Background and challenge
We are currently in the early days of the Industrial Internet of Things (IIoT), and the enthusiasm is infectious. But as is often the case with exciting emerging trends, companies may be getting ahead of themselves. Many don’t fully appreciate how to play in this brave new world. Does everything a company makes need to be connected to the Internet, or can automatic IIoT enablement be a less-than-optimal use of R&D dollars?
This line of thinking prompted a leading manufacturer of water equipment to approach L.E.K. Consulting as it sought to make informed decisions about its digitally connected products and service offerings. The company wanted a better picture of its end markets, including a clearer understanding of customers’ service requirements, their pain points and whether their needs could be better met via connected offerings.
Approach and recommendations
We utilized L.E.K.’s SMART framework for digital solutions to assess the suitability of incorporating connected features in the design of new and existing products. The framework takes a customer-centric approach in assessing the applicability of IIoT technology to solving customers’ needs, rather than developing an IIoT solution in the absence of a defined problem. The SMART framework assesses industrial equipment across five categories:
- Service-intensive — Requires recurring, ongoing maintenance
- Mission-critical — Has a very high cost of failure
- Analytics-ready — Makes use of data analytics and produces useful data that other systems can analyze
- Replacement-costly — Expensive to replace or has few substitutes
- Transformative — If connected, creates new business opportunities and improves the user experience
To better inform our strategic recommendations, we conducted a detailed benchmarking analysis of competitors’ connected product strategies. We also looked at specific customer groups and value-chain participant needs and pain points.
As a result of our strategic recommendations, the company identified and prioritized its “no regrets” connected product investments, created a framework to help inform current and future product development, and incorporated that into an expansion of its product and service offerings.