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The Pursuit of Manufacturing IoT Commercialization
February 15, 2018
Steve Pillsbury, PwC Strategy & Operations Consulting Partner
Monetizing the Industrial IoT
02.15.18
www.pwc.com
PwC Advisory
• Has the Industrial IoT become
mainstream for businesses?
• Is anyone making money
with IIoT?
• How does the journey start
(and accelerate)?
Our discussion today
“Has the Industrial IoTbecome Mainstream for
Businesses?”
A: Yes.
• Growth
• Adoption
• Connect & Optimize
PwC Advisory
38% of manufacturers now offer
IIoT-driven products and services
48% are currently in the process
of developing them
Meanwhile… nearly 90% are using or
exploring the use of IIoT tech to
enhance operations
5
For US manufacturers, IIoT adoption has already mainstreamed
PwC Advisory
PwC Advisory
6
8.4 billion connected things in 2017
(about one-third for business or
industrial application; two-thirds for
consumer products)
20 billion by 2020(Source: Gartner estimates)
Venture capital investment hit $2.5 billion
in US companies developing IoT products
and services, double from 2012
(Source: PwC/CBI Insight MoneyTree report data)
The Industrial IoT ecosystem is growing swiftly and widely
7%
32%
42%
42%
49%
61%
61%
Add’l Revenue /
attractive ROI
Competitive
Pressures
Commoditization
Pressures
Customer
Demand
Other
Disruptive
Competition
Market
Expansion
IIoT is not simply just another technology; it’s perceived as a driver of new sources (revenue, cost-savings) of profitability
Competitiveness and ROI are top
motivators for IIoT adoptionBased on PwC / MAPI Survey Results
7PwC Advisory
PwC Advisory
The buzzwords have actual meaning – “Big Data” and “Internet of Things” represent truly transformational possibilities for businesses
Data Available
From Everywhere
Data Captured / Analyzed
in Powerful Ways
Innovations and Solutions
Built from The Data Insights
Easy, Affordable Access to
Data, Solutions, Platforms
Solutions
Platform
External Company Solutions
Solution Solution Solution
Internal Company Solutions
Solution Solution Solution
Interfaces
and Apps
Communications Infrastructure
PwC Advisory
Connect Optimize
Key Concept behind IIoT
To the products you
make, sell, or lease
To your customers
To your partners in
the value-chain
To your operations
The generation of insight
The performance of your assets
Your ability to serve customers
Your ability to capture economic rent
Workflows
To create outcomes not previously possible
&
PwC Digital ServicesPwC Advisory
Connect & Optimize:The Connected Farm
OUTCOMES FOCUS: FARM PRODUCTIVITY & YIELD
• Increased investment
• Monetization models
• Product/service bundling
“Is anyone making money with IIoT?”
A: Yes.
PwC Advisory
PwC Advisory
GROWTH
1o - 20%% of Total Revenue of the next 5 years
Over the next five years, 42% expect between
10-20% of total revenue from IIoT products
and services
If companies can’t get
this right, they will be
at a competitive
disadvantage
ED ABBO
PRESIDENT & CTO, C3 IoT
INVESTING
4 of 5Investing in product development
Four in five manufacturers are investing in
IIoT product and services development
R&D
Up to 20%Of R&D budget being allocated
40% earmarking up to 20% of their total research
and development budgets to IIoT development
REVENUE
41%Generated IIoT Revenue last year
Among those offering IIoT products and
services, 41% of respondents indicated that
those generated up to 5% of total revenue
last year.
“
About half of manufacturers
currently offering IoT products and services are selling customer-managed IoT platforms
Also, nearly one in three manufacturers is deploying products-as-a-service as their IoT business model
4%
19%
30%
47%
Other
Fully-integrated
Service
Products-as-
a-service
Bundled Products &
IoT Services
Bundling products and services is the most common business model
Which IoT-driven business model is
your company currently deploying?
PwC Advisory
PwC Advisory
There are a number of IIoT business models; each monetizing their offerings using a combination of products and services
Remotely managed data with alerts & insights
Subscription basis for IIoTproducts and services, or on
contingency based on performance outcomes
Remotely managed enterprise-wide solutions
Subscription basis, complete suite of IoT products and
services, or on contingency based on performance
outcomes
Customer pays per: -hour, -unit, -alert, etc.
Based on customer usage, or when customer receives alerts
on performance, or insights on gaining efficiencies
Data analysis from
Manufacturer
IoT-driven field
services
The “Pay-Per”
Model
Optimizing Costs and Service
Real-time customer access to data
Separate premium for a suite of services or upfront
premiums for IoT-enabled asset at the point-of-sale
Product Performance
Monitoring
Digitizing Operations
PwC Advisory
Connect & Optimize:Digital Aviation
UPTIME, COST & SERVICE OPTIMIZATION
MONETIZATION: USE, SHARE & SELL
PwC Advisory
There are a number of IIoT business models; each monetizing their offerings using a combination of products and services
Real-time customer access to data
Separate premium for a suite of services or upfront
premiums for IoT-enabled asset at the point-of-sale
Remotely managed data with alerts & insights
Subscription basis for IIoTproducts and services, or on
contingency based on performance outcomes
Customer pays per:-hour, -unit, -alert, etc.
