Experience Behaviors smart Developing New Growth systems Opportunities at the Intersection Data & Content Relationships of Smart Systems, Services and design the Internet of Things
Skills Technology
B o u l d e r Z u r i c h what are smart systems and the internet of things? Why Is It So Important?
Global expansion; re-engineering; What unrealized lean practices; mergers and technology, acquisitions. For most companies system and where are the biggest these strategies for growth and market leadership opportunities are value creation have reached the Which combination growth opportunities? available in the point of diminishing returns. As of customer value smart systems Smart Systems networks continue to integrate the elements will How Should We Think About Framing Opportunities? and IoT arena? Growth physical and virtual worlds, what differentiate us? How Opportunities The assumption that the role of new business design worked in the past to drive growth can we make, partner of acquire those and development is only about making existing is less likely to work now or in the elements? products or services more attractive no longer future... works. We believe smart systems design needs to transcend discreet product or service innovation. What business design, Business developers need to creatively imagine fully revenue model and developed systems and whole marketplaces. management priorities will help build long term success? To discover, design and develop innovative smart systems, organizations will need new and uniquely how should our facilitated processes... organization respond? What Are The Success Factors? Diverse collaborative networks will be self-organized by people who are motivated to explore and develop ideas they care deeply about. Business innovation will extend beyond ideas about new products and services to the very manner in which business is conducted. Building new ventures for the Internet of Things requires new and very different modes of design and development – organizations will need to push the boundaries of collaboration to include many new and unfamiliar participants... CONTENTS
01 What Are Smart Systems, Services and the Internet of Things Page 04 02 Framing Smart Systems Growth Opportunities Page 14 03 Smart Systems Growth Models and Strategies Page 24 04 Smart Systems Design and Development Process Page 50
smart systems design 3 01
What exactly are smart systems and the INTERNET of THINGS 1 sensors 2 3 people 0 & actuators 0 connectivity 0 ?& processes & data What smart Are Smart systems Systems and and services Services innovation
smart systems 5 design smart What systems Are Smart and services Systems and innovation Services
smart systems design 6 What smart Are Smart systems Systems and and services Services innovation
And quickly advancing TO DIVERSE APPLICATIONS
HOME HEALTH CITIES CONSUMER BODY INDUSTRY
TRANSPORT BUILDINGS MOBILITY INFRASTRUCTURE
Light bulbs Tra c routing Patient Care HVAC Electrical Distribution Security Telematics Elderly Monitoring Security Maintenance Pet Feeding Package Monitoring Remote Diagnostic Lighting Surveillance Irrigation Controller Smart Parking Equipment Monitoring Electrical Signage Smoke Alarm Insurance Adjustments Hospital Hygiene Transit Utilities / Smart Grid Refrigerator Supply Chain Bio Wearables Emergency Alerts Emergency Services Infotainment Shipping Food sensors Structural Integrity Waste Management Washer / Dryer Public Transport Occupancy Stove Airlines Energy Credits Energy Monitoring Trains
smart systems 7 design smart What systems Are Smart and services Systems and innovation Services
things get really interesting when connected devices start creating compound applications
COMPLEX: • Smart Cities • Smart Transportation Systems • Diverse Data Fusions COMPOUND: • Asset Management • Multi-Vendor Equipment Support SIMPLE: • Automation • Alerts & Alarms • Location Services • Monitoring & Diagnostics • Maintenance Dispatch
Compound Applications: Complex Applications: Simple Applications: Applications that involve multiple [peer-to-peer] devices Applications driven by diverse interactions involving sensors, Applications involving simple and machines with significant interactions between sys- actuators, machines, people and systems that enable extending/ remote monitoring, location tems and equipment in multi-vendor environment such expanding values from collaboration and analytics supported by services and product support as factories, hospitals and related environments charac- data fusion between and among disparate and diverse sources for maintenance or upgrades terized by diverse vendors, users and stakeholders
60
50
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0 2000 2006 2012
smart systems design 8 What smart Are Smart systems Systems and and services Services innovation
compound applications enable unique new use cases
for example
for example
for example
smart systems 9 design smart What systems Are Smart and services Systems and innovation Services
smart systems design 10 What smart Are Smart systems Systems and and services Services innovation
smart systems 11 design smart What systems Are Smart and services Systems and innovation Services
connected machines and devices are rapidly proliferating
InIn 2017 2016 nearlyover 3 2.7billion billion connectedconnected devices willwere be shipped shipped
ThisThis number number will willgrow grow to nearly to nearly 108 billion billion devices devices by f or2022 the year 2020 *Not including mobile phones
Home (Consumer) 43,745.71 billion (Devi ces millions)
Transport (Mobility) 500392.72 million(Devi ces millions)
Body (Health) 600360.03 million(Devi ces millions)
Buildings (Infrastructure) 2.11,726.59 billion (Devi ces millions)
Cities (Industry) 2.81,524.70 billion (Devi ces millions)
smart systems design 12 What smart Are Smart systems Systems and and services Services innovation
smart systems and services opportunities 2020 are enormous in scale and scope ..... 2017 2015
HOME CONSUMER $180.3B MOBILITY TRANSPORT $79.4B $29.4B $10.4B BODY HEALTH $6.2B $18.5B
BUILDINGS INFRASTRUCTURE $25.0B $397.8B INDUSTRY CITIES $77.0B
$59.2B $76.1B
smart connected systems $48.7B $129.8B spending is likely to grow to a scale that is larger than all Managed Services previous generations of IT and $571,845.77 (USD millions) $210.2B Network spending Enablement Hardware $43,782.24 (USD millions)
Network Services $387,453.46 (USD millions) $270.0B
Internet of Things and Smart Systems Opportunity 2022
By 2022 thisBy 2020 opportunity this opportunity will willgrow grow to to more more than >$1 Trillion
smart systems 13 design
Relationships Strategy & & Interactions Business Model 3 02 framing
smart systems
growth opportunities Framing smart Smart Systems systems Growth and services Opportunities innovation
Smart Systems and the framing Internet of Things Stack
Smart Systems are quickly becoming a Technology massive, global digital nervous system smart systems conecting billions of people, tens of billions of devices, and trillions and more data points through a network of unprecedented scale Overview
growth User Relationships Market Experience opportunities Business
smart systems 15 design smart Framing systems Smart Systems and services Growth innovation Opportunities
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smart systems design 16 Framing smart Smart Systems systems Growth and services Opportunities innovation
“User Experience” is the sum of our relationship with Overview technology. It encompasses the practical—like which User Experience senses, gestures, and inputs we use to interact with our devices and surrounding Layer environment—as well as the emotional: how the interaction makes us feel.
