The Harvard Business Review article, How Smart, Connected Products Are Transforming Competition, identifies ten strategic choices manufacturers must make to capitalize on the Internet of Things.
In this second installment of a series of video interviews, the article’s co-author Jim Heppelmann looks at variables to consider when evaluating how much IoT functionality should be embedded in the product or the cloud.
How much functionality should be embedded in the product and how much in the cloud?
Connectivity serves a dual purpose. It gives us the ability to move information back and forth, but it also gives us a new domain in which to create capabilities. So, for example, as an engineer, given a requirement from the customer I really have four different ways or four different engineering domains in which I can create capabilities.
I could use a mechanical approach, and add mechanical features and characteristics.
I could use an electrical or electronic approach, and add circuit boards, and those capabilities.
I could use software, and put the software in the product as embedded software.
Or I could use software in the cloud, and put the software in the data center.
Across the four domains, a product can work pretty seamlessly. So you’re going to find yourself asking the question for a feature or a capability, which of those four domains should I use? And we think that there are some pretty important variables that you ought to think about when evaluating which software should be embedded vs. in the cloud.
Our recommendation is to understand that you have these four domains in which to deliver new capabilities. But then step back and realize that there is an inevitable progression in value and innovation from hardware to software that’s going on. And secondarily realize that within software innovation, there’s an inevitable progression from software that’s embedded in the product up to software that’s running in the cloud. So we encourage you to spend some time thinking about what is the right balance of mechanical, electronic, embedded, and cloud software that’s going to produce the most value in your product and in your business.
In their upcoming October 2015 Harvard Business Review article, How Smart, Connected Products Are Transforming Companies, co-authors PTC CEO, Jim Heppelmann, and Harvard Business School Professor, Michael Porter, will focus on the impact of smart, connected products on companies’ operations and organizational structure. Reserve your copy››