- For smart, connected product strategies to succeed they require a product lifecycle view of configurations, best attained by integrating PLM, CAD, CRM, and ERP systems.
- Capgemini estimates that the size of the connected products market will be $519B to $685B by 2020.
- In 2018, $985B will be spent on IoT-enabled smart consumer devices, soaring to $1.49B in 2020, attaining a 23.1% compound annual growth rate (CAGR) according to Statista.
- Industrial manufacturers will spend on average $121M a year on smart, connected products according to Statista.
Succeeding with a smart, connected product strategy is requiring manufacturers to accelerate their IoT & software development expertise faster than they expected. By 2020, 50% of manufacturers will generate the majority of their revenues from smart, connected products according to Capgemini’s recent study. Manufacturers see 2019 as the breakout year for smart, connected products and the new revenue opportunities they provide.
Industrial Internet of Things (IIoT) platforms has the potential of providing a single, unified data model across an entire manufacturing operation, giving manufacturers a single unified view of product configurations across their lifecycles. Producing smart, connected products at scale also requires a system capable of presenting a unified view of configurations in the linguistics each department can understand. Engineering, production, marketing, sales, and service all need a unique view of product configurations to keep producing new products. Leaders in this field include Configit and their Configuration Lifecycle Management approach to CPQ and product configuration.
Please see McKinsey’s article IIoT platforms: The technology stack as a value driver in industrial equipment and machinery which explores how the Industrial Internet of things (IIoT) is redefining industrial equipment and machinery manufacturing. The following graphic from the McKinsey explains why smart, connected product strategies are accelerating across all industries. Please click on the graphic to expand it for easier reading.
CPQ Needs To Scale Further To Sell Smart, Connected Products
Smart, connected products are redefining the principles of product design, manufacturing, sales, marketing, and service. CPQ systems need to grow beyond their current limitations by capitalizing on these new principles while scaling to support new business models that are services and subscription-based.
The following are the key areas where CPQ systems are innovating today, making progress towards enabling the custom configuration of smart, connected products:
- For smart, connected product strategies to succeed they require a product lifecycle view of configurations, best attained by integrating PLM, CAD, CRM, and ERP systems. Smart, connected product strategies require real-time integration between front-end and back-end systems to optimize production performance. And they also require advanced visualization that provides prospects with an accurate, 3D-rendered view that can be accurately translated to a Bill of Materials (BOM) and into production. The following graphic is based on conversations with Configit customers, illustrating how they are combining PLM, CAD, CRM and ERP systems to support smart, connected products related to automotive manufacturing. Please click on the graphic to expand it for easier reading.
- CPQ and product configuration systems need to reflect the products they’re specifying are part of a broader ecosystem, not stand-alone. The essence of smart, connected products is their contributions to broader, more complex networks and ecosystems. CPQ systems need to flex and support much greater system interoperability of products than they do today. Additional design principles include designing in connected service options, evergreen or long-term focus on the product-as-a-platform and designed in support for entirely new pricing models.
- Smart, connected products need CPQ systems to reduce physical complexity while scaling device intelligence through cross-sells, up-sells and upgrades. Minimizing the physical options to allow for greater scale and support for device intelligence-based ones are needed in CPQ systems today. For many CPQ providers, that’s going to require different data models and taxonomies of product definitions. Smart, connected products will be modified after purchase as well, evolving to customers’ unique requirements.
- After-sales service for smart, connected products will redefine pricing and profit models for the better in 2019, and CPQ needs to keep up to make it happen. Giving products the ability to send back their usage rates and patterns, reliability and performance data along with their current condition opens up lucrative pricing and services models. CPQ applications need to be able to provide quotes for remote diagnostics, price breaks on subscriptions for sharing data, product-as-a-service and subscription-based options for additional services. Many CPQ systems will need to be updated to support entirely new services-driven business models manufacturers are quickly adopting today.