Transforming business with smart connected products: PwC

Connected physical products (CPPs) that harness the power of the Internet of Things (IoT) present a remarkable opportunity for organizations. These innovations are transforming industries by enabling unprecedented data sharing and connectivity. Businesses that embrace these products stand to gain significantly.
Creating new revenue streams with connected physical products
Connected physical products are equipped with sensors that exchange data with other smart products or platforms. These products can unlock new revenue streams, including subscription-based services, data monetization and value-added offerings. Consider the influence connectivity has had on cars. Once limited in communication capabilities, modern vehicles now provide drivers with real-time traffic updates, performance analytics and tire pressure monitoring thanks to IoT-connected services. Consider also continuous glucose monitors that track blood sugar levels for diabetes patients, or a smart pet bowl that makes personalized food recommendations.
With the right strategy, a business that struggles with barriers to entry can shift from selling a piece of equipment or product to a service-based model that provides even greater benefits to customers. Despite this potential, many businesses have yet to embrace the transition. A vast majority — 88% — of business executives struggle to capture value from their technology investments and 85% acknowledge that updating their operating models to support new visions poses a significant challenge to ROI.
Simply deciding to add a sensor to a product or create an app isn’t likely to be sufficient. Embracing IoT-enabled solutions demands a holistic strategy encompassing new business relationships, ecosystems and operational processes. This is the crux of business model reinvention — reimagining and transforming how your company creates, delivers and captures value.
Product connectivity puts new stakes on tech stacks
While nearly 60% of executives report strong consensus on their company’s future vision, only 41% say the same about the execution path. This may be because developing smart, value-driven connected products demands a complex interplay of sensors, software, physical components, connected platforms and IoT ecosystems. All of which can be distinct from traditional analog or digital product development — and not easily found in manufacturing providers.
Each capability builds on the previous one, creating a layered approach to development from monitoring to control to optimization to autonomy. Technologies like artificial intelligence (AI) and machine learning (ML) also play pivotal roles in a connected physical product strategy, presenting critical questions for leaders. What technology are we going to use to connect the device? How is that data going to be sent to the cloud? How do we leverage ML and AI to realize the true value of that data and deliver it to our customers?
Consider a voice-enabled device. It requires more than just a microphone and speaker. These components should interface seamlessly, with output performance enhanced through acoustic tuning and noise suppression. As these capabilities become standard, the complexity and expectations grow. There’s also the cyber security concern. Business transformation and cyber transformation should be one in the same as organizations deploy connected solutions.
To compete in the world of connected physical products, organizations may need to consider how these technologies and components necessitate new capabilities, skills and operating models.
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