1. business and industrial

Smart, Connected Products:
Realizing Value from the
Internet of Things
Chris Kuntz
Vice President, Ecosystem Programs
May 14, 2015
The Third Wave of IT Driven Competition
1800s
Mechanical Products
& Physical Processes
•  Products are
mechanical and value
chain activities are
performed manually
using analog
information through
paper processes and
verbal
communications
1960s
1980s
Value Chain
Automation
•  IT used to automate
information collection
and processing in
activities across the
value chain
2000s
Value Chain Dispersion
and Integration
•  The Internet enables
coordination and
integration across the
value-chain, with
customers and
business partners, and
across geography
Confidential and Proprietary - Not for Distribution
Beyond
IoT and Smart,
Connected Products
•  IT is embedded in
products themselves,
transforming value
creation through
products while
triggering a new wave
of shifts in the value
chain, product design,
procurement,
marketing, and
service while creating
the need for new
activities
2
Manufacturers are Positioned to Capture the Value
#1
$6.2T
Estimated potential economic impact of The
Internet of Things in 2025, range from $2.7 –
6.2 trillion annually
Manufacturing industry will be the #1
industry sector by share of global economic
value-add.
– McKinsey Global Institute
– Forecast: The IoT, Worldwide, 2013
Smart, connected products will give rise to the next
era of IT-driven productivity growth at a time when
the impact of earlier waves of IT has largely played
itself out.
–Harvard Business Review, November 2014
Prof. Michael Porter
Harvard Business School
Confidential and Proprietary - Not for Distribution
Jim Heppelmann
President and CEO, PTC
3
The Internet of Things
By 2020, experts predict there will be 50 billion “things” connected to the Internet
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4
Evolution of Smart, Connected Products
Farm Equipment Industry Example
SMART,
CONNECTED
PRODUCT
PHYSICAL
PRODUCT
SMART
PRODUCT
Product is
comprised of
physical (i.e.,
mechanical,
electrical) and
other material
components
Product
incorporates
software, sensors,
electronics and
controls, and an
enhanced user
interface
Product incorporates
wired or wireless
connectivity to exchange
data remotely and
enable new capabilities
outside the physical
product
+
+
PRODUCT
SYSTEM
SYSTEM OF
SYSTEMS
Smart, Connected
Product integrates into a
product system, usually
within the same industry,
to optimize product and
system performance
Smart, Connected Product is
coordinated across other
products systems, outside
traditional partners, suppliers,
and industry, to optimize
product and system
performance
Tillers
+
Farm
Equipment
System
Tractors
Farm
Equipment
System
Combine
Harvester
Planters
Irrigation
System
Farm
Management
System
Platform
Weather
System
Seed
Optimization
System
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5
Defining Smart, Connected Products
Product Cloud
Database, Application Platform,
Rules / Analytics Engine, Smart Product Applications
Connectivity
One to One, One to Many, Many to Many
Smart,
Connected
Product
Enhanced UI
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00011001000011000010100001
Smart Product
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Ability to Interact
Software
Ability to Instruct
Sensors
Ability to Sense
Electronics and Controls
Ability to Process
Physical Product
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Electrical
Mechanical
6
Smart, Connected Product Technology Stack
PRODUCT CLOUD
APPLICATION
PLATFORM
SMART PRODUCT
APPLICATIONS
RULES / ANALYTICS
ENGINE
EXTERNAL INFORMATION
SOURCES
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BUSINESS SYSTEMS
INTEGRATION
PRODUCT DATA
DATABASE
IDENTITY AND
SECURITY
NETWORK
COMMUNICATION
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SOFTWARE
HARDWARE
PRODUCT
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7
Capabilities of Smart, Connected Product
Intelligence and connectivity enable an entirely new set of product functions and
capabilities with each capability building on the preceding one
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8
The Value of Smart, Connected Products
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9
Value Opportunities
The capabilities of smart, connected products create four new value opportunities
Improve
Customer
Experience
Optimize
Business
Processes
Differentiate
Offering
Leverage data
from connected
products for
improved service,
support and
usability
Combine realtime data with
existing systems
to increase
efficiency
Increase pace of
product and
service
innovation
Confidential and Proprietary - Not for Distribution
New
Revenue
Streams
Unlock new
business models
and realize new
value-add
opportunities
10
Maturity Model
Where is your organization in leveraging the Internet of Things
Innovate
Integrate
Analyze
Service
•  Predictive maintenance
•  Proactive monitoring
•  Identify supplier or mfg.
process issues
•  Remote delivery of software
•  Real-time reporting of
updates
product status and usage
•  Remote access and repair
•  Closed loop product
lifecycle management
•  Configuration and warranty
management
•  Knowledge management
and remote diagnostics
•  Product quality and risk
management
Confidential and Proprietary - Not for Distribution
•  Provide complementary web
and mobile apps to
differentiate products
•  Enable customer selfservice and personalization
of products
•  Introduce new business
models and value added
services throughout the
lifecycle
11
Value Curve
What are the benefits?
