacturing (machines, tools, processes) Unprecedented field service

9 IoT Business Model Canvass

10 Business Model Canvass Partnerships Key Activities Value Proposition Customer Relationships Customer Segments Channels Resources Cost Structure Revenue Stream

11 Approach 1: Value Proposition first work outwards We use this approach when the proposition is defined Partnerships Key Activities Value Proposition Customer Relationships Customer Segments we need to work out the impact on customers, activities Channels we need to determine our costs how they scale Resources and how we ll ensure revenue scales to at least cover costs Cost Structure Revenue Stream

12 Approach 2: Work from outside in to Value Proposition We use this approach when Existing business looking at new business opportunities Partnerships Key Activities Value Proposition Customer Relationships Customer Segments Brainstorming ideas Value proposition is not clear Channels Start from what we know Resources Cost Structure Revenue Stream

13 IoT Scenarios: as a service models

14 IoT as a service models Suitable for more complex solutions requiring high controllability, high customization, with low endpoint volume Suitable for less complex solutions and common use cases requiring low degree of customization, with high endpoint volume $$$ $$$ $ Your solution implementation costs increase as you provide services further down the solution stack Your operating costs increase as you provide services further down the solution stack Your service consumption costs increase as you provide services further up the solution stack $ $ $$$

15 As a Service, Business Model Basics Preferred pricing Models Value Drivers Challenges Value/usage-based pricing PaaS Post-sale integration / consulting services sales opportunities Reduced headcount / IT costs vs on-premise Demand-side economies of scale (network effect) Innovation added at lower cost vs on-premise Common infrastructure, communication, security and analytics Migration risk: need to create stickiness while maintaining interoperability and flexibility Managed Service Operations: Usage metrics; entitlements (eligibility, level of service), monetization SaaS Per device pricing, Monthly subscription, Freemium Delay in revenue recognition: initial cash flow tough Prepayments and minimum subscription periods Sales cycle can be lower touch Per-user cost of operating infrastructure reduced with each new customer add Reduced legacy support cost (constantly updating) Visibility into user behavior increases targeted up-sell and cross-sell, proactive support, increases retention Per tenant customization for app behavior Pricing - balance predictability vs flexibility Key Costs Incremental spend on Cloud IaaS Developer, Data Scientist Usage tracking, monetization engine, support Incremental spend on Cloud IaaS/PaaS Developer, data scientists Usage tracking, monetization engine, renewals Security, Integration support CRM and Support

16 IoT: evolution of P&L impact

17 Supercharge your P&L Field Service Initiative Expanded offering SaaS Solution +5yrs Revenue Traditional Device Revenue Expanded Offering, Devices Reduced Churn IoT Application/Services Revenue Total Revenue COGS Device, Materials Costs Device, Labor Device Maintenance & Repair Development Amortization IoT Hardware Costs IoT Related Labor Cloud Hosting and Platform Costs FieldOne Costs Total COGS Gross Profit Gross Margin 33% 33% 33% 32% 32% 33% 32% 33% 33% 40% 40% Gross Margin Expanded offerings, reduced churn Predictive Maintenance & Inventory SaaS 33% 32% 33% 33% Reduced maintenance/repair savings App Dev Amortization for SaaS Device sensors Field tech hours on Operating deployment and Margin integration Field One Cloud infrastructure Delta to Pre IoT in YR 5 40% PRE IOT PHASE 1 PHASE 2 PHASE 3 P3 + 5YRS 15% SG&A Research and Development Sales and Marketing General and Administrative Azure Hosting, Internal Use Total SG&A Operating Profit Operating Margin 7.8% 8.0% 6.5% 5.5% 7.5% 6.2% 7.9% 6.7% 15% 15% R&D IoT Eng/Dev, pre technical feasibility 8% 7% 8% Wages and tools 6% to manage solution output (Power BI, new field mobile devices, internal use Cloud hosting) PRE IOT PHASE 1 PHASE 2 PHASE 3 P3 + 5YRS Note: sample data for illustration only

18 Thank you! 2017 Microsoft Corporation. All rights reserved.

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20 Genetec s journey to the Cloud Christian Morin Vice President, Cloud Services

21 Genetec At A Glance Who We Are ISV Founded in 1997 in Montreal, Canada Genetec is a pioneer in the physical security industry Video surveillance Access control License plate recognition Leading global provider of world class unified IP-based security solutions Offices and partners in over 80 countries Value-added and custom-tailored services Over 1,000 employees worldwide Privately-held company; organic growth through global sales efforts

22 Protecting the everyday: Making things work better for everyone We have built our business by: Developing security technology that keeps people and data safe Designing software that is flexible and adaptable Combining an open system of state-of-the-art hardware Fostering a culture of partnerships

23 ADVANCED IDENTIFICATION RETAIL ANALYTICS VISITOR MANAGEMENT VIDEO ANALYTICS DESTINATION TECHNOLOGY VIDEO WALLS INTRUSION TECHNOLOGY TRANSACTION INTELLIGENCE COMMUNICATIONS MANAGEMENT AUDIO ANALYTICS PERIMETER SECURITY PARKING SYSTEMS

24 SaaS Transformation Challenges TechnologyBusiness

25 Business Transformation Lessons Learned Pricing Strategy Sales Team Engagement Channel Partners Back Office

26 Repeatability: The Key to Success Simplicity rules Streamline the buying experience Eliminate the human factor

27 Merci. Köszönöm Thank you! Danke! شكرا