For the past 100 years, Parker has been building and delivering ever more complex motion and control components and systems. We are well into a digital transformation that has caused us to rethink not only our connected products but also the way we deliver services and eBusiness. Given that transformations of this magnitude may only happen every 15 to 20 years, we have found there are some new motions and capabilities we needed to foster. With six operating groups that break out into 142 divisions, this is a significant task.
Download our white paper to learn more about our journey: Listening to the Voice of the Machine™: The Value of Discrete IoT
How to make money in the Internet of Things (IoT)
As we build out and deploy Voice of the Machine™ (our IoT framework) our division leaders eventually gravitate to a central question. “After building out these capabilities, are we going to make any money doing this?” Answering this question is very specific to each business case. For the most part, we have found it an easy task to get everyone in agreement as to the ‘why’ surrounding the initiative. What becomes more challenging is defining the offer and determining what to charge for it. This blog will provide some insights as to how we address these questions. Below are some fundamental motions to execute on in pursuit of the new-to-your-world business model.
So, who cares?
We share the enthusiasm that this new frontier creates for us and our customers. That said, we find that there is no better way to make sure that what we are building solves a problem that people care about, at scale than spending time in front of the end user operators and customers. At scale is critical here. We have been able to find a multitude of problems that any number of our customers share. The key is to synthesize the ones that they all care about.
With Parker’s breadth of products and number of divisions around the world, the only way to approach a connected product initiative is through a centralized team. On the surface, you may be able to see all the obvious benefits of creating shared services. Another angle that has emerged as a benefit, which was far less evident at the onset of our industrial IoT journey, deals with culture. After selling products where we make, sell and ship, we are now having to pivot and understand what it means to have an ongoing relationship and shared risk with our customers. Having a centralized team that has been able to learn the nuances of how to build out these new motions have been invaluable. We also now have a container where all of our tribal knowledge can reside and be shared across the organization.
Defining a clear and concise commercialization process eliminates ambiguity regarding individual and team responsibilities. When working with other groups or divisions, having clear “rules of the road” has reduced our overall delivery timeline.
The flow of money
Can your new business model work inside your organization? Whatever model you come up with, whether a full SaaS or a hybrid CAPEX (Capital Expenditures) make sure that your accounting department is involved and they create a process flow for the path of the transaction. The technology you are building is not only disruptive to the market, it can also be disruptive to your accounting department.
Lastly, in this new Industrial Internet of Things (IIoT) connected products world, finding the right business model and the right pricing scheme, to use a clothing analogy, has not made it to the ‘off the rack’ stage. It is all made to measure. The right model will appear as a result of carefully working through the elements above.
At Parker, we are working to transform our business through a digital transformation. With our Voice of the Machine™ offering, we deliver discreet IoT enabled platforms and components that allow our customers to understand what is happening deep inside their machine.
If you would like to learn more, please visit our Voice of the Machine™ IoT website.
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