Last week HP announced that it plans to provide companies with personal computers and other devices as a service. Business customers of HP will pay a fixed monthly fee per employee for computing equipment which will eliminate the need to pay up front for hardware, and thereby reduce the capital spending. With in-built monitoring capabilities in the devices, HP is likely to provide preemptive maintenance services: for instance, providing a replacement battery before older ones wear out. According to Patrick Moorhead at Moor Insights & Strategy, analytical capabilities are key elements of HP’s plans. That is what is going to separate HP from existing leasing and services offerings in the market.
This is just the beginning of the PC as a service. But it will be a while before we get to full consumption based pricing like what Rolls Royce pioneered in aircraft engines – charge customers per flying hour of the engine. Outcome-based monetization is a massive paradigm shift. And if the established players are not embracing the change and overturning established industry structures, then some Silicon Valley-style entrepreneurial technology company will. The incumbents have to be prepared to go through a gut wrenching business model and operating model transformation, or else they are like to be marginalized. Are you ready? What can you do today?
Connect. The basic starting point is connected products that generate alerts and notifications based on sensor readings. More advanced operations allow remote operations using sensors. So the first step is to build smart widgets. Depending upon your business, you may want to complement the sensor data with contextual information from third party sources. For instance, weather information if you are a refrigerator manufacturer. For most transactions-oriented widget manufacturers, justifying incremental cost of connectivity and monetizing the connectivity services is clearly a big challenge.
Analyze. Next step is to have tools, acquire skills and establish processes to store and analyze the data you are gathering. Both Microsoft Azure and Amazon’s AWS provide excellent cost effective tools and services for organizations to quickly get going with analytics. Because of lack organization capabilities, most mid-market companies are struggling to cross this hurdle.
The next two stages are a natural evolution – Discover and Disrupt. Discover something not just about your widget but about its users and usage. From this insight, you may be able to have a Disruptive offering that will fundamentally transform the entire ecosystem of your industry. But in order to get there, you have to take the first step today, and that is Connect. You do not have a choice. Because software is eating the world!
Developing IoT solutions leading to outcome based pricing often requires capabilities that most organization do not possess. We at Cloud 9 have been working with a number of clients in helping them with building their analytical capability and accelerating their move to IoT. Should you be interested, please give us call, and see what we can do for you.