Context
Interfaces
TIme Embedded Internal Adhere/Patches Visual / Textile Audio / Tactile / Identity Accessories Clipped Strapped Footwear Gaze Tracking Facial Expression Tracking Earbuds Eyewear Headware Emotion Recognition Voice Recognition Handheld / Mobile Haptic Sensors Pressure Sensors Location / Fixed Taste/Smell Sensors Surroundings Joysticks / Mice Device
smart systems 17 design smart Framing systems Smart Systems and services Growth innovation Opportunities
From the design of silicon to the end-user experience, the technologies of Overview Overview the IoTFrom are the driven design by data.o si icon to the end user e perience the techno ogies o TTechnologyechnology the o are driven y data Sensors, software, and networked infrastructure collect, analyze, transmit ayerLayer and Sensors present data so twa forr thee and users networ ed and devices in rastructu who needre co ect it most. ana y e transmit and present data or the users and devices who need it most
Supply Chain & Logistics Security / Data Policies & Governance Asset Management Energy Management SaaS PaaS Security Management Cloud Services IaaS Customer Support Protocols / Frameworks Core Messaging / Application Application Enablement TCP / UDP CoAP OneM2M SMPP (Short Message REST API Analytics & Dashboards IPv4 / IPv6 MQTT DDS Peer to Peer) Node JS - API Services HTML 5 XMPP DTLS Virtual IC SMS - Application Enablement Tools RESTful HTTP uIP OMA Device Management Web Sockets AMQP Telehash CPE WAN Management JSON/JSONP LWM2M UPnP Protocol (CWMP) Thread AllJoyn Weave Mobile & Collaboration Data: Agg / Transformation / MGMT // Edge Processing Value Added Applications - Storage - Statistical Analysis Diagnostics - Data Normalization - Streaming Analysis - Data Classification - Real-Time (time series) Analysis Prognostics - Data Governance - Presentation & Visualization - Ad Hoc Queries - Event Processing System Applications Automation / Analytics - Rules Engine Location & Tracking Monitoring & State Device Management & Connectivity Network Services - Upgrades and Versioning - Firmware Management - System Configuration - Gateway Management - Device Registry Wireline WLAN - Identify, Security and Encryption - Ethernet - WiFi WWAN - Device Provisioning & Commissioning - Modbus - DECT Connectivity & - Cellular (4G/LTE - 2G/GSM - Powerline - Thread Device Enablement 3G GPRS) - WiMax WPAN - Bluetooth - Power LPWAN Routers & Gateways - Sensors - 6LoWPAN Physical - Sigfox - 2G, 3G, 4G Routers - Residential Gateways - Actuators - NFC - LoRA - Ethernet Routers - Set Top Box - RFID - Gateways & Proxy Servers - Voice Gateway - Data Aggregator - WAP Gateway Software Network Hardware
Silicon / Embedded Intelligence - 64 bit Microcontrollers - DSP Controllers - 32 bit Microcontrollers - Graphic Processors - 16 bit Microcontrollers - System on a Module Device Management Security & Encryption Operating System Comms Stacks - 8 bit Microcontrollers - Systems on a Chip - FOTA (Firmware Over the Air) - Security / Anti-Virus - Preboot Verification - Virtualization S/W - Wireline - 4 bit Microcontrollers - Single Board Computers - Distributed Version Control - Encryption - IP SEC - Desktop and Mobile GUI OS - WPAN - Configuration Management - Patch Mgmt - Certificate Management - Embedded / GUI based RTOS - WLAN - Software Versioning - End Point Authentication - Cryptography - Commercial RTOS - LPWAN - Device Drivers - Anti-Device Tampering - Data at Rest Encryption - Open RTOS - WWAN - Boot Loaders / Comm’s stacks
smart systems design 18 Framing smart Smart Systems systems Growth and services Opportunities innovation
Some markets adopt new technologies faster than others, but no sector of the Overview Market economy is immune to the expanding influence of the IoT. Layer While there are similarities that apply across the board, each vertical has its own set of needs and challenges that shape the way networked technologies add value.
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R e Aerospace Marine I Vehicles Infrastructure • Water Transport Rail• Controls Systems
• Tra c Management • Military Aircraft • Military Watercraft • Rolling Stock • Construction O • Toll Collection • Commercial Aircraft • Commercial Watercraft • Urban Transit • Military O • Parking Systems • Personal Aircraft • Personal Watercraft • Locomotives • Personal On-road smart • Infrastructure • Commercial On-road systems 19 Transport • Emergency On-road Mobility design smart Framing systems Smart Systems and services Growth innovation Opportunities
Overview Integrating smart systems into business processes requires restructuring Business long-held assumptions about how products and services are brought to market. Layer Collaboration between and among users, customers, developers and partners will be a minimum requirement for success.
Physical Product Region Transaction Type North America, Europe, S. & Central America, B2B / B2C / C2B / ETC Software Asia, Africa, Oceania, Worldwide
Data
Service Subscription • Usage-based • Transaction • Flexible - Capped • Tiered / Freemium • Value-based • Open / One -time Revenue Type • Unit-based • Timed • P2P Type Pay-per • Per site • Per seat • One-time • Royalty • Per device • Per application
Cloud • Loyalty Open Source Indirect • Internal Use Co-location Apache / BSD / GPL / GNU / MIT Mozilla / Eclipse / Creative Commons R evenue Model Model Hosted / Public / LGPL / AGPL Bundled / Hybrid Proprietary - Shareware
On Premise Proprietary - Commercial Systems Integrators System Selection / Integration Delivery License License & Delivery VARs Distributers & Wholesalers Training Professional / Tech Services Maintenance / Service Monitoring OEM / ODM Direct After-Market Support & Logistics Market Delivery Channel Direct Services
smart systems design 20 Framing smart Smart Systems systems Growth and services Opportunities innovation
Overview Relationship he so utions we are descri ing here wi have ayer no manageria hierarchy command and contro decisions or proprietary ownership o ideas
Strategic Venture Ventures I-Banks hese re ationshipsThe solutions wi e we se organi ed are describing here will have much less Managed Services managerial hierarchy, command and control decisions Suppliers Private y Equity peop e who are motivated to e p ore and Investments or proprietary ownership of ideas. Appls andPublic Funding deve op ideas they care deep y a out strategic alliances Investors channel These relationships will be self-organized by Systems End Use o a orative innovation wi e tend vendors people who are motivated to explore and de- Products Tech eyond ideasvelop a outideas they new care productsdeeply about. OEMs Value-Adders sourcing and services to the very manner
marketing customers in which usiness is conducted Technology Healthcare Collaborative innovation will extend beyond ideas Ops Industrial about new products and services to the very man- Enablers Transportation ner in which business is conducted Channels venues Buildings
Tools technology Smart OEMs Energy Developer Kits Devices Machines ResearchGateways
Users & Devices Power CustomersSensors LANs Infrastructure
Facilities
Wireless
smart systems 21 design smart Framing systems Smart Systems and services Growth innovation Opportunities
Overview Smart Systems and the nternet o hings wi e ui t rom comp e interre ationships etween the stac Interactions ntegrating these ayers together are myriad
Overview Interactions Smart Systems and the nternet o hings wi e ui t success rom comp e will inter increasinglyre ationships etween go the to stac those that Interactions i directiona effectively in etween digita utilize user the combined potential e periences and ntegrating the physica these wor d ayers together are myriad Interactions
i directiona in etween digita user e periences and the physica wor d Relationships
Overview Smart Systems and the nternet o hings wi e ui t Business rom comp e interre ationships etween the stac Market Interactions ntegrating these ayers together are myriad Tech Interactions User ExperiencRelationshipse i directiona in etween digita user Business e periences and the physica wor d Market Tech User Experience Relationships Business Market the interactions represent the convergenceTec hof users, devices, systems, data, and networks User Experience
smart systems design 22 Framing smart Smart Systems systems Growth and services Opportunities innovation
re-thinking things and products as systems
Your Product / Service RELATIONSHIPS
Formal Who are our natural allies?
Informal Who are we best poised with?
USER EXPERIENCE
Context What is the context “in use” for device?
Usage What are the expected usage needs?
Device What is the device form factor?
Interaction What is the nature of interactions?
TECH
Connectivity & What is the native intelligence of device and Device Enablement communications mode?
Network Services How are comms services provided?
System Applications What platform, devie management and related functions provided?
Value Added Applications What applications and functions are required?
