Experience Behaviors smart Developing New Growth systems ......Opportunities at the Intersection of Smart Systems, Services and the Internet of Things smart systems design. ... expanding

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Relationships

Skills Technology

Data & Content

Experience Behaviors

Developing New Growth Opportunities at the Intersectionof Smart Systems, Services andthe Internet of Things

smartsystems

design

what are smart systems andthe internet of things?Why Is It So Important?

Global expansion; re-engineering; lean practices; mergers and acquisitions. For most companies these strategies for growth and value creation have reached the point of diminishing returns. As networks continue to integrate the physical and virtual worlds, what worked in the past to drive growth is less likely to work now or in the future...

How Should We Think About Framing Opportunities?

The assumption that the role of new business design and development is only about making existing products or services more attractive no longer works. We believe smart systems design needs to transcend discreet product or service innovation. Business developers need to creatively imagine fully developed systems and whole marketplaces.

To discover, design and develop innovative smart systems, organizations will need new and uniquely facilitated processes...

where are the biggest growth opportunities?

What Are The Success Factors?

Diverse collaborative networks will be self-organized by people who are motivated to explore and develop ideas they care deeply about. Business innovation will extend beyond ideas about new products and services to the very manner in which business is conducted.

Building new ventures for the Internet of Things requires new and very different modes of design and development – organizations will need to push the boundaries of collaboration to include many new and unfamiliar participants...

how should our organization respond?

What unrealized technology, system and market leadership opportunities are available in the smart systems and IoT arena?

Which combination of customer value elements will differentiate us? How can we make, partner of acquire those elements?

What business design, revenue model and management priorities will help build long term success?

Smart SystemsGrowth

Opportunities

01 What Are Smart Systems, Services and the Internet of Things Page 04

02 Framing Smart Systems Growth Opportunities Page 14

03 Smart Systems Growth Models and Strategies Page 24

04 Smart Systems Design and Development Process Page 50

CONTENTS

smartsystems

design

3

01

What exactly are smart systems and the

INTERNETof THINGS?

sensors & actuators01 connectivity02 people

& processes & data03

5smart

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What Are Smart

Systems and Services

smartsystemsand servicesinnovation

smartsystems

design 6

WhatAre SmartSystems andServices

smartsystems

and servicesinnovation

7smart

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What Are Smart



HOMECONSUMER BODY

INFRASTRUCTURE

INDUSTRY

MOBILITYTRANSPORT

HEALTH CITIES

BUILDINGS

Light bulbsSecurityPet FeedingIrrigation ControllerSmoke AlarmRefrigeratorInfotainmentWasher / DryerStoveEnergy Monitoring

Tra�c routingTelematicsPackage MonitoringSmart ParkingInsurance AdjustmentsSupply ChainShippingPublic TransportAirlinesTrains

Patient CareElderly MonitoringRemote DiagnosticEquipment MonitoringHospital HygieneBio WearablesFood sensors

HVACSecurityLightingElectricalTransitEmergency AlertsStructural IntegrityOccupancy Energy Credits

Electrical DistributionMaintenanceSurveillanceSignageUtilities / Smart GridEmergency ServicesWaste Management

And quickly advancing

TO DIVERSE APPLICATIONS

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smartsystems


SIMPLE:• Alerts & Alarms• Location Services• Monitoring & Diagnostics• Maintenance Dispatch

COMPOUND:• Asset Management• Multi-Vendor Equipment Support• Automation

COMPLEX:• Smart Cities• Smart Transportation Systems• Diverse Data Fusions

2000 2006 2012

10

20

30

40

50

60

0

NFC

Simple Applications:

Applications involving simple remote monitoring, location services and product support for maintenance or upgrades

Compound Applications:

Applications that involve multiple [peer-to-peer] devices and machines with significant interactions between sys-tems and equipment in multi-vendor environment such as factories, hospitals and related environments charac-terized by diverse vendors, users and stakeholders

Complex Applications:

Applications driven by diverse interactions involving sensors, actuators, machines, people and systems that enable extending/expanding values from collaboration and analytics supported by data fusion between and among disparate and diverse sources

things get really interesting when connected devices start creating

compound applications

9smart

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What Are Smart



compound applications enable unique new use casesfor example

for example

for example

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smartsystems


11smart

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What Are Smart



smartsystems

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smartsystems


connected machines and devices are rapidly proliferating

Home (Consumer)

In 2016 nearly 2.7 billion connected devices will be shipped

This number will grow to nearly 8 billion devices for the year 2020

3,745.71 (Devices millions)

Transport (Mobility) 392.72 (Devices millions)

Body (Health) 360.03 (Devices millions)

Buildings (Infrastructure) 1,726.59 (Devices millions)

Cities (Industry) 1,524.70

(Devices millions)

*Not including mobile phones

This number will grow to nearly 10 billion devices by 2022

In 2017 over 3 billion connected devices were shipped

4 billion

500 million

600 million

2.1 billion

2.8 billion

13smart

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What Are Smart



CONSUMER

$79.4B

$10.4B$6.2B

$25.0B

$180.3B

$29.4B

$18.5B

$77.0B

$129.8B

$397.8B

$76.1B

$48.7B

$210.2B

$270.0B

BODY

INFRASTRUCTURE

INDUSTRY

MOBILITY

HOMETRANSPORTHEALTHBUILDINGSCITIES

$59.2B

2017

2015

2020

>$1 TrillionBy 2020 this opportunity will grow to more thanBy 2022 this opportunity will grow to more than

Network Services

Managed Services$571,845.77

$43,782.24

$387,453.46

Enablement Hardware

(USD millions)

(USD millions)

(USD millions)

Internet of Things and Smart Systems

Opportunity 2022

smart systems and services opportunities are enormous in scale and scope .....

smart connected systems spending is likely to grow to a scale that is larger than all previous generations of IT and Network spending

3

02framing smart systems growth opportunities

Strategy &Business Model

Relationships & Interactions

15smart

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FramingSmart Systems

GrowthOpportunities


framing smart systems growth opportunities

Overview

User Experience

Business

MarketRelationships

Technology

Smart Systems are quickly becoming a massive, global digital nervous system conecting billions of people, tens of billions of devices, and trillions and more data points through a network of unprecedented scale

Smart Systems and theInternet of Things Stack

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Framing Smart SystemsGrowthOpportunities

smartsystems


As these intersections blend the physical with the digital, they are mediated by ongoing user interactions, business processes, technology architectures, and newly created market forces

Business

Relationships Tech

ContextIdentity // Location // Time

InteractionVisual // Audio // Tactile

User Experience

Market

Tech

User Experience

Rel

atio

nshi

ps

Business

Revenue TypeSubscription // Managed // Indirect

Market Delivery Direct // Channel // Value Adders

BusinessBusiness ModelSolo // Cooperative // Collaborative

MonetizationCost + // Value-Based // Disruptive

Market

Wireline

WPAN

WLANWWAN

LPWAN

Mobile & Collaboration

Analytics & Dashboards

Hardware

Software

Connectivity & Device Enablement

Network Services

System Applications

Value Added ApplicationsApp’l Enablement

Data Aggregation

Device Management

Customers Early Adopters // Co-Creation

SuppliersElectronics // Software // Modules

OperationsOutsourced Mfg // Logistics

Design Design Firms // Incubators

Investors VCs // PE // Corporate Funds

Value Added Partners Prof Services // Integrators

Channel Partners VARs // VADs // Retailers

ResearchUniv’s // Consortia

Ecosystem

17smart

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GrowthOpportunities


Overview User ExperienceLayer

“User Experience” is the sum of our relationship with technology. It encompasses the practical—like which

senses, gestures, and inputs we use to interact with our devices and surrounding

environment—as well as the emotional: how the interaction makes us feel.