Innovate
Cost Benefits
Integrate
VALUE
Service
Cost Benefits
•  Decrease field visits with
remote access
•  Increase first-time fix rates
•  Reduce cost of software
updates
Revenue Benefits
•  Reduce downtime & mean
time between failure
Analyze
Cost Benefits
•  Reduce part supplier and
mfg. process issues
•  Decrease field visits with
preventative actions
Revenue Benefits
•  Increase uptime (support
premium SLA)
Cost Benefits
•  Reduce warranty claims
•  Reduce support call time
and number
•  Reduce product failures
Revenue Benefits
•  Increase market share via
superior design
•  Enable upsell and crossselling opportunities
•  Increase market share via
better market analysis
•  Enable self-service support
•  Increased employee
productivity with greater
information sharing
Revenue Benefits
•  Increase market share with
greater competitive
differentiation
•  Charge price premium
•  Expand market with pay-perusage offering
•  New revenue streams from
expanded portfolio and
industry offerings
•  Increase customer
satisfaction
Confidential and Proprietary - Not for Distribution
12
Service: Diebold Reduces Downtime by 15%
“With OpteView, I can achieve world-class ATM
availability by making the most out of a close
relationship with a trusted vendor – Diebold .”
Diebold is a $2.9B provider of integrated
self-service delivery and security systems,
including ATMs
– Chad Lynch
Services Manager, America First Credit Union
Deployment results:
•  Average problem resolution time reduced from
3 hours to minutes
•  17% of total issues resolved remotely without
a field service visit
•  Overall Opteva ATM downtime reduced
by 15%
Confidential and Proprietary - Not for Distribution
13
Analyze: Elekta Delivers Preventative Maintenance
Elekta is a $750 million company with
approximately 3,500 employees worldwide.
The company develops sophisticated,
state-of-the-art tools and treatment
planning systems for radiation therapy,
radiosurgery and brachytherapy.
“By harvesting machine data and using predictive
analytics on the usage patterns and life-cycle of
the systems, we can pre-position spares closer
to machines where we know that a part is coming
to the end of its duty cycle. This predictive
support model truly maximizes the availability of
the systems, providing an enhanced service
experience for the customer and enabling them
to deliver improved patient care .”
– Martin Gilday
VP of Service, Elekta
Deployment results:
•  >20% of service requests resolved remotely
without the need for an onsite visit
•  Increased system uptime and patient
throughput
•  Improved product design through machine
reliability data analysis
Confidential and Proprietary - Not for Distribution
14
Integrate: GE Power & Water Optimizes 7 Processes
GE Power & Water is a world leader in
power generation and water technologies
for utilities, independent power producers
and industrial applications.
“We are using machine data to build algorithms
to predict issues or changes. Often we see ‘this
is different from the majority of engines’ and that
will help us develop an appropriate procedure.”
– Audi Lucas
GE Power & Water
1.  Commissioning - Sales Efficiency
2.  Contractual SLAs – Higher profitability
3.  Training – Employee productivity
4.  Remote Monitor, Diagnostics and Service –
Fewer truck rolls, less downtime
5.  Field Service – higher first time fix rate,
faster time to repair
6.  Spare Parts – Optimized inventory levels
7.  Upgrades and Repair – predictive maintenance
Confidential and Proprietary - Not for Distribution
15
Innovate: Joy Global Transforms Business Model
Joy Mining is a worldwide leader in highproductivity mining solutions that manufactures
and markets original equipment and aftermarket
parts and services for the mining industries.
“The future gains in productivity will come from
system improvements, not just the product itself.
This requires smart connected product systems
that can monitor and optimize the full system
performance.”
– Ted Doheny
CEO, Joy Global
Deployment results:
•  Anticipate equipment failures & efficiently
respond to problems reducing equipment
downtime
•  Optimize mining processes with new analytics
to reduce the cost of resources & increase
production
•  Manage the overall mining operation on behalf
of the mine owner. Transition from pay per
product to pay per tonnage of earth mined
Confidential and Proprietary - Not for Distribution
16
Innovate: All Traffic Captures New Revenue Streams
All Traffic Solutions is the leading
manufacturer of signs used by police
departments and local governments to help
understand and manage traffic.
“ThingWorx’s rapid application development
environment and scalable platform allows us to
extend our solution and deliver new services to
our customers in ways that were previously
impossible.”