INTERACTIONS BUSINESS Security / Data Policies How will identity mgmt, access and security work? Connections Revenue Model What is best path to monetization? MARKET eop e What is the nature of relation- License & Delivery Sector Which industry segments and applications rocesses ships, interactions, requirements Where used; via what services model? provide best opportunities? and dependencies between and terna Market Delivery Device Application What specific use cases and apps will need to among systems elements? What channel partners are required? Systems be addressed? Revenue Type License, transactions or what?
questions to frame your smart systems opportunity
smart systems 23 design 3 03
smart systems growth models and strategies
Smart smart Systems systems Growth Models and services and Strategies innovation
smart systems and IoT solutions are comprised of complex solutions development and delivery chains often, multiple parallel “upstream” technology enablers are adopted by ”mid’stream” OEMs and/or services providers who, in turn, deploy solutions into “downstream” vertical end use segments
IT Infrastructure & Machine and End Users and Software Providers Equipment OEMs End Customer Accounts
Core Enabling Technologies OEMs and Services Providers End Users
while the business models for developing and delivering core technologies are relatively stable, the rapidly evolving business and revenue models for OEMs and services providers are anything but......
smart systems 25 design smart Smart systems Systems and services Growth Models innovation and Opportunities
core smart systems technologies will impact all end use segments
Energy & Buildings & Healthcare Transportation Manufacturing Utilities Facilities
Fusing patient Timeline to Ability to balance Ability to Artificial Automation of data sets and AI completion grids, manage optimize energy Intelligence driverless capable of and sensing demand and requirements and Machine trucking fleets diagnosing faults during provide services and resource Learning patients production usage as users and customers have become more familiar with digital and IoT capabilities, they are Building systems Ticketing Renewable realizing these technology innovations will push the Application Predictive that leverage Telehealth and analytics for energy Development maintenance data across boundaries of how products, systems wearables demand and production and Developer and workflow lighting, HVAC, applications for asset tracking/ trends and and equipment are used and managed within their Tools applications alarms, fire wellness scheduling predictions detection operations which, in turn, has increased pressure on machine builders and equipment Internal vehicle Analytics on Information Cross-leveraging manufacturers to embrace these capabilities. End information production Analytics on Distributed access and data data from access and individual processes Data and set fusion for various building customers in factories, hospitals, buildings and more coordinated with machines and systems Information disease and facility urban systems improve for equipment are coming to see how these technologies work Architecture management sources efficiencies optimization together in new and novel ways to solve operational and business problems. As a result, specification and Real-time Transport Syncing global Building owners High- Power patient data systems operations for & operators are adoption of digital and IoT enabled equipment and Performance distribution, and medical schedule and collaboration able to share Networks & automation systems is beginning to shift towards a “shared” set of application resources to fit and efficient data across Infrastructure and control updates demand cycles management facility roles between end customers and their OEMs.
Medical staff Fleet tracking Substation Integrated Sensors & Remote machine and critical and road monitoring mechanical and Sensor Data maintenance, asset tracking & condition and process energy sensors Fusion health and monitoring monitoring diagnostics monitoring for multi-use
smart systems design 26 Smart smart Systems systems Growth Models and services and Strategies innovation
OEMs are uniquely positioned to capture smart systems values
IT Infrastructure & Machine and End Users and Software Providers Equipment OEMs End Customer Accounts Mobile Mobile construction, Equipment agriculture, mining and material handing machines
Medical Healthcare imaging, diagnostic Machines and patient monitoring and care equipment
Diversified Portfolio players with no LoB Manufacturers accounting for more than 40% of revenues
Core EnablinIndustrialg TechnoloFixedgies machines and OEMs End User Speci cation and Buying In uencers Machinery machinery systems primarily Provide horizontal technolousedgie sin a manufacturingnd If enabled with the right tools, OEMs can help End customers want to adopt smart services solutions, tools that must be contextualized disseminate these solutions to end customers due to but are wary of working with tech suppliers who may for speci c industries and customers their application expertise and existing relationships not have industry expertise--OEMs can ll this role Building Sub-system equipment within Equipment buildings including HVAC, lighting, transport and safety
Power Equipment for electrical power Mobile Mobile construction, Equipment generation, transmission, Equipment agriculture, mining and distribution and storage material handing machines
Automation Components, products and Medical Healthcare imaging, diagnostic and Controls systems for control incl electrical, Machines and patient monitoring and flow, regulatory and pneumatics care equipment
Test & Sensors, instruments and Diversified Portfolio players with no LoB Measurement measurement devices for testing, Manufacturers accounting for more than 40% analyzing equip and systems of revenues
Industrial Fixed machines and Low and medium voltage Electrical machinery systems primarily components utilized for power Machinery Power Dist used in manufacturing distribution and switching
Advanced Diverse precision or multi- Building Sub-system equipment within function mechanical and/or buildings including HVAC, Components Equipment electronic devices lighting, transport and safety
Power Equipment for electrical power Equipment generation, transmission, distribution and storage smart systems 27 Automation Components, products and design and Controls systems for control incl electrical, flow, regulatory and pneumatics
Test & Sensors, instruments and Measurement measurement devices for testing, analyzing equip and systems
Electrical Low and medium voltage Power Dist components utilized for power distribution and switching
Advanced Diverse precision or multi- function mechanical and/or Components electronic devices smart Smart systems Systems and services Growth Models innovation and Opportunities
equipment, systems and support is a changing environment
industrial services are increasingly complex and technology enabled to allow coordination and collaboration…
• Growth of higher value engineered / technical services will outpace growth of basic maintenance / repair and installation services • Growth of professional technical services is driven by customer needs for planning, designing, building, and managing complex, systems
System Consulting / Design / Business Process Configuration & System Packaging & System Delivery / Requirements Specification / System Integration Re-Engineering Application Staging Installation Analysis Planning Engineering
Tech Phone / Traditional Technology Start-Up & Testing / Field Engineering / Multivendor Managed Remote Support Equipment & S/W Financing & Asset Commission-ing Enhancements Services / Support Services (Help Desk) Maintenance Management
Training and Education • Rapid future growth of asset management services is expected: Project Management HW / SW inventory, SW licenses, contracts (lease & maintenance)
• Managed, remote services and support expected to • Shift to open systems will continue to drive increasing demand for multivendor grow considerably services & support • Continued growth of ‘selective outsourcing’ of non- • Systems integration & support services are offered to satisfy customer need for core or peripheral activities following intense period “knitting” together systems of downsizing • Customers will emphasize service providers’ ability to manage their environments • Future trend toward “managed” services – SaaS, PaaS rather than just simply service products from different suppliers and IaaS
smart systems design 28 Smart smart Systems systems Growth Models and services and Strategies innovation
customers expect suppliers to improve business outcomes
as automation and production systems become more complex, customers are looking to suppliers to provide broader services scope and are increasingly reducing the number of strategic suppliers they work with
Best-In-Class Design / deploy unique motion and drive control solutions to achieve best-in-class • Control systems • Auxiliary equipment & systems Control Systems optimization of process, support and non-process operational assets. • Support systems Systems Design & Program Global program / project management services designed to maximize effective • Planning/project management • Contract/risk management Development Management implementation of systems, delivering a consistent, quality-based program. • Quality/cost management Services Measurement & Monitoring & measurement of specific process, process support and non-process • Equipment uptime • Resource management Driven CustomersDriven - Verification systems variables that improve system performance. • Energy utilization
Asset Collect and analyze information to identify optimization opportunities for process and • Modeling / simulation of systems • Quality and throughput indices Analysis systems analyzed independently and together as interdependent systems. • Modular software development Performance Asset Benchmark key performance data for systems performance. Key areas to assess • Cost per unit of production • Cost per square footage Benchmarking include process, process-support, and process and equipment assets. • Level of technology Systems Safety & Management Provide solutions that allow customers to manage safety, including integration of • Safety and performance criteria Compliance • Validation assistance & Optimization new regulations and ongoing testing, certification and verification support. Services • Waste monitoring Services Predictive Provide predictive maintenance and condition-based monitoring for critical assets -- • Predictive maintenance plans • Equipment health profiles Maintenance current health, warning status, recommended maintenance actions. • Benchmark to standards Reliability Optimize maintenance strategies for equipment criticality and failure -- preventive, • Right mix of advanced services Centered • Maintenance master plan predictive, pro-active approaches -- optimizing cost and uptime. Maintenance • Lowest cost reliability Driven CustomersDriven - Parts & Parts Spare parts location, availability, rapid delivery and response time. Additional value • Spare parts • Parts programs Field Service Management added requirements include logistics services, repair & re-manufacturing. • Logistics
Support & Support Field Maintenance Optimize maintenance for repair, upgrades and support, including field engineer and • Field service • Warranty services & Repair Services technical support for trouble shooting and services enhancements. • Maintenance planning
smart systems 29 design smart Smart systems Systems and services Growth Models innovation and Opportunities
customers need better & more integrated maintenance solutions the value of digital transformation is gaining traction among manufacturers, but the complexity of this strategy is causing challenges across all industries
By it’s nature, maintenance is an ad-hoc event. It’s Preventative and Planned reliant on triggering events that by themselves Scenario: Data from sensors are relatively straightforward. The complexity of Scenario: Test and triggers a notification, the event and the nature of the work are primary measurement is part of alerting facilities manager to determining factors when deciding how to adopt their ongoing job take a measurement duties and regular Predictive these technologies, and what business models to business operations. Maintenance implement within them.