Context

Handheld / Mobile

Fixed

Embedded

Accessories

Interfaces

Internal

Device

Textile Adhere/Patches

FootwearClippedEarbuds

StrappedEyewear Headware

Identity

Location / Surroundings

TIme

Visual / Audio /

Tactile /

Gaze TrackingFacial Expression Tracking

Emotion RecognitionVoice Recognition

Haptic Sensors Pressure Sensors

Taste/Smell SensorsJoysticks / Mice

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smartsystems


Technology Layer

From the design of silicon to the end-user experience, the technologies of the IoT are driven by data.

Sensors, software, and networked infrastructure collect, analyze, transmit and present data for the users and devices who need it most.

Overview

Routers & Gateways- 2G, 3G, 4G Routers

- Ethernet Routers

- Gateways & Proxy Servers

- Data Aggregator

- Residential Gateways

- Set Top Box

- Voice Gateway

- WAP Gateway

Silicon / Embedded Intelligence- 64 bit Microcontrollers

- 32 bit Microcontrollers




- DSP Controllers

- Graphic Processors

- System on a Module

- Systems on a Chip

- Single Board Computers

Software

Device Management- FOTA (Firmware Over the Air)

- Distributed Version Control

- Configuration Management

- Software Versioning

- Device Drivers

Network Hardware

Security & Encryption- Security / Anti-Virus

- Encryption

- Patch Mgmt

- End Point Authentication

- Anti-Device Tampering

- Preboot Verification

- IP SEC

- Certificate Management

- Cryptography

- Data at Rest Encryption

Comms Stacks- Wireline

- WPAN

- WLAN

- LPWAN

- WWAN

Operating System- Virtualization S/W

- Desktop and Mobile GUI OS

- Embedded / GUI based RTOS

- Commercial RTOS

- Open RTOS

- Boot Loaders / Comm’s stacks


Network Services

Wireline

WPAN

WLANWWAN

Cloud Services

Security / Data Policies & Governance

Protocols / Frameworks

System Applications

Application Enablement - API Services

- Application Enablement Tools

Data: Agg / Transformation / MGMT // Edge Processing- Storage

- Data Normalization

- Data Classification

- Data Governance

- Ad Hoc Queries

- Rules Engine

- Statistical Analysis

- Streaming Analysis

- Real-Time (time series) Analysis

- Presentation & Visualization

- Event Processing

Device Management & Connectivity- Upgrades and Versioning

- System Configuration

- Device Registry

- Identify, Security and Encryption

- Device Provisioning & Commissioning

- Firmware Management

- Gateway Management

Monitoring & State

Prognostics

Automation / Analytics

Location & Tracking

Diagnostics

Security Management

Energy Management

Supply Chain & Logistics

Customer Support

Asset Management

Mobile & Collaboration

Analytics & Dashboards

Value Added Applications

- Bluetooth

- 6LoWPAN

- NFC

- RFID

- Cellular (4G/LTE - 2G/GSM

3G GPRS)

- WiMax

- Ethernet

- Modbus

- Powerline

- WiFi

- DECT

- Thread

TCP / UDPIPv4 / IPv6

CoAPMQTTXMPPRESTful HTTPAMQPLWM2MThread

OneM2MDDSDTLSuIPTelehashUPnPAllJoyn

SMPP (Short Message Peer to Peer) Virtual IC SMSOMA Device Management CPE WAN Management Protocol (CWMP)Weave

REST APINode JSHTML 5Web SocketsJSON/JSONP

Physical- Power- Sensors - Actuators

LPWAN- Sigfox

- LoRA

SaaSPaaSIaaS

Core Messaging / Application

Technology Layer

From the design of silicon to the end-user experience, the technologies of the IoT are driven by data.

Sensors, software, and networked infrastructure collect, analyze, transmit and present data for the users and devices who need it most.

Overview

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GrowthOpportunities


Market Layer

Some markets adopt new technologies faster than others, but no sector of the economy is immune to the expanding influence of the IoT.

While there are similarities that apply across the board, each vertical has its own set of needs and challenges that shape the way networked technologies add value.

Overview

Transportation Infrastructure Aerospace

• Tra c Management• Toll Collection• Parking Systems

• Military Aircraft• Commercial Aircraft• Personal Aircraft

• Military Watercraft• Commercial Watercraft• Personal Watercraft

• Rolling Stock• Urban Transit• Locomotives• Infrastructure

Marine Rail

• Construction O• Military O• Personal On-road• Commercial On-road• Emergency On-road

Vehicles

Mobility

InformationTechnology &

Communications

Industrial

• Lighting• Power Distribution• Life Safety• Climate Control• Water & Gas• Security & Access Ctrl

ResidentialCommercial & Institutional

• Lighting• Power Distribution• Life Safety• People Moving• Climate Control• Water & Gas• Security & Access Control

• Climate Control• Appliances

• Security & Access Control• Power Distribution

• Water & Gas• Life Safety• Lighting

Facilities &Security

Borders & Ports

of Entry

Secu

rity

Campuses, Bases & Public Venues

• Access Control• Security & Detection• Surveillance

• Access Control• Security & Detection• Surveillance

Indu

stria

l

Hybrid/Converting

• Processing• Auxiliary Equipment• Controls &

Instrumentation

• Processing• Converting• Handling &

Packaging• Controls

Manufacturing Supply Chain

• Fabrication• Material Handling• Assembly/Test• Controls

• Handling• Warehouse /

Distribution Systems

Resources &Production

Reso

urce

s

Power Generation

Alternative PowerConventional Generation

Power Transmission & Distribution

Transmission & Distribution

Power Quality & Electrical

BackupEner

gy

Institutional & Commercial

Tran

spor

tRe

tail

/ C

omm

erci

al• Restaurants• Hotels

• Goods & Groceries

• Convenience/Gas

Hea

lthca

re

• Patient Care• Surgery• Labs

Hospitals & Health Facilities

Home / Personal Healthcare

• Home Care• Mobile Care• Lifestyle

• Entertainment• Public Venues

& Stadiums

• Advertising• Vending• Repair Services

• Cleaning Services

CommercialServicesPublic Venues HospitalityRetail

Enterprise

• Computing • Communication• O ce

• Mobile• Field

Prof

essio

nal

Con

sum

er

Home

• Communication• Infotainment• Home O ce

Water Utility

Oil & Gas

• Oil & Gas Extraction

• Oil & Gas Processing

• Oil & Gas Transport

Agriculture

• Farming• Cultivation• Livestock

Management

• Water Extraction• Water Processing

/ Treatment • Water Transport

Mining

• Extraction• Material

Handling• Material

Processing

Environment & Infrastructure

• Infrastructure Monitoring

• Environment Monitoring

Power Generation

Build

ings

••

•

•

Industrial

• Lighting• Power Systems• Life Safety• Climate Control• Water & Gas• Security & Access

ResidentialCommercial & Institutional

• Lighting• Power Distribution• Life Safety• People Moving• Climate Control• Water & Gas• Security & Access Control

