From product to connected product-as-a-service

A guide to transforming the business model through IoT

IoT is high on the agenda for many enterprises. The initial business case for connecting products is usually focused on realizing cost savings and most companies that have deployed IoT are still at this initial stage. However, there is a large opportunity that lies in redefining the business model – from a traditional product to a connected product-as-a-service. This can enable enterprises to build deeper customer relationships, improve the value proposition and increase revenues.

Servitization brings many benefits but from an organizational perspective it may be challenging. It requires a shift in mindset and impacts strategy, processes, people and technology. Companies would face a series of strategic questions and considerations on such a transformation journey:

  • Customers:  Who are the new customer segments? How to transition existing customers?
  • Value proposition:  How to redefine the value proposition from selling an asset to delivering a service for a fee?
  • Business case:  What is the impact on TCO and ROI? What pricing model to use and how to manage cash flow impact?
  • Product development:  What product redesign is needed? Do product development processes support after-sales updates?
  • Sales and distribution:  What is the impact on sales people and incentives? Are new distributors needed?
  • IT systems:  What new systems and capabilities are needed? How to manage data ownership, privacy and security?
  • Partners:  What should be done in-house or provided by partners? How to form the ecosystem and what role to play?

Download the report and read more about these considerations as well as best practices that can help your company succeed on this journey.

 

Northstream White Paper - From product to connected product-as-a-service (pdf)
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