Preventative Failure Maintenance Mitigation End Customer Third Party Equipment First Line Services OEMs Maintenance Providers Breakdown Repair Assistance Support
Scenario: While Fault Tracking completing an Scenario: A major piece unassociated task, the of machinery has broken Tech decided to test a down so frontline workers machine in the factory (“I notify the maintenance was simply passing by”) tech so he can fix it
Corrective and Ad Hoc
smart systems design 30 Smart smart Systems systems Growth Models and services and Strategies innovation
value of embedding & integrating smart services into equipment
embedding intelligence and software into products and systems creates new values and services opportunities across the value chain, driving competitive differentiation for products and services
Manufacturing Value Chain & Smart Services New Sources of Value Product Requirements Design & Build & Sell Operate Maintain Apply rich new data on how products are used by customers in Engineer Integrate next generation product designs
Connected Pre-Sales Insights Designs Connected Understand installed device states – end of support; end of life, etc. Sales to drive more personalized account management, outreach and Simulate Build sales tactics
Supply & Distribution Chain Track products throughout supply and distribution chains to Connected Supply monitor detours, delivery, compliance, and more Simulate Operate Remote Support Services Design for [remote] Servicing: diagnostics and preventive and Connected predictive maintenance are conducted remotely to assist field Support technicians and support resources automatically
Asset Tracking Simulate Support Efficiently utilize & maintain expensive assets by monitoring status, health, configuration and location
smart systems 31 design smart Smart systems Systems and services Growth Models innovation and Opportunities
smart systems is enabling a new range of strategic services for OEMs
Equipment Services System Services Data Services
! Embedded machine control, ! Process engineering ! Process optimization tools information management, capabilities ! Online analyzers and sensors remote support, sensors, and ! Process design and ! Information management analyzers optimization (e.g. asset management) ! Control systems linking all key ! Re-engineering capabilities ! Data analytics and downtime plant equipment and optimization embedded process engineering
Inspection & Maintenance Repair, Replacement, Lifecycle Management Services Refurbishment
! Inspection ! Spare parts and kits ! Swap outs and replacements ! Re-engineering ! Long-term service agreements ! Repair ! Service scheduling ! Performance upgrades ! Renewals ! Maintenance kits ! Lifetime extension ! New parts ! Skilled workforce & training
Mechanical Engineers Electrical Engineers Services Enabling Capability: After Market Parts/Support Services Enabling Capability: Infrastructure & Automation
Power Generation Machinery Power Conversion Electrical Distribution / Control Centralized power generation Compressors Motors and Generators High/medium voltage Industrial gas and steam Pumps Drives Low voltage turbines Valves Inverters/Convertors Automation and instrumentation Diesel and gas engineers Blowers Mechanical power distribution Standby power Renewables Turbo Expanders Industrial Diversi ed Players: Evolving Portfolio O erings
smart systems design 32 Smart smart Systems systems Growth Models and services and Strategies innovation
new core data services will be a core enabler of new strategic services
Fast Data Contextual Situational Information Information Ingestion Awareness Awareness Analyzed Acted Upon
Rapid Decision Making: Less than 1 Second
Ingest data at Correlate and enrich with Correlate with real-time Predict threats and Trigger next speed and volume contextual data situational data opportunities best actions approx. 1 million events/second to enable better decisions affecting mission-critical equipment using machine learning models using automated rules & adaptive processes
Data From Sensors & Devices Data Transport Data Transformed Information Analyzed Decisions-Intelligence
Sensing Traffic/bandwidth control Data quality Semantic transformation Descriptive Analytics Asset Management & Uptime Assurance Connectivity Responsiveness/latency Support Cleansing Semantics assignment Aggregation view Operations Visibility & Optimization Access & Control hybrid networks Filtering Context injection Time series Supply Chain & Logistics Authenticity De-duplication Governance Simple correlation Customer Engagement & Satisfaction Confidentiality Syntax transformation Ownership assignment CPE Safety & Compliance Integrity Format normalization Anonymization Predictive analytics People Tracking & Wayfinding Data normalization Protection Machine learning Resource Utilization Management Graph analytics Environmental Condition Monitoring Prescriptive analytics User Safety and Security Machine learning Graph analytics
smart systems 33 design smart Smart systems Systems and services Growth Models innovation and Opportunities
OEM current state is one of confusion and excitement
many OEMs provide basic customer support services, but OEMs face open questions in expanding smart systems and services to provide new business values for customers
Evolution of Digital Manufacturing Services Maturity High Provide Challenges Business “Real-Time Leverage Value Adding Process [Managed] Partners To Extend Business What does service & support mean for me? How will Improvements Services” Processes & Risk Services definitions of service & support change in the future?
How do we create valuable services that will Systems & Application Use proven KPIs to incentivize customers to adopt these new solutions? Improve Deployment expand platform to Operating entire customer base How should we frame the resistance towards data Efficiency ownership and security? Basic Smart Service Development & Integration What services should be prioritized in development for customers?
Customer Benefit Customer Identify anchor end-customers and “Basic Customer partners to develop How do we identify partners for scalable relationships in offering services? Support Services” connected solutions via platforms Enhance Provide Engineering How will the future market for services evolve? What Technology & Technical Support steps must we take to support customers? Infrastructure Low Customer Tech Support Today “Provide Collaborative Solutions”
Customer Experience
smart systems design 34 Smart smart Systems systems Growth Models and services and Strategies innovation
diverse challenges hindering digital and IoT adoption although challenges vary among OEMs, the issues fall into the general categories of technology, business and customers
Clear Strategy To Start With… Developing a clear strategy to engage internal support and quickly gain customer adoption by generating tangible value; Lack of Consensus & Leadership Support knowing what to do and how to do it Developing a shared understanding of digital and gaining top level support Aligning the Business to Support Services Planning for the Future Moving from decades-old cultures resistant to Understanding and being flexible in technology change; becoming a service-driven and solution development today to be prepared for organization, both structurally and culturally future technology developments
New business Recruiting The Right Talent Technology Managing Complex Data and revenue Finding and hiring leaders and evangelists Collecting, transforming and integrating models Business that can help drive the development and data from complex machines and processes diffusion of digital throughout the company to enable new application values
Determining Organization & Relationships New work New modes Walling off digital initiatives and operating of interaction styles and Data Ownership & Security processes independently from the mothership to drive speed and Customers are increasingly aware of the freedom has advantages, but can also just deprive mew value and importance of their data, and are ventures of investment, capabilities and resources concerned about the security of their IP Customer Finding your Place in the Ecosystem Poor User Experience Finding and engaging the right partners to help fill capability Industrial suppliers typically do not consider or emphasize user gaps and add value to smart solutions, while not creating experience in the development of smart systems and services, tension with current partners, channels or customers resulting in diminished value and use of these systems Fragmented Customer Requirements While equipment may be easy to customize or configure to specific customer scenarios, doing the same for software and services is difficult
smart systems 35 design smart Smart systems Systems and services Growth Models innovation and Opportunities
OEMs will need to design and develop new business and operating models
Solo Driven Partner Driven Open Collaboration Driven
Embedded System Value Chain Solutionist Collaborator Community Innovator Professional Aggregator
Largely focused on Leverages services Builds broad support Collects, organizes data Builds and extends value via Drives value via extensive remote support automation to feed capabilities across the entire with aim to optimize collaboration with customers, multi-party systems and automation & data value diverse needs across life cycle of target equipment interactions across single channels and providers collaboration and by for speci c product product provider or delivery chain provider dominant delivery across collective delivery leveraging private, public, and delivery chain chain chains partnered information sharing
Simple
Compound
Complex
smart systems design 36 Smart smart Systems systems Growth Models and services and Strategies innovation
new business models are progressive; open collaboration drives innovation
Foster Multi- Vendor, Multi-User Open Interactions & Collaboration Cooperative Mgmt
Adoption Driven Manage System/User by Mix of End Experience & Delivery Chain Customers, OEMs Relationships, Intelligence
n and Services and Interactions o Providers ss i e r
g Adoption Driven Builds broad support o r
P Mainly by capabilities across the l
Partner e Machine and d entire life cycle of Driven o Device OEMs
M equipment or service ss
e delivery chain n i s u B Leverages services automation to feed diverse needs across product provider delivery chain Largely focused on remote Solo support automation & data value Driven for speci c product
Application Complexity Simple Compound Complex
smart systems 37 design smart Smart systems Systems and services Growth Models innovation and Opportunities
new business models require new selling skills and channel partners and new go-to-market designs ....