• Climate Control• Appliances

• Security & Access • Power Distribution

• Water & Gas• Life Safety• Lighting

Facilities &Infrastructure of Entry

Campuses, Bases & Public Venues

• Air Monitoring• Water Monitoring • Floods• Trasnport Sys

RetailHealthcare &Commercial

Services Reta

il /

Com

mer

cial

• Restaurants• Hotels

• Goods & Groceries

• Convenience/Gas

Hea

lthca

re

• Patient Care• Surgery• Labs

Hospitals & Health Facilities

Home / Personal Healthcare

• Home Care• Mobile Care• Lifestyle

• Entertainment• Public Venues

& Stadiums

• Advertising• Vending• Repair Services

• Cleaning Services

CommercialServicesPublic Venues HospitalityRetail

Build

ings

Transportation Infrastructure Aerospace

• Tra�c Management• Toll Collection• Parking Systems

• Military Aircraft• Commercial Aircraft• Personal Aircraft

• Military Watercraft• Commercial Watercraft• Personal Watercraft

• Rolling Stock• Urban Transit• Locomotives• Infrastructure

Marine Rail

• Construction O�-road• Military O�-road• Personal On-road• Commercial On-road• Emergency On-road

Vehicles

Mobility

Tran

spor

t

Industrial Data Centers

• Network Equip• Storage Devices• Servers• Cooling Systems• Sensors• Security & Access

Borders & Ports

• Access Control• Security • Surveillance• Detection

• Access Control• Security • Surveillance• Detection

Environment Urban Systems

• Air Monitoring• Water Monitoring • Floods• Trasnport Sys

Infr

astr

uctu

re

• Waste Mgmt• Lighting• Parking• Pedestrian Sys

Resources &Production

Indu

stria

l

Hybrid/Converting

• Processing• Auxiliary Equipment• Controls &

Instrumentation

• Processing• Converting• Handling &

Packaging• Controls

Discrete Manufacturing Supply Chain

Reso

urce

sProcessing Industries

Water Utility

Oil & Gas

• Oil & Gas Extraction

• Oil & Gas Transport

• Oil & Gas

Agriculture

Mining

• Extraction• Material

Handling• Material

Processing

Electrical Power

• Power Generation • Transmission &

Distribution

Processing

• Alternative Power

Enterprise IT

• Computing • Communication• O�ce

• Mobile• Field

Prof

essio

nal

Cons

umer Home IT & Appliances

• Communication• Infotainment• Home O�ce

InformationTechnology &

Communications Cons

umer

• Warehouse /Distribution Systems

• Livestock Management

• Fabrication• Material Handling• Assembly/Test• Controls

• Mat’l Handling• Farming• Cultivation

• Water Extraction• Water Processing

/ Treatment • Water Transport

• Big Box Retail

Specialty Retail•

• Water Mgmt• Air Pollution• Floods• Chemicals• Weather • Transport Sys

• Appliances

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smartsystems


BusinessLayer

OverviewIntegrating smart systems into business processes requires restructuring long-held assumptions about how products and services are brought to market.

Collaboration between and among users, customers, developers and partners will be a minimum requirement for success.

R evenue Model

License & Delivery

Market Delivery

Revenue Type

DeliveryOn Premise

Bundled / HybridHosted

Co-location

Cloud

LicenseProprietary - Commercial

Proprietary - Shareware

Open SourceApache / BSD / GPL / GNU / MIT Mozilla / Eclipse / Creative Commons/ Public / LGPL / AGPL Model

North America, Europe, S. & Central America, Asia, Africa, Oceania, Worldwide

RegionB2B / B2C / C2B / ETCTransaction Type

Indirect

One-time

Pay-per

Subscription

• Per seat• Per device

•• Per application

• Per site• Royalty

• Usage-based• Tiered / Freemium• Unit-based

• Transaction•Value-based• Timed

• Flexible - Capped• Open / One -time• P2P

LoyaltyInternal Use

••

Direct ServicesChannelDirect

Distributers & WholesalersProfessional / Tech ServicesOEM / ODM

VARsSystems Integrators

Maintenance / Service Monitoring

After-Market Support & Logistics

Training

System Selection / Integration

Type

Physical Product

Software

Data

Service

21smart

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GrowthOpportunities


Relationship Layer

Overview The solutions we are describing here will have no managerial hierarchy, command and control decisions or proprietary ownership of ideas.

These relationships will be self-organized by people who are motivated to explore and

Collaborative innovation will extend beyond ideas about new products

in which business is conducted.

and develop ideas they care deeply about.

and services to the very manner

Channels

Users & Customers

Value-Adders Tech

Research

Ops

Suppliers Investments

End Use

OEMs

customers

Facilities

Infrastructure

Power

OEMs

Machines

Venture I-Banks

Strategic Ventures

Private Equity

Public Funding

Healthcare

Industrial

Transportation

Buildings

Energy Developer Kits

venues

Investors

Managed Services

Appls

Systems

Products

Technology

sourcing

channel

Enablers

strategicalliances

Smart Devices

LANs

Gateways

Sensors

Wireless

marketing

vendors

technology Tools

Devices

The solutions we are describing here will have much less managerial hierarchy, command and control decisions or proprietary ownership of ideas.

These relationships will be self-organized by people who are motivated to explore and de-velop ideas they care deeply about.

Collaborative innovation will extend beyond ideas about new products and services to the very man-ner in which business is conducted

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smartsystems


the interactions represent the convergence of users, devices, systems, data, and networks

Smart Systems and the Internet of Things will be built from complex interrelationships between the stack.

Integrating these layers together are myriadInteractions

A bi-directional link between digital user experiences and the physical world.

BusinessMarket

TechUser Experience

Overview

Interactions

Relationships




BusinessMarket

TechUser Experience

Overview

Interactions

Relationships

success will increasingly go to those that effectively utilize the combined potential




BusinessMarket

TechUser Experience

Overview

Interactions

Relationships

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GrowthOpportunities


re-thinking things and products as systems

questions to frame your smart systems opportunity

USER EXPERIENCE

INTERACTIONS

TECH

BUSINESS

Your Product / Service

MARKET

RELATIONSHIPS

Value Added Applications

Security / Data Policies

Sector

Device Application

System Applications

Network Services


Informal

Formal

Connections(People, Processes &External Systems)

Interaction

Context

Device

Revenue Model

License & Delivery

Market Delivery

Revenue Type

Who are our natural allies?

Who are we best poised with?

What is the context “in use” for device?

What is the device form factor?

What is the nature of interactions?

What is the native intelligence of device and communications mode?

How are comms services provided?

What platform, devie management and related functions provided?

What applications and functions are required?

How will identity mgmt, access and security work?

Which industry segments and applications provide best opportunities?

What specific use cases and apps will need to be addressed?

What is best path to monetization?

Where used; via what services model?

What channel partners are required?

License, transactions or what?

What is the nature of relation-ships, interactions, requirements and dependencies between and among systems elements?

Usage What are the expected usage needs?

