Digital Product IT: A New Responsibility for Manufacturers on the IoT Journey - 2020

As manufacturing companies become digital enterprises, their capabilities typically mature, moving from traditional stand-alone products, to connected products, to products or offerings packaged “as a service.” With the help of digital technologies like the internet of things (IoT), cloud and edge computing and advanced data analytics, enterprises are improving their business operations and creating new digital products and services to drive new business models. Manufacturing enterprises know they must take advantage of emerging technologies like IoT, but some are still struggling to find and capture the value IoT offers. In fact, many manufacturing organizations trying to apply IoT are stuck in the early phase, still trying to align their business, technology and partner ecosystems.

A company is an organism in which optimizing only certain parts can sub-optimize the whole. It is no surprise that approximately 30 to 40 percent of IoT pilots fail to become enterprise-wide solutions. Most often, these pilot projects fail to secure the right resources, get de-prioritized (read: shelved) or are compromised by an enterprise trying to make a forward-looking solution align with an outdated organizational way of working. Tech entrepreneur and investor Chris Dixon uses the term “full-stack start-ups” to define companies that care about every aspect of their product/service and become good at many different things besides software. This allows them to create something out of all those interlocking pieces that is extremely hard for competitors to replicate.

Let’s extend the analogy to ask, “what’s the secret sauce to get unstuck from the pilot stage and realize full value from IoT initiatives?” The answer lies in simultaneously considering business aspects, technology aspects and ecosystem aspects for an IoT initiative. It is in this context that some successful companies have created a new responsibility around “digital product IT” to bring together the three “interlocking pieces” creating a unique advantage that competitors will struggle to replicate.

This ISG paper Digital Product IT: A New Responsibility for Manufacturers on the IoT Journey focuses mainly on the need for such a function or responsibility, which is based on the key challenges in each of the above three aspects. The modality for structuring this function in the manufacturing enterprise varies from organization to organization.

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