Key Sales, Marketing, & Distribution Challenges
Specification Value-Added Marketing Key Channel Skills Salesforce Skills Omni/Channel Influence and Go-To-Market Resources Issue and Scale and Capabilities Support Business Structure and Support Development
• End customer • Quality of sales • Technical depth • Channel skills for • Focus on design, • Marketing focus force, value and vertical new digital engineering and communications market and solutions • Influencing adders and construction and awareness distributors application firms specifications knowledge • Developing • Industry trade • Number of explicit channel • Vertical Industry/ shows and • Driving market direct/reps and • Managing support coverage application marketing Levers awareness effective indirect resources expertise communications • Augmenting • Demand creation coverage vs. end customer selling and channel technical • Targeting and • Sales force and • Channel • Leveraging account support developing channel partner structure and distribution development resources strategic partners tools and support partners partners and OEMs (demo kits, • Enterprise selling • Decoupling diret collateral, cases) focus and skills sales resources from channel
smart systems design 38 Smart smart Systems systems Growth Models and services and Strategies innovation
new business models also require new monetization and new revenue models
Pricing Models
Hardware-Centric Cost-Plus Pricing Market-Based Pricing Product-Based w/ Subscription Only Cost-Plus pricing is Disruptive Services Without adding significant exactly what you think it is: Often the easiest transition In this model, customers still Figure out the cost to value that differentiates Collaborative to a connected product, incur a substantial your offering from the deliver your offering, customer pays a one- percentage of the cost of competition, prevailing multiply by an acceptable time/up-front fee and hardware (if not the entire market conditions will margin, and set a price. In receive connectivity at no cost), but also pay an dictate your pricing. a commodity market, this Value-Based incremental costs. ongoing subscription fee. might work.
Bundled Subscription-Centric Model w/ Hardware
Value-Based Pricing Disruptive Pricing Relational This approach attempts to Subscription-based services Market-Based blend the best of both worlds with customers typically Value-based pricing Transformation of this type – some investment up front incurring some modest allows you the flexibility to happens when your with a modest recurring expense up front usually at price your offering offering is so compelling expense. or near cost. dependent on the value and delivers so much
you deliver to your unique value that it literally Customer with Relationship customer- whether it is changes the way Cost-Plus dollars saved, dollars customers experience and Managed Services Collaborative Services earned, any combination purchase for the entire Focused Focused of the two, or any category. intangible savings or Transactional A more common model in Builds and extends value benefit. the age of smartphones, Cost-Plus Value-Based via collaboration with customers receive the customers, channels and product at no cost and providers across collective Digital and IoT Monetization Models vendor provides a delivery chains complete ”managed” experience
smart systems 39 design smart Smart systems Systems and services Growth Models innovation and Opportunities
digital and IoT requires different modes of strategy development
How do we address systemic issues with our organizations ability to fully address the new opportunity? Does our go-to-market system design align well with the opportunity and market? Design & Architect Which trends, forces and disruptions Platform & Services likely will shape the future Develop & Deploy competitive environment? Solution Are our products, systems or Develop Strategy services correctly spec’d and & Business Model configured? Which players, events and technologies Discover Trends, should we care about? Forces & Disruptions
Validated System & Solution Are there new combinations of technologies, Opportunities products, services and partners that can drive Identify Apps, sustained differentiation? Which value elements should we Use Cases & develop, which obtain by partnering Solution Concepts User, Customer, and which by sourcing? Partner Interactions & Learnings Frame New Growth Opportunities What value elements will increase and Research, Analysis extend the value to the customer of our & Investigations core offerings? What formal and informal relationships among allies might exist in the future?
smart systems design 40 Smart smart Systems systems Growth Models and services and Strategies innovation
new growth and corporate venture development has been challenging for OEMs
Corporations have become addicted to acquisitions and consolidation as a growth mechanism ...... companies are willing The “spread bet” mode to overpay for established businesses to of venture capitalists and mitigate risk but need to understand that Early stage nurturing creating sustaining means taking risks of new technology been increasingly trending ventures is really towards more and more a “no-man’s” land conservative investments today
Today opportunities are not well addressed Manufacturers Need To Completely by either corporate Re Think Ho To Create Ne venture programs or Gro th Ventures institutional investors
Venture Development For Smart Systems and the Internet of Things
1 Design and development of 1 all system elements for new customer solution
Coordination 2 Formulate business of common 5 capitalization information requirements sources and partner protocols
Alliance network and/or ecosystem 3 4 Development plan mapping and development
smart systems 41 design smart Smart systems Systems and services Growth Models innovation and Opportunities
OEMs have dominantly relied on acquisitions to drive top line growth
October 2007 March 2009 August 2011 June 2014 March 2000 Nasdaq March 2001 March 2003 All time high for Trough in the S&P downgrades U.S. economy and employment surpasses the number of all time high Stock Market Crash Recovery the S&P 500 S&P 500 US debt jobs lost in the great recession (8.7M) ve years later
Bosch / Johnson Controls / Honeywell / Seeo, Inc. Footfall RAE Systems Emerson/ Honeywell / Emercon / Pentair Valve Chlonde Schneider/ Honeywell/ Datmax-O’Neil Emerson/ Leader Harvest Bosch / Elster Parker Hanni n / Siemens/ Schneider/ IntelliSAW Astrim Energia Clarcor Militronics Schneider/APC Xantrex GE/ Bosch / Caterpiller / Mastercook Wellstream GE/ Itron / ABB / John Wood Johan Walter Berg AB Silver Spring Los Alto Research Panasonic / Group ABB / Net’works Cooper Industries/ Caterpillar/ ITC Global Gomtec Danaher/ ABB/ MTL Instruments Bucyrus Panasonic / Schneider Elec / GE / Laetus Eslag Bailey Schneider/ 3i/ Duez Honeywell/ Sperian ABB/ ABB / Invensys Majikinc Interactive Itron / Power Systems ATI/ WurldTech Johnson Controls / Comverge BEI Technologies Ventyx Ladish GE/ APS Tech Group Commercial Wireless Catepillar/ MWM Converteam ABB/ Baldor Schneider/ Electric Panasonic / Emerson / Robbins & Meyers/ T-3 GE Andover Controls Bouygues/ Terex/ Bosch RFNet Technology Paradigm Alston Danaher/ Demag Re’Flect Johnson Alstom Energy ABB / Keithley Instruments Sulzer/ ABB / Controls/ GE Honeywell/ York Emerson/ 3M/ Winterthur Cardio Solutons Danaher / Industrial Schneider/ Silent Wireless GE/ Artesyn Pall Ind Johnson Controls LBO France/ Pentair/ Emerson / TAC Building Automation Edwards Tech 3M/ Cogent UTX/ Tyco AlliedSignal Converteam Norit Proces APM Automation Johnson Honeywell Goodrich Technolgies Siemens / Controls / UTC/Kidde Honeywell/ Emerson / Air Dist Schneider/ Caterpillar/ Dresser Rand Norcross Adv Protetion Tech Alstom / Tech Legrand Electro Motive Diesel Bosch / Bauer Pansonic / GE/Interlogix Eaton/Powerware GE Signaling Siebe/ GE / Hussmann GE/ Dresser Rand/ Johnson Controls / Eurotherm Honeywell Parker Hannifan/ Schneider/ Lufkin Industries Schneider/ MGE Dresser Grupo Guasco Hitachi Home-Life Pitway SSD Drives Eaton/ Telvant Emerson / UPS Danaher / Phoenixtec UTC/ Alstom / Panasonic / GeoFields IMS Meters/ Navman Signaling Solutions Danaher/ KKR/ Eaton/ Emerson/ GE Tactel AB Invensys Honeywell/ Security ABB / Newron Johnson Controls / UTC / Siebe/ Cooper Industries Legrand Moeller Roxar Emerson / Novar Baldor Electric/ Danaher/ Emerson/ Industrial Safety Tech Rockwell APV UTC/ EGS-Appleton Reliance & Dodge Beckman Enardo Panasonic / Collins Chubb Alstom & Honeywell/ Johnson Electric/ Coulter ABB / Bosch / Creative Systems Schneider/ Measurex Eaton/ SAIA Burgess Dynamotive Hausgerate Chicago Bridge & Iron/ Areva T&D Cooper/ Laird Delta Electronic Doughty Hanson/ Honeywell / GE / Eaton/ Lummus Danaher/ Panasonic / Moeller Intermec Quick Service System Backer GE Power Systems/ MGE Small Teletrac ABB/Entrelec Regal Beloit/ Hughes Jenbacher Werke Systems UPS Bosch / Honeywell / Barclays PE/ Doosan/ A.O Smith EPC Siemens Osgood Industries Aviaso Siebe/ BTR Alstom Power Conversion Skoda Power Invensys Johnson Controls / Deere / Rail Creative Systems ABB / Blue River Tech Bosch / B&R ZF LenkSysteme