3

03

smart systems growth models and strategies

25smart

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SmartSystems

Growth Models and Strategies


IT Infrastructure &Software Providers

Machine andEquipment OEMs

End Users andEnd Customer Accounts

OEMs and Services ProvidersCore Enabling Technologies End Users

smart systems and IoT solutions are comprised of complex solutions development and delivery chainsoften, multiple parallel “upstream” technology enablers are adopted by ”mid’stream” OEMs and/or services providers who, in turn, deploy solutions into “downstream” vertical end use segments

while the business models for developing and delivering core technologies are relatively stable, the rapidly evolving business and revenue models for OEMs and services providers are anything but......

smartsystems

design 26

Smart SystemsGrowth Models and Opportunities

smartsystems


High-Performance

Networks & Infrastructure

Distributed Data and

Information Architecture

Real-time patient data and medical application updates

Medical staff and critical asset tracking &monitoring

Integrated mechanical and energy sensors for multi-use

Substation monitoring and process monitoring

Remote machine maintenance, health anddiagnostics

Fleet tracking and road condition monitoring

Information access and data set fusion for disease management

Power distribution, automation and control

Syncing global operations for collaboration and efficient management

Transport systems schedule and resources to fit demand cycles

Cross-leveraging data from various building and facility sources

Internal vehicle information access coordinated with urban systems

Artificial Intelligence

and Machine Learning

Fusing patient data sets and AI capable of diagnosing patients

Automation of driverless trucking fleets

Timeline to completion and sensing faults during production

Ability to balance grids, manage demand and provide services

Ability to optimize energy requirements and resource usage

Building owners & operators are able to share data across facility

Analytics on production and individual machines improve efficiencies

Analytics on processes and systems for equipment optimization

Application Development

and Developer Tools

Telehealth and wearables applications for wellness

Building systems that leverage data across lighting, HVAC, alarms, fire detection

Ticketing analytics for demand and asset tracking/ scheduling

Predictive maintenance and workflow applications

Renewable energy production trends and predictions

Sensors & Sensor Data

Fusion

Energy & Utilities

TransportationBuildings &

FacilitiesManufacturingHealthcare

core smart systems technologies will impact all end use segments

as users and customers have become more familiar with digital and IoT capabilities, they arerealizing these technology innovations will push the boundaries of how products, systemsand equipment are used and managed within their operations which, in turn, has increasedpressure on machine builders and equipment manufacturers to embrace these capabilities. End customers in factories, hospitals, buildings and more are coming to see how these technologies work together in new and novel ways to solve operational and business problems. As a result, specification and adoption of digital and IoT enabled equipment and systems is beginning to shift towards a “shared” set of roles between end customers and their OEMs.

27smart

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SmartSystems



IT Infrastructure &Software Providers

Machine andEquipment OEMs

End Users andEnd Customer Accounts

OEMsCore Enabling Technologies End User Speci�cation and Buying In�uencersProvide horizontal technologies and tools that must be contextualized for speci�c industries and customers

End customers want to adopt smart services solutions, but are wary of working with tech suppliers who may not have industry expertise--OEMs can �ll this role

If enabled with the right tools, OEMs can help disseminate these solutions to end customers due to their application expertise and existing relationships

DiversifiedManufacturers

ElectricalPower Dist

AdvancedComponents

MobileEquipment

Automationand Controls

PowerEquipment

Test & Measurement

BuildingEquipment

IndustrialMachinery

MedicalMachines

Mobile construction, agriculture, mining and material handing machines

Healthcare imaging, diagnostic and patient monitoring and care equipment

Portfolio players with no LoBaccounting for more than 40% of revenues

Fixed machines and machinery systems primarily used in manufacturing

Sub-system equipment within buildings including HVAC, lighting, transport and safety

Equipment for electrical power generation, transmission, distribution and storage

Components, products and systems for control incl electrical, flow, regulatory and pneumatics

Sensors, instruments and measurement devices for testing, analyzing equip and systems

Low and medium voltage components utilized for power distribution and switching

Diverse precision or multi-function mechanical and/or electronic devices

DiversifiedManufacturers

ElectricalPower Dist

AdvancedComponents

MobileEquipment

Automationand Controls

PowerEquipment

Test & Measurement

BuildingEquipment

IndustrialMachinery

MedicalMachines

Mobile construction, agriculture, mining and material handing machines

Healthcare imaging, diagnostic and patient monitoring and care equipment

Portfolio players with no LoBaccounting for more than 40% of revenues

Fixed machines and machinery systems primarily used in manufacturing

Sub-system equipment within buildings including HVAC, lighting, transport and safety

Equipment for electrical power generation, transmission, distribution and storage

Components, products and systems for control incl electrical, flow, regulatory and pneumatics

Sensors, instruments and measurement devices for testing, analyzing equip and systems

Low and medium voltage components utilized for power distribution and switching

Diverse precision or multi-function mechanical and/or electronic devices

OEMs are uniquely positioned to capture smart systems values

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smartsystems


• Managed, remote services and support expected to grow considerably

• Continued growth of ‘selective outsourcing’ of non-core or peripheral activities following intense period of downsizing

• Future trend toward “managed” services – SaaS, PaaS and IaaS

• Shift to open systems will continue to drive increasing demand for multivendor services & support

• Systems integration & support services are offered to satisfy customer need for “knitting” together systems

• Customers will emphasize service providers’ ability to manage their environments rather than just simply service products from different suppliers

• Rapid future growth of asset management services is expected: HW / SW inventory, SW licenses, contracts (lease & maintenance)

• Growth of higher value engineered / technical services will outpace growth of basic maintenance / repair and installation services

• Growth of professional technical services is driven by customer needs for planning, designing, building, and managing complex, systems

Training and Education

Project Management

Business ProcessRe-Engineering

Consulting / Requirements

Analysis

Design / Specification /

Planning

System Configuration &

Application Engineering

System Packaging & Staging

System Delivery / Installation

Start-Up & Testing / Commission-ing

Tech Phone / Remote Support

(Help Desk)

Traditional Equipment & S/W

Maintenance

Multivendor Services / Support

Managed Services

Technology Financing & Asset

Management

System Integration

Field Engineering / Enhancements

equipment, systems and support is a changing environmentindustrial services are increasingly complex and technology enabled to allow coordination and collaboration…

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SmartSystems



customers expect suppliers to improve business outcomesas automation and production systems become more complex, customers are looking to suppliers to provide broader services scope and are increasingly reducing the number of strategic suppliers they work with

Systems Design &

Development Services

Systems Management

& Optimization Services

Field Service&

Support

Best-In-Class Control Systems

Measurement & Verification

Program Management

AssetAnalysis

Asset Benchmarking

ReliabilityCentered

Maintenance

Predictive Maintenance

Safety & Compliance

Services

Field Maintenance& Repair Services

Parts & PartsManagement

Design / deploy unique motion and drive control solutions to achieve best-in-class optimization of process, support and non-process operational assets.

Monitoring & measurement of specific process, process support and non-process systems variables that improve system performance.

Global program / project management services designed to maximize effective implementation of systems, delivering a consistent, quality-based program.

Collect and analyze information to identify optimization opportunities for process and systems analyzed independently and together as interdependent systems.

Benchmark key performance data for systems performance. Key areas to assess include process, process-support, and process and equipment assets.

Optimize maintenance strategies for equipment criticality and failure -- preventive, predictive, pro-active approaches -- optimizing cost and uptime.

Provide predictive maintenance and condition-based monitoring for critical assets --current health, warning status, recommended maintenance actions.

Provide solutions that allow customers to manage safety, including integration of new regulations and ongoing testing, certification and verification support.

