Connected Devices – Driving Customer Adoption

We have seen a surge in IIoT applications and solutions, but unfortunately, we are going through a period of asynchronous adoption – there is a significant lag between the innovations that are being created and adoption by end users:

1.??????In first place on the adoption curve are the hyperscalers (Microsoft, AWS, Google) that want to shape the world to do everything in the Cloud.?A big part of their strategy is to create new software companies with born-in-the-Cloud solutions.?This includes start-ups and non-traditional prospects, e.g., manufacturers that are building IIoT solutions;

2.??????This is creating a large number of new solutions that are developed and delivered through the Cloud;

3.??????In third place we have the end user customers – there are more Cloud-based solutions than there are customers that want to buy them.

The challenge for manufacturers is to find ways to convince their customers to adopt these wonderful new solutions and shorten the lag in this asynchronous adoption.?The longer you have to absorb the investment in connected devices and related software without a return, the more difficult it becomes for management and the board to maintain their commitment to going digital.?

We went through this cycle 5-7 years ago, when a lot of companies developed connected products and remote monitoring/preventive maintenance applications, and they hit the wall in terms of customer adoption.?Now many of them are back, and they are still experiencing some of the same objections and concerns:

• The cost of buying and installing connected devices;
• Impact on the organization – how much do they need to transform?
• Hybrid, multi-vendor production environments?;
• Showing a clear ROI;
• Getting access to the data.

Every manufacturer will have small number of customers that are ready to pull the trigger on a comprehensive transformation project, but they are the outliers.?For the more reluctant customers, there are a number of strategies to maximize the rate of adoption.

Start with existing historical machine data

Most of your customers have generated enormous amounts of data from SCADA, PLCs and historians.?Significant value can be extracted by analyzing the machine-specific data to forecast servicing requirements and the remaining life.?This approach overcomes one of the most common objections – “We don’t want to send our data to the Cloud.”?Once customers see the value of applying analytics to their historical data, they are more likely to accept that even greater benefits can be provided by connecting their devices and getting recommendations in real-time.

Include connectivity in all devices shipped

It is essential to create a user base – the more connected devices you have installed with your customers, the more data you can ultimately generate and analyze.

The big question for many of our customers has been whether they should simply include the connectivity and absorb the cost, or offer it is an option at a higher price to cover the cost of building in the connectivity.?I think this comes down to some key questions:

• Are you committed to connected devices as a long-term strategy??The more strategic it is, the more you should be willing to invest in creating a user base;
• What is the cost of the connectivity relative to the value of the asset being monitored??
• What is the cost of building in the connectivity versus having to retrofit it later?
• Is the asset, regardless of cost, critical to a larger process?

For many manufacturers our recommendation is to bite the bullet, build connectivity into the devices and ship them at no cost to your customers.?At some point adoption will hit an inflection point,?and you will be much better positioned if you can simply connect and activate the devices when the time comes.

Have a strategy for retrofitting older devices

Many physical assets have a useful life of 20-30 years, which means that any connected devices that your customer installs will only be a small percentage of the total, unless they are going through an end-to-end transformation that involves ripping and replacing everything. ?How often is that going to happen?

This can result in the following objections:

• What is the value of only monitoring a small number of devices?
• We don’t want to change our standard operating processes in order to monitor a few devices.

You should be prepared to have a strategy for retrofitting and connecting your older devices.?Position the first phase of pre-connected devices as a pilot to show the ROI they can get, and then roll out a program to extend connectivity to the older devices.?

Strategy for connecting competitors’ devices

As customers start to see the benefits generated by connected devices, they will want all similar devices connected and monitored.?And it doesn’t really make sense to have different dashboards from three competing vendors – it is already hard enough to train their people to use one system, let alone three.?Eventually, many companies will want to consolidate the monitoring so that they have a single dashboard.

The question you have to ask yourself is, “What happens if they consolidate the monitoring with one of your competitors?” ?Among other things:

• Your competitors will generate a revenue stream from monitoring your equipment;
• They will be perceived to be the “smart device vendor”, making it more likely that customers will purchase their equipment in the next replacement cycle;
• They will have access to performance data from your equipment, giving them insights they can use to improve their own devices.

This is the epitome of “eat or be eaten”.?Once you have been locked out of gaining access to data from your devices, you risk being locked out forever, and you will become marginalized as a vendor of commodity hardware at the lowest possible price.

Have clearly defined terms for data ownership

Customers are starting to become more sophisticated about the value of data, and you will need to have agreements to cover the four main categories of customers:

1.??????Do not understand the value of data, and sign your license agreement without question, in the same way that I sign user agreements with Apple and Google.?Your license agreement would give you the right to use their data on an anonymized basis;

2.??????Will never allow their data to leave their premises;

3.??????Will allow you to use their data, but only for their direct benefit, e.g., improving the software for them, using the data to make recommendations, etc.;

4.??????Understand the value of data, and will allow you to monetize their anonymized data in return for some form of monetization, e.g., sharing in royalties generated from the use of their data.

You will need different provisions for each category of customer, but being able to present your customer with well-explained options increases the likelihood of adoption.

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