1996 1998 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Portfolio Expansion / Extension New and/or Sign cantly Di erent LoB Bubble size = Enterprise Value
smart systems design 42 Smart smart Systems systems Growth Models and services and Strategies innovation
OEMs need to be focused and deliberate in their choice of innovation modes...
Cooperative Distinctive Digital Focused “Builder” Digital ”Enabler” “Accelerator” Skills of Digital Ventures
Leadership enhances value Leadership creates value by Leadership enhances ability of synergy between teams developing a range of to stage and launch new and/or units -- the whole is distinct digital skills, critical digital business ventures, JVs worth more than the some enablers, functions, and collaborative customer Description of its parts programs, and services innovation
Leadership sets vision, Leadership fosters and Leadership provides actively supports and encourages interactions investment and the means directly influences digital through vision development, to drive expertise-based strategies and performance decision-making processes & services and architectural in BUs – could include new structures, policies & enablers for BUs. The best venture development, guidelines, relationships, or companies align unique
LeadershipRole support for JVs and teams/staff skills with BUs and needs investments in infrastructure
Leadership is less familiar Synergistic efforts are often Leadership provides with each business than unit cumbersome, inappropriate, resources but is not leaders and can press for or ineffective (benefits of aggressive enough about wrong targets, misallocate Pitfalls synergistic relationships are setting vision, goals and Common resources, or adopt often overestimated) criticality of initiatives inappropriate strategies
Active Passive
smart systems 43 design smart Smart systems Systems and services Growth Models innovation and Opportunities
we believe OEMs need to broaden their options for new growth and innovation
M&A CORPORATE VENTURES and BUSINESS UNIT VENTURES DEVELOPMENT MERGERS and ACQUISITIONS (M&A) COLLABORATIVE Acquisition of developed companies with VENTURES existing business, innovations or assets
Expansion/New (Joint Ventures, Spin-Offs and COLLBAORATIVE VENTURES Minority Equity Joint ventures, collaborative developments, Investments) spin-offs, etc. that drive incremental revenues BUSINESS UNIT VENTURES Sound business idea that surfaces in core where culture or ops mode limits potential INTERNAL R&D and INNOVATION Internal core innovation and/ or product development
CORPORATE VENTURES & DEVELOPMENTS Support of and cooperation with start-up companies in early stages
Core INTERNAL R&D and INNOVATION
Lead Time To Maturity
smart systems design 44 Smart smart Systems systems Growth Models and services and Strategies innovation
leading OEMs are beginning to shift to multi-modal growth strategies e l a c
S Time Digital “Enabler” Digital Growth “Accelerator” “Builder” of New Ventures Act as an “enabler” of new Take more direct control of projects and Become central coordinator and digital and IoT technologies initiatives in emergent arenas not well vehicle for establishing and growing and tools addressed by operating BUs new Smart Systems growth ventures
Develop new business and Discover and develop new adjacent business Promising spin-o s from BUs revenue models opportunities to existing core businesses De ne reference architecture External partnerships, JVs and and development tools Explore M&A and investment opportunities to ventures accelerate re-positioning and transition Collaborate with BUs to drive to new growth opportunities External investors new initiatives Coordinate and collaborate with diverse Develop and drive new skills external organizations to drive new learning, into BUs JVs and related strategic business development
Strategic Alliance To Drive Industrial Reverse merger and acquisition to create Ethernet (technology from Cisco to Creation of GE Software to converge new software business unit to drive the internal software developments to single Rockwell and market access via Rockwell unique skills required in industrial software channel for Cisco platform – equity investment in Pivotal business software to speed new platform to market
smart systems 45 design smart Smart systems Systems and services Growth Models innovation and Opportunities
OEM growth strategy models and roles We believe there is a new generation of OEM players that are addressing the need to create new growth modes and growth vehicles. The various approaches to creating new customer value can be grouped into a set of growth models and strategies.
“Designer” “Constructor” “Grower” “Planner” “Operator”
Designs unique organizational Acquires to attain new skills Has competence to Charts the company’s future Aggressively and deliberately structures, relationships, and &/or businesses (e.g. software); organically grow; deliberately course, fostering opportunities focus on the management of tools to create extraordinary builds new business nurtures new skills without that mark a big shift from the internal efficiencies and skills; value with digital “platforms” to address growth losing focus or competitive company’s existing businesses digital focus is often on driving opportunities. opportunities. edge; adept at ecosystem (i.e. digital). new efficiencies and services. development.
Digital and Smart Systems Development Mode
A company will typically Many companies acquire firms Some companies have skills Leadership takes an active role Operators aggressively manage adopt this mode when it sees but often these moves are and technology to develop in charting the company’s operational efficiencies such as a growth opportunity where stop-gap measures; in certain new organic growth future course fostering those manufacturing, R&D, sales, existing structures or business cases, a company sees a opportunities and make a opportunities that shift from M&A, or related business models are not well aligned growth opportunity that special competence of the OEM’s existing business processes based on corporate with the new opportunity – cannot be prosecuted by evolving an organization that mix. These often occur in skill sets. Often, corporate examples include clever internal growth in the required can nurture and adjacencies or in unexplored maximizes management structuring of combinations of time frame, or lack the skills. accommodate the creation apps or technologies. Often expertise and impact by acquisitions, creating internal For these, buying becomes a and resulting businesses these players will create intentionally managing similar ventures as separate specialization– typically without loss of focus. Special distinct new organization business models. businesses &/or “spinning- building a new line of business attention focused on structures to grow new out” new companies to create (platform). developing unique organic capability. an innovative culture. growth capabilities.
