This is how you make your products fit for the IoT (Internet of Things)! 5 strategy tips that you should consider when engineering to secure your market share in the digital transformation.
More and more companies want to better position their products for the digital transformation. This year alone, around 26 billion IoT devices will go online worldwide. On the one hand, making them IoT-capable is not always easy and, on the other hand, it does not always make sense. Many are trying to make their existing products smarter and more connected. This is possible in many cases, but not always the most appropriate way. Because in digital engineering, too often products are created that offer no added value either for the company or for the end-user. For the product development of a successful IoT device, the approach must be customer-centric. Furthermore, suitable digitization skills and, last but not least, the right digitization strategy are essential. Because studies show: Around 25-45 per cent of all new IoT device developments fail. In dynamic digitization, some products are very well received, while others are already doomed to fail when they are launched.
So what separates successful IoT devices from the rest? If we look at companies that are successful in digitization, we get an idea of how products can become compatible with the Internet of Things. We can learn from this and transfer experiences of such digitization strategies to product development. Implementing IoT connectivity to digital devices can be difficult. Especially if it’s the first time. So what does it take to make an existing product IoT compatible? And what are the advantages of product development of an innovative digital device for the Internet of Things?
Digitization: check the added value of connectivity!
Before you start developing an IoT product, you should ask yourself the following questions: If the product is smart after engineering, does it add value for you and your customers? And can the product collect useful data? Most products today can already collect data in some way. However, not all of this data is of any value to you or your end-users. For companies, the following must be clarified:
⦁ Can you integrate IoT data into your business processes?
⦁ Will you be able to effectively use the data collected to improve service to your customers? Because: A new IoT device is only successful when it is clear how the data will offer added value after engineering.
Product development: Include the cost of the IoT device!
Smart devices generate costs that a conventional product would not have. It is important to include these costs in the digitization strategy for product development:
- What are the manufacturing costs? Is it clear how the connectivity costs will be covered? Normally, this happens through a higher sales price, but more and more often through service or subscription fees over the product life.
- What are the ongoing costs for device support? Does the product generate large amounts of data that need to be stored in the cloud? Does the product require computationally intensive cloud services such as speech recognition?
- What support does you as a company have to provide the end-user with product defects or upgrades?
Check the marketability of your intelligent device!
From a technology point of view, you can make any product IoT compatible. But is it worth it? While a WiFi-enabled watering can certainly be a nice idea, the demand for product development of such a device would be rather limited.
- When it is clear what value your smart system will have for you and the end-users and you know the costs, you need to ensure that the product is marketable after engineering.
- Can the value of product development be communicated to your potential customers quickly and easily? Do you understand this and are you willing to pay for it?
- In particular, when innovating in a new category, you should answer the following questions: What is the greatest single value that your IoT device offers to the end-user? Can you simply communicate this value in terms of your product digitization strategy?
- Be careful with new features in your engineering strategy. Each function is associated with development costs and makes the digital product more complex. Many companies add features hoping it will make the product more attractive. But often a simpler product offers more enjoyment and thus has a higher overall value.
- To know if your product is IoT-ready, you should develop ⦁ prototypes of your digital devices. Do not develop the whole product at once, but proceed step by step in engineering. User experience testing and surveys of existing customers will help you create a more valuable digital product and better understand potential costs. That way, you’ll spot problems where you never expected them. And the digital product that comes out will be better.
Digital engineering: What you should pay attention to when it comes to technology and design
As soon as you are sure that the digitization strategy for your product is understandable to your customers, the device has added value and the costs fit into the business model, you can start planning – taking a few other points into account.
So there are different connectivity options for your digital innovation that you have to consider. Most IoT devices connect to a network via an app via Bluetooth or WiFi. The user then controls the device via the app. However, smart home devices often also use their own protocols (eg Zigbee) and there are also more and more devices that connect to the Internet on a mobile basis (eg NB-IoT or LTE- m). Each technology has advantages and disadvantages depending on where and how the device is used and the costs that the digitization strategy can support. Safety is important here, for example. The sheer number of IoT devices and the inconsistent security practices of device manufacturers have increasingly made the devices targets of cyberattacks.
“Hardware is hard” is a popular saying among hardware engineers. However, it is becoming increasingly easier to develop a new IoT device or to make existing devices IoT-capable. Prototyping has also become easier as companies now have affordable development boards and prototyping kits at their disposal. Standardized hardware components mean that companies don’t have to start from scratch when it comes to engineering and can start testing ideas quickly.
If the ideas prove successful, standardized development boards and 3D printers can be replaced with optimized custom boards and injection moulded parts that can be produced in high volumes. These individual design and engineering phases to create a product that can be mass-produced require many different skills and high investments. Good research beforehand and prototyping to get real user feedback gives you confidence that your system is on the right track and the investment will pay off.
The single largest item of an IoT solution is often the software. For an IoT device, there is embedded software for the device hardware, IT for cloud services (IoT platforms) and app software on the smartphone or computer. All of these and other elements must interact seamlessly with one another, like in a network. This ecosystem requires a lot of coding and testing to ensure the system performs optimally under a variety of conditions.
Great design and a carefully crafted user experience are not the only things that make an attractive product. The task of setting up a new IoT device can seem daunting at times. It is therefore important to make the first user experience after digitization as convincing and simple as possible. The entire digitization process, ie every step from connecting the device and installing the IT to using the product for the first time, must be carefully planned and implemented. Support calls and product returns can erode the profits of a new product. The response rate for consumer devices is estimated at 11-20 per cent. And 95 per cent of returns are not due to defects or defects. The product can work as desired and yet it does not satisfy the user. While industrial products don’t have the same response rates, user expectations are now just as high. And since many IoT products are based on service fees or subscription models, it is important that the products are used for a long time.
After product development: How to properly deal with competitors
You have completed all of the above steps. You know what to do with your hardware and software. You know how to make your product IoT-enabled. But then you discover that someone else has already developed the product you are planning to implement. A horror scenario! What should you do now?
It’s not necessarily a bad idea to develop something that already exists. Because that means: There is already a market for the innovative product. What you need to do is position your device in a way that offers value to your customers. What can your device do that the other cannot? What overall value can you offer your end-users, ie how do you show them that you really have their needs in mind?
If you can show your customers how your product differs from those of your competitors, you can better position and sell your product in the market. Turning your product into an IoT device is not always a good idea. However, if you have a marketable product that adds value and you can integrate the necessary hardware and software, you are well on your way to creating a successful smart digital device.