Smart, Connected Products: Manufacturing s next transformation. Key research findings
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1 Smart, Connected Products: Manufacturing s next transformation Key research findings
2 About Oxford Economics PTC partnered with Oxford Economics to conduct a study on the impact of smart, connected products the things in the Internet of Things in the manufacturing industry. An overview of the top-level findings from our study is summarized in this slideshow. Download the full report, Smart, Connected Products: Manufacturing s Next Transformation, for the complete findings and analysis, including case studies of leading firms. Oxford Economics was founded in 1981 as a joint venture with Oxford University. Since then, the company has become one of the world s foremost independent global research firms. Headquartered in Oxford, England, with offices throughout the world, Oxford Economics employs more than 80 professional macroeconomic and industry economists one of the largest teams of economists in the private sector. Get more information at oxfordeconomics.com PTC s technology solutions help customers transform the way they create and service products across the entire product lifecycle from conception and design to sourcing and service to create sustained competitive advantage. Founded in 1985, PTC employs approximately 6,000 professionals, including 1,300 dedicated service professionals, serving more than 27,000 businesses in rapidly evolving, globally distributed manufacturing industries worldwide. Get more information at PTC.com
3 About the research We conducted an online survey of 300 executives across the manufacturing industry and key world markets in the first quarter of Survey respondents come from 13 countries in North America, Europe, and Asia and are from sectors ranging from aerospace and defense to medical devices, automotive, and consumer products. Only firms with strategies to develop smart, connected products were considered. We also conducted interviews with senior executives at leading companies in Europe and North America. Respondents by business function Respondents by annual revenue
4 Key findings Smart, connected products the things in the Internet of Things are expected to power the next wave of manufacturing. However, smart, connected products are at a roughly similar state of development as the Internet in the late 1990s. Their enormous potential is widely recognized, but the road map to a mature market is only now starting to take shape. The SCP revolution is well under way, but it is going to take time, effort, and investment on multiple fronts to get there. As strategies mature, the challenges, opportunities, and value of an SCP strategy shift from being product specific to the SCP ecosystem as a whole. Businesses must accelerate the changes they are making around SCPs across three key themes or risk being left behind.
5 Not an overnight sensation
6 The slow fuse SCP strategies are still developing. Manufacturers that start sooner will gain valuable clarity into how long the maturation process will take. How long ago did your firm begin developing a strategy for smart, connected products and the Internet of Things? Nearly half of survey respondents say they started more than two years ago, and another third say they started more than three years ago. Key insights: Only 54% of survey respondents say their customers understand the benefit and values of SCPs. On average, businesses only have one to nine employees solely dedicated to SCPs. More resources will be required.
7 Putting the things in the Internet of Things The focus of early adopters involves capturing and managing product usage data and shifting more product features and functionality to the cloud, where real-time analytics can be applied. This has enabled new services like remote monitoring or optimizing of existing services. Internally, the pioneering manufacturers have integrated new applications with other enterprise systems. Key insights: Nearly half of executives surveyed believe SCPs offer substantial transformative value. Growth remains in the early stages, with substantial progress expected. What steps have you taken to transform your products and services around the Internet of Things? 34% 31% 34% Captured and managed usage data Shifted product features and functionality to the cloud Enabled new services
8 Climbing the maturity curve
9 Defining maturity Over one-quarter of respondents firms with strategies to develop smart, connected products are in early stages of SCP maturity. Three initial stages for maturing an SCP business are: Developing an SCP strategy Piloting SCP capabilities in a product, service, or line of business Deploying SCP capabilities and hard assets at scale across business functions Key insights: More-mature firms are much more likely to cite accelerating product and service innovation as a measure of SCP success than those just developing a strategy, as the explosion of opportunities driven by enhanced capabilities and data-driven innovation becomes clear to them. Companies with more advanced programs are far less likely to cite increased product revenue and improved customer satisfaction as measures of SCP success.
10 Product capabilities reveal three tiers of adoption Products that talk to their makers are common; products receiving actionable information, less so. Products talking to each other is the next frontier. Key insights: 70% now make products that can monitor their current status. 46% of surveyed firms can deliver alerts and notifications to their connected products, and only 40% say they enable remote control of a product. 29% of firms say their SCPs act in coordination with other product systems.
11 The transformation imperative
12 What holds transformation back As strategies mature, the challenges shift from being product-specific to the SCP ecosystem as a whole. Key insight: One of our core value points of the Volvo brand is safety. But now it s not just the safety of the physical vehicle but also the security and privacy of the customer s information. Klas Bendrik,Group CIO, Volvo Cars To what extent do the following issues present challenges to your firm s success with smart, connected products?
13 Rethinking strategy: Commit or fall behind A solid majority of executives says the shift to SCPs requires significant business transformation, and this number increases in three years. Their road map for product and organizational innovation addresses three broad shifts: Key insight: It was not just a technology change. It was a change that rippled through the organization from sales to accounting to engineering, because we re managing software performance on behalf of the client. Ted Graef, CEO, All Traffic Solutions
14 Download the report To see the full results of our survey along with case studies of leading firms, download the report.
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