Illustrative Examples
• GE ** • Acuity • Roper • Rockwell Automation • ABB • Emerson • Xylem • Fortive-Fluke ** • 3M • Fortive ** • Danaher ** • GE ** • Schneider Electric • National Instruments • GE ** • Honeywell ** • Bosch • Danaher ** • Eaton
smart systems design 46 Smart smart Systems systems Growth Models and services and Strategies innovation
several OEMs are attempting to embrace smart systems and IoT platforms
relayr Acquires Proximetry (Device Mgmt. & Connectivity) 12/23/2016 Itron Acquires Silver Spring Xylem Acquires Sensus (Device Mgmt. & Connectivity) (Meter Data Platform) 1/5/2018 8/15/2016 GE Acquires Bit Stew Systems (Data mgmt. & Analytics) 11/15/2016 Sierra Acquires Numerex (Device Mgmt. & Connectivity SAP Acquires Plat.One 12/7/2017 (Device Mgmt. & Connectivity) 9/28/2016 OSRAM acquires Digital Lumens (Lighting & IoT Platform) Cisco Acquires ParStream 8/24/2017 (Automation & Analytics) Autodesk Acquires SeeControl 10/26/2015 (Data Mgmt. & Analytics) 8/27/2015 Sierra Acquires flowthings.io PTC Acquires Coldlight (Automation & Analytics) (Automation & Analytics) 8/3/2017 5/5/2015 Acuity Acquires DG Logik Prodea Acquires Arrayent (Automation & Analytics) (Device Mgmt. & Connectivity) Amazon Acquires 2lemetry 7/7/2017 7/26/2017 (Data Mgmt. & Analytics) 3/12/2015 Microsoft Acquires Solair (Device Mgmt. & Connectivity) Altair Acquires 5/3/2016 PTC Acquires Axeda (Device Mgmt. & Security) (Device Mgmt. & Connectivity) 6/12/2017 7/23/2014 Honeywell Acquires NextNine (Device Mgmt. & Security) 6/12/2017 Google Acquires Xively Cisco Acquires Jasper (Device Mgmt. & Connectivity) (Device Mgmt. & Connectivity) 2/15/2018 2/3/2016 PTC Acquires Kepware (Automation & Analytics) Acuity Acquires Lucid (Automation & Analytics) 1/12/2016 2/12/2018 PTC Acquires ThingWorx SoftwareAG Acquires Cumulocity (Device Mgmt. & Connectivity) (Device Mgmt. & Connectivity) 12/30/2013 4/31/2017 2014 2015 2016 2017 2018
smart systems 47 design smart Smart systems Systems and services Growth Models innovation and Opportunities
understanding new business and operating models as well as organizational development levers will be critical to driving new digital growth
Business Design and Model Skills Organizational Planning Development Innovation Structure, Culture & and Control and Human Modes and Core Relationships, Leadership Systems Resources Revenue Capabilities Interactions Types Model Management
How Money System and Critical Solution Is Made Enabling Skills Delivery Structure Core Skills & Customer Business Mix and Knowledge Corporate People, Evolving Functions Leadership Function & Engagement Organization Business Planning Capabilities and Roles To Modes, Roles Structure To Processes & Content Structure and Skills Foster Innovation and Style Innovate and Systems Features & Deliver Value Target Capabilities Unique Customers Developing and Ecosystem Proprietary Rewards and Research, Corporate Investments Fostering Capabilities & Platform Customer Incentives Development Functions and Planning Clear Growth Processes Capabilities Segmentation Schemes And Engineering Network of Vision and Targeting Value Technology Adders and Enable Partners & IP Marketing Contributors to Extend Value & Brand Information Flexible Integration Technology Systems and Performance Services Cross-Unit Teams Platforms and Corporate Development Value and Collaboration Measurement Support and Interactions Information Culture & Intellectual Benefits Tools Systems Property Perceived By Services to Customers Support Offerings Digital Smart Leadership User Management Resource Critical Enabling Systems Involvement in Experience Forums Allocation Roles and IoT Innovation & Councils User, Participant Innovation Programs and Customer Experience Explicit Growth Sales & Processes Significant Growth Lever Mechanisms & Channel and Systems New Growth Catalyst Vehicles How Offerings Are Delivered To Customers
smart systems design 48 Smart smart Systems systems Growth Models and services and Strategies innovation
OEMs need new ways to interact to create new growth strategies
Most knowledge comes from human experience and expertise. Today, however, knowledge and expertise largely resides in functional silos and systems dispersed across organizations. Acting singularly, functional organizations are constrained by the resources under their control. Legacy processes and habits inhibit any natural ability to communicate and work together to solve big problems or create new solutions.
Transformative IoT and Digital Vision
Strategic Assets Sales force Products & content Partnership network Customer knowledge Sales & channels Product innovation Brand Culture • Defining a digital and IoT vision and strategy based on understanding new and IoT and Digital Building Blocks IoT and Digital Governance novel requirements for manufacturing
Customer Operational Business and customers Experience Process Model • Development and acceleration for new Process & Manufacturing Customer Understanding Digitally-Modif ied Business smart systems, services and solutions Digitization
Customer Touch Points Worker & Process New Digital Partnered • Supported by new internal processes, & Experiences Enablement Models skills and roles required to adopt new tech IoT and Digital Engagement Digital and IoT
New Revenue and Value and capabilities New Top Line Growth Performance Management Realization • Supported by building and sustaining partner and ecosystem values Skills Infrastructure Investment Initiatives
Iterative Transformation Roadmap
smart systems 49 design 04 smart systems design and development process
Smart Systems smart Design and systems Development and services Process innovation
recognizing the need for new methods and processes is a minimum requirement...
Smart systems design is a new discipline that lies Convergence of design, strategy and innovation processes is smart systems design between the fault lines of existing disciplines creating a new smart systems design process
Business Strategy
Line of Product & Innovation Graphic Industrial Services Interaction Complex Innovation Corporate Design Strategy & Business Service Design Design Design Design Systems Processes Processes Design Thinking Portfolio Strategy Strategy and development & Mgmt Mgmt
Product Related & Service Disciplines Design & Fields process Smart Systems Design
Today, with the emergence of connected products and information- Design, as well as strategy, is concerned with creating values and making them based services, even more complexity has arisen in the design of visible, not to mention profitable. Business strategy and design today need to systems and services as well as in the core of the product. extend to the experience that customers will have with connected products, services, spaces or a mix of these and, therefore must integrate the processes Because networks add yet more complexity to the process and and systems that are behind these experiences with decisions related to both because just about everything will get connected, we strongly design and strategy. believe this environment requires combinations of several disciplines and methods in order to fully address the nature of smart The convergence of design with strategy and related innovation processes will connected business opportunities. inevitably lead to a new integrated set of processes, methods and disciplines -- the advent of what we are calling Smart Systems Design.
smart systems 51 design smart Smart Systems systems Design and and services Development innovation Process
we need a radically new frame of reference...that leverages the convergence of design, strategy and innovation processes
How can we better understand How can we drive empathy, customer experience through the participation and motivation? How user’s eyes and through the creativity can we put human sensibilities and of multiple parallel participants? behaviors at the center of the solution?
Experience Behaviors
How can we bettter How can an organization turns understand the value its workers, partners, and of data and information customers into believers and coming from products, Data & Content Relationships contributors? How can we solve systems and people? really big problems or create unique new offerings?
Skills Technology
Skills echnology
T How can we move beyond a conventional view of How can we deliberately organize to technology where all tangible and intangible skills anticipate technologies that are disruptive or and assets including people, brands, technologies, sustaining in nature.....innovation that creates relationships, and processes are fully leveraged? new (and unexpected) opportunities?
smart systems design 52 Smart Systems smart Design and systems Development and services Process innovation
to conceive and design smart systems, organizations need an integrated approach...
