Implications for Organizational Structure

Video Transcript

As Professor Porter and I, together with our research teams, analyzed the companies that were moving into the world of smart, connected products, we began to realize that these companies are actually entering a situation where they're placing one foot in the traditional world of a company who manufactures, sells, and services physical products. But they're putting their other foot in this new world that's basically a software-as-a-service-based technology company. So these companies are trying to figure out how to be a traditional manufacturer and a SaaS-based software company. And it's creating a lot of new challenges for them.

  • IT and R&D Integration - The first is that we need the engineering department and the IT department to almost look like one department, because the product that used to be a physical product is now half digital or more. The engineering department doesn't typically have enough expertise in the digital elements of the product that now run in the cloud. That's really been more the domain of the IT department. And yet the IT department was a supporting organization, not really in the front lines creating the product that was going to be sold to the customer. So we need those two to work together, to each bring their skill to the table and try to figure out how we can make a product that is one part physical, one part digital, and all very safe and secure and meeting the customer requirements at the same time.

  • Unified Data Organization - A second challenge really comes around data analytics. So if we put one of these smart, connected products out in the field and it begins to stream tremendous amounts of data at us, encoded in that data is information that might be useful to the engineering department, or manufacturing, or service, or sales, or somebody else. But we have to figure out how to decode, through big data analytics, what is this data telling us and then how can we provide that insight and intelligence back to the departments that would benefit from it.

  • Dev-Ops - A third challenge comes around a capability referred to as DevOps, which is really a contraction of development and operations. So if you are producing a product that has an evergreen type of architecture such that it can be updated after it's sold while it's in use by the customer, this careful introduction of changes into a fleet of products as they're being actively operated is really the domain of DevOps. And that's a function we've not seen previously in manufacturing companies.

  • Customer Success Management - And then the fourth one is what's called customer success management. Almost invariably, a smart, connected product ends up being sold with a service and sometimes now as a service. What's unique about the service aspect is it's always time-bound, and at some point, it'll have to be renewed. And so we have to now watch our customers and ask, are they getting value out of this service capability and the products associated with it? An organization charged with the proactive monitoring of a fleet of products to ensure that these products are delivering good value is required, so that we'll get high renewal rates.