Optimize maintenance for repair, upgrades and support, including field engineer and technical support for trouble shooting and services enhancements.

Spare parts location, availability, rapid delivery and response time. Additional value added requirements include logistics services, repair & re-manufacturing.

• Control systems• Auxiliary equipment & systems• Support systems

• Equipment uptime• Resource management • Energy utilization

• Planning/project management• Contract/risk management• Quality/cost management

• Modeling / simulation of systems• Quality and throughput indices • Modular software development

• Cost per unit of production• Cost per square footage• Level of technology

• Right mix of advanced services• Maintenance master plan • Lowest cost reliability

• Predictive maintenance plans• Equipment health profiles • Benchmark to standards

• Safety and performance criteria• Validation assistance• Waste monitoring

• Field service• Warranty services• Maintenance planning

• Spare parts• Parts programs• Logistics

Perf

orm

ance

-Driv

en C

usto

mer

sSu

ppor

t-D

riven

Cus

tom

ers

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By it’s nature, maintenance is an ad-hoc event. It’s reliant on triggering events that by themselves are relatively straightforward. The complexity of the event and the nature of the work are primary determining factors when deciding how to adopt these technologies, and what business models to implement within them.

Corrective and Ad Hoc

Scenario: A major piece of machinery has broken

down so frontline workers notify the maintenance

tech so he can fix it

Repair

PreventativeMaintenance

PredictiveMaintenance

Failure Mitigation

Breakdown Assistance

Support

Fault Tracking

Preventative and Planned

Scenario: Data from sensors triggers a notification, alerting facilities manager to take a measurement

Scenario: Test and measurement is part of their ongoing job duties and regular business operations.

Scenario: While completing an unassociated task, the Tech decided to test a machine in the factory (“I was simply passing by”)

End CustomerFirst Line

Maintenance

Third Party Services

Providers

EquipmentOEMs

customers need better & more integrated maintenance solutionsthe value of digital transformation is gaining traction among manufacturers, but the complexity of this strategy is causing challenges across all industries

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value of embedding & integrating smart services into equipmentembedding intelligence and software into products and systems creates new values and services opportunities across the value chain, driving competitive differentiation for products and services

Product RequirementsApply rich new data on how products are used by customers in next generation product designs

Pre-Sales Insights

Understand installed device states – end of support; end of life, etc. to drive more personalized account management, outreach and sales tactics

Supply & Distribution Chain

Track products throughout supply and distribution chains to monitor detours, delivery, compliance, and more

Remote Support ServicesDesign for [remote] Servicing: diagnostics and preventive and predictive maintenance are conducted remotely to assist field technicians and support resources automatically

Asset TrackingEfficiently utilize & maintain expensive assets by monitoring status, health, configuration and location

Manufacturing Value Chain & Smart Services New Sources of Value

Design & Engineer

Build & Integrate Sell Operate Maintain

Simulate Build

Simulate Operate

Simulate Support

Connected Designs

Connected Sales

ConnectedSupply

ConnectedSupport

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Equipment Services System Services Data Services

! Embedded machine control, information management, remote support, sensors, and analyzers

! Control systems linking all key plant equipment and embedded process engineering

! Process engineering capabilities

! Process design and optimization

! Re-engineering capabilities

! Process optimization tools! Online analyzers and sensors! Information management

(e.g. asset management)! Data analytics and downtime

optimization

Inspection & Maintenance Services Lifecycle Management Repair, Replacement,

Refurbishment

! Inspection! Re-engineering ! Service scheduling! Maintenance kits! New parts! Skilled workforce & training

! Spare parts and kits! Long-term service agreements! Performance upgrades! Lifetime extension

! Swap outs and replacements! Repair! Renewals

Mechanical Engineers Electrical Engineers

Power GenerationCentralized power generationIndustrial gas and steam turbinesDiesel and gas engineersRenewables

MachineryCompressorsPumpsValvesBlowersTurbo Expanders

Power ConversionMotors and GeneratorsDrivesInverters/ConvertorsMechanical power distribution

Electrical Distribution / ControlHigh/medium voltageLow voltageAutomation and instrumentationStandby power

Industrial Diversi�ed Players: Evolving Portfolio O�erings

Services Enabling Capability: After Market Parts/Support Services Enabling Capability: Infrastructure & Automation

smart systems is enabling a new range of strategic services for OEMs

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Traffic/bandwidth controlResponsiveness/latency Support hybrid networks

Data quality CleansingFilteringDe-duplicationSyntax transformationFormat normalizationData normalization

Descriptive AnalyticsAggregation viewTime seriesSimple correlationCPEPredictive analyticsMachine learningGraph analyticsPrescriptive analyticsMachine learningGraph analytics

Asset Management & Uptime AssuranceOperations Visibility & OptimizationSupply Chain & LogisticsCustomer Engagement & SatisfactionSafety & CompliancePeople Tracking & WayfindingResource Utilization ManagementEnvironmental Condition MonitoringUser Safety and Security

Data Transformed Information Analyzed Decisions-IntelligenceData From Sensors & Devices Data Transport

Sensing Connectivity Access & ControlAuthenticityConfidentialityIntegrity

Fast DataIngestion

Contextual Awareness

SituationalAwareness

Information Analyzed

Information Acted Upon

Ingest data atspeed and volume

approx. 1 million events/second

Correlate and enrich with contextual data

to enable better decisions

Correlate with real-time situational data

affecting mission-critical equipment

Predict threats and opportunities

using machine learning models

Trigger next best actions

using automated rules & adaptive processes

Rapid Decision Making: Less than 1 Second

Semantic transformationSemantics assignmentContext injectionGovernanceOwnership assignmentAnonymizationProtection

new core data services will be a core enabler of new strategic services

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OEM current state is one of confusion and excitementmany OEMs provide basic customer support services, but OEMs face open questions in expanding smart systems and services to provide new business values for customers

What does service & support mean for me? How will definitions of service & support change in the future?

How should we frame the resistance towards data ownership and security?

What services should be prioritized in development for customers?

How will the future market for services evolve? What steps must we take to support customers?

How do we identify partners for scalable relationships in offering services?

How do we create valuable services that will incentivize customers to adopt these new solutions?

Challenges“Real-Time[Managed] Services”

Systems & ApplicationDeployment

Basic Smart Service Development & Integration

ProvideBusiness

Process Improvements

ImproveOperatingEfficiency

EnhanceTechnology

Infrastructure

High

LowCustomer Tech Support Today

Use proven KPIs to expand platform to entire customer base

Leverage Value Adding Partners To Extend Business Processes & Risk Services

Customer Experience

Provide Engineering & Technical Support

“Provide Collaborative Solutions”

“Basic Customer Support Services”

Evolution of Digital Manufacturing Services Maturity

Identify anchor end-customers and partners to develop connected solutions via platforms

Cus

tom

er B

enef

it

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diverse challenges hindering digital and IoT adoptionalthough challenges vary among OEMs, the issues fall into the general categories of technology, business and customers

Customer

TechnologyBusiness

Data Ownership & SecurityCustomers are increasingly aware of the value and importance of their data, and are concerned about the security of their IP

Aligning the Business to Support ServicesMoving from decades-old cultures resistant to change; becoming a service-driven organization, both structurally and culturally

Clear Strategy To Start With…Developing a clear strategy to engage internal support and quickly gain customer adoption by generating tangible value; knowing what to do and how to do it

