The document discusses the opportunities and challenges presented by the Industrial Internet and smart, connected products. It notes that the Industrial Internet is expected to create $14.2 trillion in value by 2030 and that 70% of this value will come from business-to-business applications. The Industrial Internet involves using data from connected machines and devices to create better solutions for work and personal needs. Successful implementation requires digitally reimagining businesses, creating new business models, starting small and investing gradually, and dealing with internal resistance to changes enabled by data. Both new customer value and strategic challenges will result, including decisions around features, data ownership, business models, and company scope.

1. Industrial Internet,
Should I be Interested?
Mikko Sainio
ionSign Oy

2. Things Are Changing…
“38 billion connections by 2023.” Machina Research, 2015
“$14.2 trillion value created by IIoT by 2030 .” Accenture, 2017
“Economic impact $11.1 trillion by 2025 .”
“70% of value in B2B applications.” McKinsey, 2015

3. What Industrial
Internet?
Creating better solutions to
needs people encounter
(in their work or personal life)
by using the data that things
(machines, devices, systems…)
are producing.
Industrial Internet: Pushing the Boundaries of Minds and Machines
Peter Evans and Marco Annunziata
General Electric White Paper, November 2012

4. What Smart, Connected Products?
Physical component
+ Smart component
+ Connectivity component
= Smart, connected product
How Smart, Connected Products Are Transforming Competition
Michael E. Porter and James E. Heppelmann
Harvard Business Review, November 2014
A
B
A
B
C
D
E A
B
C
D
E
One-to-One One-to-Many
Many-to-One
Many-to-Many

5. Why Now?
Now it’s possible.

6. Industry Boundaries Reshape
Services Equal Products – and Go Beyond
How Smart, Connected Products Are Transforming Competition
Michael E. Porter and James E. Heppelmann
Harvard Business Review, November 2014

7. What Can Smart, Connected
Products Do?
How Smart, Connected Products Are Transforming Competition
Michael E. Porter and James E. Heppelmann
Harvard Business Review, November 2014

8. Four IoT Opportunities
Applied Most Often
Emil Berthelsen, Machina Research,
March 2015
“Industrial manufacturing
companies are leading the
IoT implementation”
Internet of Things: The Complete
Reimaginative Force
TCS Global Trend Study, July 2015

9. The successful
implementers
tell us to…
Internet of Things: The Complete
Reimaginative Force
TCS Global Trend Study, July 2015
1. Digitally reimagine your business to create
substantial value for clients
2. Create that value with a new business model
3. See the breakthrough potential of IoT
4. Organize to act fast based on what data tells
5. Deal with the internal resistance to accepting
what the data tells and enables
6. Bet on reliable and secure field technology
7. Start small, invest as you go

10. New Customer Value – Where?
Service
•Service to need, not to
schedule
•Spare parts to need, not to
stock
•Remote diagnosis and
repairs
•Only planned shutdowns
•Adding features to supplied
products – open-ended
manufacturing
Product development
•How is the product used?
•In what conditions is
the product used?
•What systems is the
product connected to?
•What product features
are used?
•What product features
are lacking?
•Client specific tailoring
New business
•24/7 support to users
•Maximise capacity,
uptime and energy
efficiency
•Maximise investment
value by optimisation
•Targeted after sales
•Move from product to
service business
•Enable use of less
qualified personnel
Liabilities
•Prevent failures and
performance shortages
before they appear
•Dig into causes of claims
•Reveal operating errors
•Reveal risky and harmful
operating conditions
•Clarify supplier and
operator duties
•Milder personnel
qualificationdemand

11. Make better informed
decisions in farming
simply by knowing what’s
happening.
OnFarm made an effort
to collect all data,
relevant to the farmer, in
one location.

12. A traditional
scented candle
factory thinks
out of several
boxes.
The result:
Remotely
monitored and
maintained
scent
impression
solution for
businesses.

13. So You’re Connected. Now What?
”The relationship a firm has with its products – and
with its customers – is becoming continuous and
open-ended.”
• This has consequences.
How Smart, Connected Products Are Transforming Companies
Michael E. Porter and James E. Heppelmann
Harvard Business Review, October 2015

14. The Value Chain
Transforms
Interoperable systems, evergreen design. Customizable at low cost, new
user interfaces & business models, connected service & quality control.
Product
Development
Smart factories with simplified components & reconfigured assembly
processes, open-ended manufacturing, all through product life cycle.
Manufacturing
Continuous tracking of goods and fleet with data on condition &
surrounding environment. Driverless logistics.
Logistics
Focus on continuous value creation with product systems change
segmenting, customer relationships, business models.
Marketing &
Sales
Remote diagnosis enables remote or one-stop local, and preventive
service. New services to e.g. optimize equipment utilization.
After-Sale
Service
IT security cuts across all functions.
Data security may become a key source of value.
Security
The transformed product design, manufacturing & delivery requires
new expertise, new cultures, new compensation models.
Human
Resources
Companies must
shape accordingly
How Smart, Connected Products
Are Transforming Companies
Michael E. Porter and James E.
Heppelmann
Harvard Business Review,
October 2015

15. 10 New Strategic Choices
1. Which set of smart, connected features to
pursue?
2. What features to build in the product and
what in the cloud?
3. Should we build an open or a closed system?
4. What to do internally and what to
outsource to vendors and partners?
5. What data to capture to maximize
customer value?
6. How to manage data ownership
and security?
7. Keep or kick distribution and
service networks?
8. Rethink the business model?
9. Does the data give birth to new business?
10. Should we expand company scope?
How Smart, Connected Products Are Transforming Competition
Michael E. Porter and James E. Heppelmann
Harvard Business Review, November 2014

16. Avoid the Pitfalls
• Only add features, that the client is willing to pay for
• Don’t underestimate security and privacy risks
• Anticipate new competitive threats
• Start early
• Assess internal capabilities realistically
How Smart, Connected Products Are Transforming Competition
Michael E. Porter and James E. Heppelmann
Harvard Business Review, November 2014

17. www.ionsign.fi
MikkoSainio
Sales&BusinessDevelopment
ionSignOy
mikko.sainio@ionsign.fi
+358405881679