SYSTEMS DESIGN We believe design needs to transcend discrete product or service innovation. Assuming that the role of design is only about making existing products DISCOVER or services more attractive no longer works. Business designers need to creatively imagine fully developed systems and whole marketplaces. How to use customer experience and technology Companies need to envision the design role as one that can address product, uncertainty to reveal new User experience service and business systems. opportunities and understanding
RELATIONSHIPS DEFINE Problem solving for new Smart Systems opportunities must address DEPLOY Specific development opportunities including tough questions: how can an organization turns its workers, partners, and Align investments formal and informal Understand with strategy and customers into believers and contributors? How can we make changes that likely evolution relationships model can impact multiple functions and organizations and ultimately solve really of competitive environment big problems or create unique new offerings? We are firm believers in the human element - the community as a manifestation of the system and visa Business model design and vali- versa. Behaviors of users, customers, teams, functions, leadership, all need dation to considered. Understanding empathy, participation, motivations - putting human sensibilities and behaviors at the center of the solution is key. DEVELOP System and services SKILLS delivery modes including Companies need to move beyond a conventional orientation to technology go-to-market design skills and knowledge. Organizations need a disciplined process focused on optimizing all tangible and intangible skills and assets including people and competencies, brands and positioning, technologies and intellectual property, alliances, relationships and business and operational processes.
smart systems 53 design smart Smart Systems systems Design and and services Development innovation Process
business model design and development needs to be truly creative ......
Business Design and Core Capabilities Systems and Solutions Customer Engagement
Revenue Enabling Processes Technology Function & Platform Delivery Target Customer Sales & User Structure Ecosystem Model Skills & Systems & IP Content Capabilities Services Engagement & Brand Channel Experience
BUSINESS ORGANIZATION and DESIGN SMART SYSTEMS and SERVICES OFFERINGS USER and CUSTOMER EXPERIENCE Configuring core skills and relationships within an OEM are the basis for new innovation models Organizing customer and user innovations Structuring the elements to enable unique user and customer interactions
Monetization and Value Creating Networks Alignment, Leverage and Unique / Distinct Features, Augmenting Capabilities Positioning, How Offerings Are Uniquely Enabled Ways To Make Money and Relationships Development of Resources Functions and Capabilities and Services/Support Empathy and Affinity Delivered Users Interactions
Subscriptions Micros Services Technology Sourcing Intellectual Property Leadership Style Customization Integrated Offerings Behavioral Segmentation Context Specific UX/UI Effectiveness Flexible Pricing Premium Commercial Alliances Knowledge Mgmt Company Culture Modularity Direct Add-ons Industry Segmentation Cross-Selling Ease of Use Freemium Risk-Sharing Customer Collaboration Organizational Design Decentralized Manageability Third Party Extensions User Segmentation Diversification Functionality Installed Base Scaled Transactions Partner Collaboration IT Sys and Integration Incentive Systems Best-in-Class Performance Bundled Functions Affinity Experience Center Look, feel & Style Licensing Switchboard Franchising Lean/Flex Production Team Structures Environment/Sustainability Guarantee Empathy Flagship Store Configurability Membership Ad-Supported Open Innovation Logistics Systems Staff Development Productivity and Efficiencies Financial Incentives (e.g. lease) Community Go Direct Personalization Metered Auction Crowdsourcing Process Automation Staff Education Resource Utilization Loyalty Programs Values Alignment Indirect Distribution Curation Transactions Bundled pricing Merger/Acquisitions Process Efficiency Planning Systems Content Elements Personalization Status and Recognition Multi-Level Marketing Automation Financing Cost Leadership Minority Investments Standardization Corp Venture Dev Safety Self-Service Brand Leverage/Extension Non-Traditional Channels Enabling Disaggregated Pricing Analytics Development Service Supplements/Range Co-Branding On Demand Simplification Strategic Design Incubators User Communities Modular Branding Pop-Up Presence Curation Innovation Modes Competency Centers Support Systems Private Labeling
What Business Design and What Business Design Should What Management What Unrealized Technology What Unrealized Market Which value elements in How Can We Best Use Architecture Will Build We Pursue; Which Combination Priorities Will Allow and Innovation Opportunities Leadership Opportunities which segments will give Technological & Market Long-Term Success For Of Value Elements Will Give Us Us To Realize Our Are Available To Our Are Available To Our us a sustainable Uncertainty To Our Our Company? An Advantage? Strategy? Company? Company? advantage? Advantage? What configuration of How can we best make, partner What organizational Which trends, forces and What creative and disruptive What characteristics should we use Do our systems and solutions business skills, partners, or acquire those value levers will best disruptions likely will shape players are present in the arena; to describe our user’s and possess unique features and business model and elements; who are the allies we operationalize these the future competitive what new competitive structure customer’s needs; how should we functionality that captivate systems drives uniqueness? should cultivate? priorities? How should environment? might these trends forge? segment our world? customers? they be configured? Can we monetize our Are there new combinations of What value elements (e.g. What is the evolving competitive Which actual or potential segments Does the company deliver its offerings in ways that are technologies, products, What are our most embedded logic, networked and value structure and how can are most attractive; which offerings to customers and users different from competitors services and partners that can important capability gaps devices, software, analytics, we align but distinctly? opportunities should we focus on? in ways that challenge industry or industry norms; can we drive sustained differentiation? to fill? wireless, etc.) will increase norms? make money and better and extend the value to the How open and interoperable are Are customers measurably pleased margins via multiple Which value elements should How can we align customer of our core our solutions; can we integrate with our offerings; do customers Do diverse partners help sell or revenue streams from we develop, which obtain by investment resources offerings? and connect with peers in unique speak directly about their deliver the company’s offerings? different constituencies? partnering and which by with our chosen strategy? ways? interactions with our company; does sourcing? Can we design a superior our brand reflect unique attributes? What top management solution offering that Does the company offer modular What formal and informal priorities will lead to the dominates market share or products and services that can Are there robust partners and relationships among allies most effective fulfillment earns a substantial also be integrated or purchased as communities that enhance users’ might exist in the future? of our market role? premium? packages? experience?
smart systems design 54 Smart Systems smart Design and systems Development and services Process innovation
our approach is simple: help clients create and capture value by combining accurate data discovery and analysis with strategy development and creative systems-thinking We plan and build new businesses and growth opportunities by leveraging deep analysis, thoughtful interactions and unique systems and business model design and development tools
Harbor Research Inc. has nearly 30 years of experience supporting new business creation and development. We continually strive to Revenue & Growth generate deep insight into what drives value Business Opportunity Assessments DESIGN creation and competitive advantage in our STRATEGY Models clients’ businesses and the economy as a whole. Harbor helps companies outperform their peers Domain Adoption Forums Player & Event Tracking Platform otype Mo and rivals by instilling innovation into the core of Prot del te In pa no ici va their business development processes. We help rt te Tech Discovery Forums Pa V Smart Systems Framework e al client’s foster creative thinking, facilitate diverse iv D id e E E a c N V t n FI E e Innovation Workshops o E LO perspectives and unconventional insight and, C D P A r most importantly, we directly participate. The Research, Analysis, Forecasts, p c a h Smart Systems Lab i M t Content & Reports e c result is increased certainty around vital new t
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building their capabilities for the future - we are passionate about creating lasting impact. We believe that innovation can be driven from systematic methods and that enduring capabilities and processes can be built to reduce the risks associated with new growth To discover, design and develop innovative smart systems, organizations must ventures. Every solution we propose is informed consider all the elements involved and the context they fit into. The benefits that by a combination of real world experience and will flow from the recognition that traditional strategy and product development unique processes and methods that are tailored protocols will not meet the needs of a connected business are nearly infinite. to the dynamics of your organization.
smart systems 55 design