Fragmented Customer RequirementsWhile equipment may be easy to customize or configure to specific customer scenarios, doing the same for software and services is difficult

Poor User ExperienceIndustrial suppliers typically do not consider or emphasize user experience in the development of smart systems and services, resulting in diminished value and use of these systems

Managing Complex DataCollecting, transforming and integrating data from complex machines and processes to enable new application values

Planning for the FutureUnderstanding and being flexible in technology and solution development today to be prepared for future technology developments

New work styles and processes

New modes of interaction

New business and revenue

models

Recruiting The Right TalentFinding and hiring leaders and evangelists that can help drive the development and diffusion of digital throughout the company

Finding your Place in the EcosystemFinding and engaging the right partners to help fill capability gaps and add value to smart solutions, while not creating tension with current partners, channels or customers

Lack of Consensus & Leadership SupportDeveloping a shared understanding of digital and gaining top level support

Determining Organization & Relationships Walling off digital initiatives and operating independently from the mothership to drive speed and freedom has advantages, but can also just deprive mew ventures of investment, capabilities and resources

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Embedded Innovator

System Professional Solutionist Collaborator

Value Chain Aggregator Community

Solo Driven Partner Driven Open Collaboration Driven

Largely focused on remote support automation & data value for speci�c product

Leverages services automation to feed diverse needs across product provider delivery chain

Builds broad support capabilities across the entire life cycle of target equipment or delivery chain

Collects, organizes data with aim to optimize interactions across single provider dominant delivery chain

Builds and extends value via collaboration with customers, channels and providers across collective delivery chains

Drives value via extensive multi-party systems and collaboration and by leveraging private, public, and partnered information sharing

Simple

Complex

Compound

OEMs will need to design and develop new business and operating models

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SoloDriven

PartnerDriven

OpenCollaboration

Largely focused on remote support automation & data value for speci�c product

Manage System/User Experience & Delivery Chain Relationships, Intelligence and Interactions

Foster Multi-Vendor, Multi-User Interactions & Cooperative Mgmt

Leverages services automation to feed diverse needs across product provider delivery chain

Builds broad support capabilities across the entire life cycle of equipment or service delivery chain

Simple Compound Complex

Application Complexity

Busi

ness

Mod

el P

rogr

essi

on

Adoption DrivenMainly by Machine and Device OEMs

Adoption Drivenby Mix of End Customers, OEMs and Services Providers

new business models are progressive; open collaboration drives innovation

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• End customer focus

• Influencing specifications

• Driving market awareness

• Demand creation

• Channel structure and partners

• Quality of salesforce, value adders and distributors

• Number of direct/reps and effective coverage

• Leveraging distribution partners

• Technical depth and vertical market and application knowledge

• Managing indirect resources vs. end customer selling and account development

• Enterprise selling focus and skills

• Channel skills for new digital solutions

• Developing explicit channel support coverage

• Augmenting channel technical support resources

• Decoupling diretsales resources from channel

• Focus on design, engineering and construction firms

• Vertical Industry/ application expertise

• Targeting and developing strategic partners and OEMs

• Marketing communications and awareness

• Industry trade shows and marketing communications

• Sales force and channel partner tools and support (demo kits, collateral, cases)

Key Sales, Marketing, & Distribution

Challenges

KeyIssue

Levers

Value-Added Go-To-Market

Structure

Channel Skills and Scale

Salesforce Skills and Capabilities

Omni/Channel Support

Specification Influence and

Business Development

MarketingResources

and Support

new business models require new selling skills and channel partners and new go-to-market designs ....

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Digital and IoT Monetization Models

Cost-Plus Value-Based

Col

labo

rativ

eTr

ansa

ctio

nal

Rel

atio

nal

Rel

atio

nshi

p w

ith C

usto

mer

Disruptive

Value-Based

Cost-Plus

Market-Based

Cost-Plus Pricing Market-Based Pricing

Without adding significant value that differentiates your offering from the competition, prevailing market conditions will dictate your pricing.

Cost-Plus pricing is exactly what you think it is: Figure out the cost to deliver your offering, multiply by an acceptable margin, and set a price. In a commodity market, this might work.

Value-based pricing allows you the flexibility to price your offering dependent on the value you deliver to your customer- whether it is dollars saved, dollars earned, any combination of the two, or any intangible savings or benefit.

Value-Based Pricing

Transformation of this type happens when your offering is so compelling and delivers so much unique value that it literally changes the way customers experience and purchase for the entire category.

Disruptive Pricing

Product-BasedOnly

Hardware-Centric w/ Subscription

Services

Often the easiest transition to a connected product, customer pays a one-time/up-front fee and receive connectivity at no incremental costs.

In this model, customers still incur a substantial percentage of the cost of hardware (if not the entire cost), but also pay an ongoing subscription fee.

BundledModel

Subscription-Centric w/ Hardware

This approach attempts to blend the best of both worlds – some investment up front with a modest recurring expense.

Subscription-based services with customers typically incurring some modest expense up front usually at or near cost.

Managed Services Focused

A more common model in the age of smartphones, customers receive the product at no cost and vendor provides a complete ”managed” experience

Collaborative Services Focused

Builds and extends value via collaboration with customers, channels and providers across collective delivery chains

Pricing Models

new business models also require new monetization and new revenue models

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digital and IoT requires different modes of strategy development

Validated System & Solution

Opportunities

Frame New Growth Opportunities

Discover Trends,Forces &

Disruptions

Identify Apps, Use Cases &

Solution Concepts

Research, Analysis & Investigations

User, Customer, Partner Interactions

& Learnings

Design & Architect Platform & Services

Develop Strategy & Business Model

Develop & Deploy Solution

Which players, events and technologies should we care about?

Are there new combinations of technologies, products, services and partners that can drive sustained differentiation?

Does our go-to-market system design align well with the opportunity and market?

Which value elements should we develop, which obtain by partnering and which by sourcing?

What formal and informal relationships among allies might exist in the future?

How do we address systemic issues with our organizations ability to fully address the new opportunity?

Which trends, forces and disruptions likely will shape the future competitive environment?

What value elements will increase and extend the value to the customer of our core offerings?

Are our products, systems or services correctly spec’d and configured?

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1

Venture Development For Smart Systems and the Internet of Things

Early stage nurturing of new technology ventures is really a “no-man’s” land today

Today opportunities are not well addressed by either corporate venture programs or institutional investors

The “spread bet” mode of venture capitalists and

been increasingly trending towards more and more conservative investments

Corporations have become addicted to acquisitions and consolidation as a growth mechanism ........ companies are willing to overpay for established businesses to mitigate risk but need to understand that creating sustaining means taking risks

Manufacturers Need To Completely Re-Think How To Create New Growth Ventures...