– Scott Johnson
CEO, All Traffic Solutions
Results:
•  Delivered an innovative solution for law
enforcement professionals called the
TraffiCloud
•  Faster time to market
•  Rapid development of mobile UI
•  Advanced data mining that All Traffic can now
offer its customers
Confidential and Proprietary - Not for Distribution
17
The Transformation Enabled by
Smart, Connected Products and the IoT
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18
Enabling Product and Service Advantage
Technology solutions
that transform the way
you create, operate, and
service products
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19
IoT is the Ultimate Technology to Enable Transformation
•  Design products based on actual usage data and feature performance
Create
•  Adopt innovative systems engineering driven design principles
•  Deliver products that can be remotely personalized, upgraded and serviced
•  Increase product utilization and product and fleet performance
Operate
•  Reduce the need for operators and monitor their activities
•  Improve operator safety in dangerous environments
•  Improve warranty management and parts planning
Service
•  Deliver proactive, remote and automated service
•  Provide new service offerings and improve customer satisfaction
Confidential and Proprietary - Not for Distribution
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PTC Capabilities Across the Technology Stack
PTC Creo helps teams create, analyze, view and leverage product designs
downstream utilizing 2D CAD, 3D CAD, parametric & direct modeling.
PTC Windchill offers comprehensive capabilities to help manufacturers
manage their products through all phases of the product lifecycle.
PTC Integrity manages global software development processes and
connects systems and software artifacts to ensure lifecycle traceability.
PTC Axeda helps manufacturers and their service partners ensure services
are planned, delivered and analyzed to maximize customer value.
ThingWorx empowers companies to securely connect and create value
from their smart, connected products through end-to-end IoT solutions.
Confidential and Proprietary - Not for Distribution
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PTC Capabilities Across the Technology Stack
PRODUCT CLOUD
COLDLIGHT
APPLICATION
PLATFORM
SMART PRODUCT
APPLICATIONS
RULES / ANALYTICS
ENGINE
EXTERNAL INFORMATION
SOURCES
010000101000001110001100
100101001100101010110001
010000101000001110001100
BUSINESS SYSTEMS
INTEGRATION
PRODUCT DATA
DATABASE
IDENTITY AND
SECURITY
NETWORK
COMMUNICATION
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SOFTWARE
HARDWARE
PRODUCT
Confidential and Proprietary - Not for Distribution
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PTC Enables Closed-Loop Lifecycle Management
Operate
Support
Produce
Closed-Loop Lifecycle
Management
Plan
Validate
PRODUCT
SERVICE
Design
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23
Ten Key Strategic Choices
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Strategic Positioning: Ten Key Strategic Choices
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Strategic Positioning: Ten Key Strategic Choices
1.  Which smart, connected product capabilities and features should the
company pursue?
Focused Capabilities
Wider Capabilities
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Strategic Positioning: Ten Key Strategic Choices
2.  How much functionality should be embedded in the product versus the
cloud?
Sound Quality Focus
Cloud-Driven Innovation
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Strategic Positioning: Ten Key Strategic Choices
3.  Should the company pursue an open or closed system?
Closed System
Open System
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Strategic Positioning: Ten Key Strategic Choices
4.  Should the company develop the full set of smart, connected products
capabilities and infrastructure internally, or outsource to vendors and
partners?
Internal Development
Partner Outsourcing
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Strategic Positioning: Ten Key Strategic Choices
5.  What data does the company need to capture, secure and analyze to
maximize the value of its offering?
Radiation Therapy Equipment
Confidential and Proprietary - Not for Distribution
Consumer Thermostat
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Strategic Positioning: Ten Key Strategic Choices
6.  How does the company manage ownership and access rights to the data it
seeks and collects?
All-in-One Health Monitor
Confidential and Proprietary - Not for Distribution
Pacemaker
31
Strategic Positioning: Ten Key Strategic Choices
7.  Should the company fully or partially disintermediate distribution channels
or service networks?
Traditional Dealership
Direct to Customer
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Strategic Positioning: Ten Key Strategic Choices
8.  Should the company change its business model?
Transactional Sales Model
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Product-as-a-Service
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Strategic Positioning: Ten Key Strategic Choices
9.  Should the company enter new businesses by monetizing its product data
by selling it to outside parties?
Selling User Data to
Advertisers
Data Proprietary to GE
Confidential and Proprietary - Not for Distribution
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Strategic Positioning: Ten Key Strategic Choices
10.  Should the company expand its scope?
Product System Optimized to Work
Together
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System of Systems
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Learn More
Visit our web resources
•  Read customer success stories
•  Gather analyst and academic insights
•  Watch videos and interactive demonstrations
Request an Innovation Workshop
•  Plan for Growth and Innovation
•  Define and Prioritize Use Cases
•  Examine Your Customer Value Proposition
•  Outline Implementation Options
Contact Your PTC Account Manager
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