“Internet of Things” – Opportunities ahead for Intelligent Device Makers?
There are some key points intelligent device manufacturers should consider when making the leap to a software-centric model:
1. Securing business buy-in for the transformation – this is broader than just engineering or product management, and requires coordination across business groups.
2. Understanding the traditional software licensing methodology and its proven approaches that can be leveraged in the intelligent device context.
3. Determining the appropriate software licence compliance policies and enforcement mechanisms among a wide spectrum of available options, and anticipating the flexibility needed to make changes later as business conditions change
4. Understanding the difference between delivering hardware and digital goods – the distribution mechanisms should be coordinated, but can be unique
5. Understanding the software value lifecycle – as opposed to a one-off hardware transaction, it is an ongoing process and is increasingly subscription based.
6. Creating business processes to support the value cycle of the software.
7. Implementing a customer self-service portal – it can reduce operational costs and increase customer acceptance of software.
8. Defining and executing a product management and go-to-market strategy.
9. Implementing sales training and compensation policies – selling is not about selling numbers of hardware pieces, but about selling “value”.
10. Continuously fine-tuning strategy for product development, delivery and execution to optimise revenue and margins.
By leveraging embedded software for licensing and entitlement management, manufacturers create connected devices that unlock new revenue streams, protect intellectual property, and implement configure-to-order manufacturing – dramatically reducing inventory while facilitating greater responsiveness to changing market conditions.
As manufacturers make the transition to embedded software and connected devices – they must also think through the layers of management and support associated with this new model, especially when selling to other businesses. For instance, the IT Operations team in a purchasing organisation may want control of some or all of the processes. This implies infrastructure changes, including the need to link the connected system to an IT operations management center, which can then be used to gather, filter, analyse, and respond to the data from the new system.
In whatever way individual device makers implement these strategies – there can be no doubt that the “Internet of Things” and “M2M” connectivity enabled by embedded software, licensing and entitlements represents a permanent transformation that impacts on every vertical industry.
As Gartner suggests, smart companies already understand the size of the opportunity and are planning their strategy for this transformation – and some are already there.
For those that have not started down this path – it requires top-down desire, imagination and creativity, as well as input from experts and thought leaders from all parts of the business to enable a hardware company to think and act like a software company.
Robert Dickau is a principal engineer at Flexera Software, currently focused on implementing the FlexNet Producer Suite for Intelligent-Device Manufacturers. He has a master’s degree in mathematics from University of Illinois.
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