Design and development of all system elements for new customer solution

Alliance network and/or ecosystem mapping and development

Coordination of common information sources and partner protocols

Development plan34

2Formulate business capitalization requirements

5

1

new growth and corporate venture development has been challenging for OEMs

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OEMs have dominantly relied on acquisitions to drive top line growth

Bubble size = Enterprise Value

1996 1998 2000 20022001 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Honeywell/Measurex

Siebe/APV

Siebe/Eurotherm

AlliedSignal Honeywell

HoneywellPitway

Danaher/Cooper Industries

ABB/Entrelec

Schneider/Legrand GE/Interlogix

Siebe/ BTR

KKR/Legrand

Eaton/Delta Electronic

GE Power Systems/Jenbacher Werke

UTC/Chubb

IMS Meters/Invensys

Schneider/TAC Building Automation

Honeywell/Silent Wireless

Schneider/ MGE UPS

Eaton/Powerware

ABB/Eslag Bailey

UTC/Kidde

GE/Edwards

Schneider/BEI Technologies

Schneider/Andover Controls

Parker Hannifan/SSD Drives

Honeywell/Novar

Doughty Hanson/Moeller

Barclays PE/Alstom Power Conversion

Johnson Electric/SAIA Burgess

Baldor Electric/Reliance & Dodge

Eaton/Moeller

Chicago Bridge & Iron/LummusEaton/

MGE Small Systems UPS

Eaton/Phoenixtec

Emerson/Roxar

Emerson/ Artesyn

Tech

Bouygues/Alston

Schneider/APC

3i/ DuezPower Systems

Cooper Industries/MTL Instruments

Schneider/Xantrex

Emerson/Chlonde

Johnson Controls/

York

UTC/GE

Security

Alstom & Schneider/Areva T&D

Doosan/Skoda Power

Danaher/BeckmanCoulter

Cooper/ Laird

Regal Beloit/A.O Smith EPC

Caterpillar/Electro Motive Diesel

Siemens/Militronics GE/

Wellstream

Schneider/Leader Harvest

GE/John Wood

GroupCaterpillar/Bucyrus

ABB/Ventyx

Honeywell/ Sperian

Schneider/Telvant

Dresser Rand/ Grupo Guasco

GE/Dresser

3M/ Cogent

3M/ Winterthur

LBO France/Converteam

Honeywell/Norcross

Danaher/Keithley Instruments

Robbins & Meyers/ T-3

Catepillar/ MWM

ATI/Ladish GE/

Converteam

UTX/Goodrich

ABB/ Baldor ElectricTerex/

DemagSulzer/

Cardio Solutons

Pentair/Norit ProcesTechnolgies

March 2000 Nasdaqall time high

March 2001Stock Market Crash

March 2003Recovery

October 2007All time high for the S&P 500

March 2009Trough in the S&P 500

August 2011S&P downgrades US debt

2014 2015 2016 2017 2018

Portfolio Expansion / Extension New and/or Sign�cantly Di�erent LoB

June 2014U.S. economy and employment surpasses the number of jobs lost in the great recession (8.7M) �ve years later

SiemensInvensys

Rail

ABB /Los Alto Research

ABB / Dynamotive

ABB /APS Tech Group

ABB / Newron

Bosch / Bauer

Bosch /Astrim Energia

Alstom /GE Signaling

Caterpiller /Johan Walter Berg AB

Emerson /APM Automation

Danaher /Navman

Emerson /Adv Protetion Tech

GE /Lufkin Industries

Honeywell /RAE Systems

Bosch /Osgood Industries

Bosch /Hausgerate

Emerson/Enardo

Danaher/Teletrac

Bosch /ZF LenkSysteme

Honeywell /Intermec

Schneider Elec /Invensys

Emerson /EGS-Appleton

GE

Alstom Energy

GE /WurldTech

Honeywell/Elster Emerson/

IntelliSAW

Danaher/Laetus

ABB /Gomtec

Alstom /Signaling Solutions

Bosch /Seeo, Inc.

Bosch /Mastercook

Bosch Re’Flect

Johnson Controls /Footfall

Honeywell /Datmax-O’Neil

Honeywell /Aviaso

Johnson Controls /Industrial Safety Tech

Johnson Controls /Hitachi Home-Life

Johnson Controls /Commercial Wireless

Johnson Controls /Creative Systems

Panasonic /Creative Systems

Panasonic /RFNet Technology

Emerson /GeoFields

Panasonic /ITC Global

Panasonic /Tactel AB

Panasonic /Majikinc Interactive

Panasonic /Quick Service System

Johnson ControlsTyco

Siemens /Dresser Rand

Danaher /Pall Ind

Parker Hanni�n /Clarcor

Pansonic /Hussmann

UTC /Rockwell

Collins

GE /Backer

Hughes

ABB /B&R

ABB /GE

Industrial

ABB /GE

Industrial

Emercon /Pentair Valve

Emerson /Paradigm

Deere / Blue River Tech

JohnsonControls /

Air DistTech

Itron / Silver Spring

Net’works

Itron /Comverge

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Focused “Builder”of Digital Ventures

Cooperative Digital ”Enabler”

Distinctive Digital “Accelerator” Skills

Leadership enhances ability to stage and launch new digital business ventures, JVs and collaborative customer innovationD

escr

iptio

nLe

ader

ship

Rol

eC

omm

on

Pitf

alls

Leadership sets vision, actively supports and directly influences digital strategies and performance in BUs – could include new venture development, support for JVs and investments in infrastructure

Leadership is less familiar with each business than unit leaders and can press for wrong targets, misallocate resources, or adopt inappropriate strategies

Leadership enhances value of synergy between teams and/or units -- the whole is worth more than the some of its parts

Leadership creates value by developing a range of distinct digital skills, critical enablers, functions, programs, and services

Leadership fosters and encourages interactions through vision development, decision-making processes & structures, policies & guidelines, relationships, or teams/staff

Leadership provides investment and the means to drive expertise-based services and architectural enablers for BUs. The best companies align unique skills with BUs and needs

Synergistic efforts are often cumbersome, inappropriate, or ineffective (benefits of synergistic relationships are often overestimated)

Leadership provides resources but is not aggressive enough about setting vision, goals and criticality of initiatives

PassiveActive

OEMs need to be focused and deliberate in their choice of innovation modes...

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smartsystems


Cor

e

M&A

INTERNAL R&D and INNOVATION

COLLABORATIVE VENTURES(Joint Ventures, Spin-Offs andMinority Equity Investments)

BUSINESS UNIT VENTURES

Joint ventures, collaborative developments, spin-offs, etc. that drive incremental revenues

INTERNAL R&D and INNOVATIONInternal core innovation and/ or product development

Lead Time To Maturity

CORPORATE VENTURES and DEVELOPMENTBUSINESS UNIT VENTURES

Sound business idea that surfaces in core where culture or ops mode limits potential

COLLBAORATIVE VENTURES

CORPORATE VENTURES & DEVELOPMENTSSupport of and cooperation with start-up companies in early stages

MERGERS and ACQUISITIONS (M&A)Acquisition of developed companies with existing business, innovations or assets

Expa

nsio

n/N

ewwe believe OEMs need to broaden their options for new growth and innovation

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Strategic Alliance To Drive Industrial Ethernet (technology from Cisco to Rockwell and market access via Rockwell channel for Cisco

Creation of GE Software to converge internal software developments to single platform – equity investment in Pivotal software to speed new platform to market

Reverse merger and acquisition to create new software business unit to drive the unique skills required in industrial software business

leading OEMs are beginning to shift to multi-modal growth strategies

Digital “Enabler”Act as an “enabler” of new digital and IoT technologies and tools

Develop new business and revenue models

De�ne reference architecture and development tools

Collaborate with BUs to drive new initiatives

Develop and drive new skills into BUs

TimeScal

e

“Builder” of New VenturesBecome central coordinator and vehicle for establishing and growing new Smart Systems growth ventures

Promising spin-o�s from BUs

External partnerships, JVs and ventures

External investors

Digital Growth “Accelerator”Take more direct control of projects and initiatives in emergent arenas not well addressed by operating BUs

Discover and develop new adjacent business opportunities to existing core businesses

Explore M&A and investment opportunities to accelerate re-positioning and transition to new growth opportunities

Coordinate and collaborate with diverse external organizations to drive new learning, JVs and related strategic business development

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OEM growth strategy models and rolesWe believe there is a new generation of OEM players that are addressing the need to create new growth modes and growth vehicles. The various approaches to creating new customer value can be grouped into a set of growth models and strategies.

