In our Product and Service Innovation FutureScape, December 2014, our top prediction was as follows: By 2017, 70% of global manufacturers will offer connected products, driving the need for systems engineering and a cross-enterprise product innovation platform. Indeed, there will be enormous growth of connected products in the next 5-10 years, whether that is a car, refrigerator, or industrial machine: IDC projects there will be 30 Billion connected products by 2020, a CAGR of 12.5%. At the Consumer Electronics Show (CES) earlier this year, Samsung stated that they think by 2020 100% of their products will contain software enabling them to be connected.
Software has been embedded in discrete products for years, but the number of lines of code has increased exponentially over the past decade. Why? This is due of course to an increase in the functionality of products; or said another way, products are smarter today and do more. But they also produce a lot of rich information about product performance and usage that manufacturers can benefit from.
Never before has there been an opportunity to launch a product to a target customer, and stay connected with that customer through the actual product, across the product lifecycle. This is mostly a passive connection in that manufacturers can track the performance and quality of a product, as well as customer usage, but in some cases there is an active interface that enables interaction and dialog with the user, such as OnStar in vehicles. One of the biggest opportunities connected products present is around service – scheduling, condition monitoring, and execution - but what about innovation? We think that the large amount of data produced by connected products on performance, usage, and preferences can be mined to accelerate the creation, design, and enhancement of products, as well as enable service planning, scheduling, and execution.
How are organizations currently leveraging, or planning to leverage, the data in connected products? Our research shows a focus on security, payment systems, and supply chain, but also monitoring of performance, processes, quality issues, and energy efficiency – all data points that can help accelerate innovation.
One challenge with connected products is that customer's expectations have increased. With smarter cars, for example, drivers expect the latest diagnostic capabilities, applications, and content will be updated and/or offered constantly. They will expect that passengers in the vehicle will have entertainment options – complex video games, visually stunning movies, long podcasts, books of every genre, etc. - akin to what you experience on your couch at home watching TV, or looking at your tablet. This latter point becomes an even more interesting discussion with autonomous cars, where the “vehicle” will no longer be just a (per the Merriam Webster dictionary) “machine used to carry people or goods from one point on another”, it will be more like a living room with entertainment and consumer electronics on wheels; or a “Cocoon” from everyday life as Chairman of Daimler and Head of Mercedes Benz cars Dieter Zetsche stated at CES this year upon announcing the F 015 autonomous concept car. These expectations mean that innovation needs to happen very quickly with connected products – not necessarily wholesale redesign, but incremental innovation that leads to a continually optimal customer experience.
Capitalizing on innovation through connected products presents opportunity and challenge to manufacturers. By staying connected to a product after it is launched to market, manufacturers naturally are brought closer to the customer, and can capture information on product performance, usage, and quality, enabling better service, dialog with customers, loyalty, better products, and future sales. This paradigm also drives a broader approach to PLM, beyond the engineering workgroup. As such, we expect end users to ask their PLM vendors to work within a Product Innovation Platform that not only enables systems engineering, but also the capture and analysis of product usage, performance, and quality information back to the front end of innovation, so manufacturers can apply this for product improvement and innovation.
In our next report on the Product Innovation Platform, we will revisit the benefits and discuss why realities like connected products are leading companies to consider this approach to PLM. Until then, I welcome your thoughts and comments: firstname.lastname@example.org.