Based on customer usage, or when customer receives alerts
on performance, or insights on gaining efficiencies
Product Performance
Monitoring
Data analysis from
Manufacturer
The “Pay-Per”
Model
Optimizing Costs and Service
Remotely managed enterprise-wide solutions
Subscription basis, complete suite of IoT products and
services, or on contingency based on performance
outcomes
IoT-driven field
services
Digitizing Operations
PwC AdvisoryPwC Advisory
Connect & Optimize:The Connected Vehicle
CUSTOMER EXPERIENCE AND ENGAGEMENT
MONETIZATION: NEW REVENUE MODELS
PwC Advisory
There are a number of IIoT business models; each monetizing their offerings using a combination of products and services
Real-time customer access to data
Separate premium for a suite of services or upfront
premiums for IoT-enabled asset at the point-of-sale
Remotely managed data with alerts & insights
Subscription basis for IIoTproducts and services, or on
contingency based on performance outcomes
Remotely managed enterprise-wide solutions
Subscription basis, complete suite of IoT products and
services, or on contingency based on performance
outcomes
Customer pays per:-hour, -unit, -alert, etc.
Based on customer usage, or when customer receives alerts
on performance, or insights on gaining efficiencies
Product Performance
Monitoring
Data analysis from
Manufacturer
IoT-driven field
services
The “Pay-Per”
Model
Digitizing Operations Optimizing Costs and Service
Connect & Optimize:Smart Factory
PwC Advisory
PRODUCTION OPTMIZATION
MONETIZATION: COST REDUCTION, IMPROVED CUSTOMER SERVICE
• Outcomes-back
• Fail fast and learn
• Digital IQ
A: Get Smart, Get Moving.
“How does the journey start (and accelerate)?”
PwC Advisory
PwC Advisory 21
Common Challenges
Capturing the valueRecognizing the gap between value created and value captured
Running the business with two different commercial modelsand the transition that has to happen
Getting organizedOperating model and organization capabilities
Impact on FinancialsWho owns the asset and impact on revenue models (transfer of product versus provisioning of service)
PwC Advisory
Five recommendations to advance your position in the IIoT race
22
Identify
Entry Points
Define
Value
Develop go-to-
market strategy
Create Business
Model
Learn &
Improve
Identify do-able, realistic entry points (or expansion plans) into the IoT products & services market
Define & demonstrate how IoT products & services create value for your customers & your company
Develop effective IoT go-to-market strategies to effectively support your IoT products and services offerings
Create scalable & future-proof IoT business models & promote a culture of entrepreneurship to develop them
Learn from your products and your customers to improve, accelerate, & scale up your IoT products & services
PwC Advisory 23
Your Questions
Hopefully Covered Today Worth Mentioning Now Requires a Richer Discussion
• How can a traditional manufacturing
company change its business model to get
significant revenue growth through IIoT?
• How companies are creating value
through IIoT and digitalization
strategies. Potential new business models
emerging.
• How to generate revenue streams for
services from the availability of data from
IoT
• What are the overarching themes that
drive the ability to commercialize IoT?
• How to balance investment in future
growth via digital products vs. investment
required for current products
• Price point or application tipping points
where IIoT capabilities are expected,
differentiator or not applicable 'today'&5
yrs
• Do customers know they need IoT? We…haven't
heard much demand for IoT
• How do you gauge customer interest if similar
products do not exist in the market yet?
• What are the main arguments to convince an end-
user to use IIoT solutions.
• How do you identify early adopter customers who
want to participate in agile IIoT solution devmn’t?
• What can IT organizations do to help facilitate IoT in
our manufacturing facilities - how can we also best
stay out of the way.
• We sell through distribution - How can we better
support the online specification/decision-making
process without owning POS?
• What key areas can we focus on to get an initial
payback that will help fund additional activities! ie
energy, efficiency, maint
• Would like to hear the most common uses of IoT for
manufacturers driving revenue and used internally to
reduce costs.
• Real examples of manufacturers with a business
case
• Benefits/disadvantages of managing other
company's data on your own server
• Cybersecurity
• Data ownership
• How to address inter-operability? Are
there any open standard communication
protocol that the industry is migrating
towards?
• Transition from independent locally
housed equipment control and monitoring
to a hosted cloud based interconnected
solution
• Use on manufacturing equipment for
predictive maintenance and processes to
fingerprint data collected
• What are key information security
considerations for IoT and how is it
evolving over the last few years?
• Interested in case studies - how others
have developed and launched a strategy
around smart connected products and
factories
PwC Advisory
Thank you!
© 2018 PwC. All rights reserved. Not for further distribution without the permission of PwC. “PwC” refers to the network of member firms of PricewaterhouseCoopers International Limited (PwCIL), or, as the context requires, individual member firms of
the PwC network. Each member firm is a separate legal entity and does not act as agent of PwCIL or any other member firm. PwCIL does not provide any services to clients. PwCIL is not responsible or liable for the acts or omissions of any of its
member firms nor can it control the exercise of their professional judgment or bind them in any way. No member firm is responsible or liable for the acts or omissions of any other member firm nor can it control the exercise of another member firm’s
professional judgment or bind another member firm or PwCIL in any way. 388427-2018 MAPI Presentation.
Steve Pillsbury
Principal, PwC
+1 773 383 1263
Upcoming Webinars
Economic Disruptors: Globalization and Technology
March 6, 2pm ET
Upcoming Events
ManufacturED Summit – Chicago, IL
For manufacturing executives
May 22-24
Looking forward
Thank you.