Leadership takes an active role in charting the company’s future course fostering those opportunities that shift from the OEM’s existing business mix. These often occur in adjacencies or in unexplored apps or technologies. Often these players will create distinct new organization structures to grow new capability.

• ABB• Fortive **• GE **

Charts the company’s future course, fostering opportunities that mark a big shift from the company’s existing businesses (i.e. digital).

Operators aggressively manage operational efficiencies such as manufacturing, R&D, sales, M&A, or related business processes based on corporate skill sets. Often, corporate maximizes management expertise and impact by intentionally managing similar business models.

• GE **• Emerson• Danaher **• Honeywell **• Eaton

Aggressively and deliberately focus on the management of internal efficiencies and skills; digital focus is often on driving new efficiencies and services.

Some companies have skills and technology to develop new organic growth opportunities and make a special competence of evolving an organization that can nurture and accommodate the creation and resulting businesses without loss of focus. Special attention focused on developing unique organic growth capabilities.

• Rockwell Automation• 3M• National Instruments

Has competence to organically grow; deliberately nurtures new skills without losing focus or competitive edge; adept at ecosystem development.

Designs unique organizational structures, relationships, and tools to create extraordinary value with digital opportunities.

A company will typically adopt this mode when it sees a growth opportunity where existing structures or business models are not well aligned with the new opportunity –examples include clever structuring of combinations of acquisitions, creating internal ventures as separate businesses &/or “spinning-out” new companies to create an innovative culture.

• Acuity• Xylem• GE **• Bosch

Many companies acquire firms but often these moves are stop-gap measures; in certain cases, a company sees a growth opportunity that cannot be prosecuted by internal growth in the required time frame, or lack the skills. For these, buying becomes a specialization– typically building a new line of business (platform).

• Roper• Fortive-Fluke **• Schneider Electric • Danaher **

Acquires to attain new skills &/or businesses (e.g. software); builds new business “platforms” to address growth opportunities.

“Planner” “Operator”“Grower”“Designer” “Constructor”

Digital and Smart Systems Development Mode

Illustrative Examples

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2014 2015 2016 2017 2018

PTC Acquires Axeda(Device Mgmt. & Connectivity)7/23/2014

GE Acquires Bit Stew Systems(Data mgmt. & Analytics)11/15/2016

Cisco Acquires Jasper(Device Mgmt. & Connectivity)2/3/2016

Cisco Acquires ParStream(Automation & Analytics)10/26/2015

PTC Acquires Coldlight(Automation & Analytics)5/5/2015

PTC Acquires Kepware(Automation & Analytics)1/12/2016

Microsoft Acquires Solair(Device Mgmt. & Connectivity)5/3/2016

Amazon Acquires 2lemetry(Data Mgmt. & Analytics)3/12/2015

SAP Acquires Plat.One(Device Mgmt. & Connectivity)9/28/2016

PTC Acquires ThingWorx(Device Mgmt. & Connectivity)12/30/2013

Autodesk Acquires SeeControl(Data Mgmt. & Analytics)8/27/2015

Google Acquires Xively(Device Mgmt. & Connectivity)2/15/2018

Acuity Acquires Lucid(Automation & Analytics)2/12/2018

Sierra Acquires flowthings.io(Automation & Analytics)8/3/2017

Sierra Acquires Numerex(Device Mgmt. & Connectivity12/7/2017

Prodea Acquires Arrayent(Device Mgmt. & Connectivity)7/26/2017

relayr Acquires Proximetry(Device Mgmt. & Connectivity)12/23/2016

OSRAM acquires Digital Lumens(Lighting & IoT Platform)8/24/2017

Acuity Acquires DG Logik(Automation & Analytics)7/7/2017

SoftwareAG Acquires Cumulocity(Device Mgmt. & Connectivity)4/31/2017

Honeywell Acquires NextNine(Device Mgmt. & Security)6/12/2017

Altair Acquires(Device Mgmt. & Security)6/12/2017

Itron Acquires Silver Spring(Device Mgmt. & Connectivity)1/5/2018

Xylem Acquires Sensus(Meter Data Platform)8/15/2016

several OEMs are attempting to embrace smart systems and IoT platforms

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Organizational Structure,

Relationships,Interactions

Planning and Control

Systems

Skills Development

and Human Resources

Management

Culture & Leadership

Innovation Modes and

Types

Business Mix and Organization

Structure

Corporate Functions

Flexible Cross-Unit Teams and Interactions

Management Forums

& Councils

Corporate Planning

Investments and Planning

Information Systems and

Collaboration Tools

Resource Allocation

Processesand Systems

People, Capabilities

and Skills

Rewards and Incentives Schemes

Leadership Modes, Roles

and Style

Corporate Culture

Developing and Fostering

Clear Growth Vision

Explicit Growth Mechanisms &

Vehicles

Critical Enabling Roles

PerformanceMeasurement

Evolving Functions and Roles To

Foster Innovation

Research, Development

And Engineering

Digital Smart Systems and IoT

Innovation

Integration Platforms and Information

Systems

Significant Growth LeverNew Growth Catalyst

LeadershipInvolvement in

InnovationPrograms

understanding new business and operating models as well as organizational development levers will be critical to driving new digital growth

Business Design and Model

Business Structure To Innovate and Deliver Value

How Money Is Made

Ecosystem

RevenueModel

Structure

Network of Value Adders and Contributors

Core Capabilities

Processes & Systems

CriticalEnabling

Skills

Technology& IP

Unique ProprietaryCapabilities & Processes

Core Skills & Knowledge

Technology Development & Intellectual Property

Function & Content

PlatformCapabilities

ServicesSupport

System and Solution Delivery

Enable Partners to Extend Value

Features &Capabilities

Services to SupportOfferings User

Experience

Sales & Channel

TargetCustomers

Customer Engagement

Marketing& Brand

How Offerings Are Delivered To Customers

Value and BenefitsPerceived By

Customers

Customer Segmentationand Targeting

User, Participant and Customer Experience

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OEMs need new ways to interact to create new growth strategies

IoT and Digital Building Blocks

Strategic Assets

Customer Experience

Operational Process

Business Model

Customer Understanding

Customer Touch Points & Experiences

New Top Line Growth

Process & Manufacturing Digitization

Worker & Process Enablement

Performance Management

Digitally-Modif ied Business

New Digital Partnered Models

New Revenue and Value Realization

Transformative IoT and Digital Vision

Iterative Transformation Roadmap

Sales force

Sales & channels

Products & content

Product innovationPartnership network

Brand

Customer knowledge

Culture

Infrastructure InvestmentSkills Initiatives

IoT and D

igital Governance

IoT

and

Dig

ital

Eng

agem

ent

• Defining a digital and IoT vision and strategy based on understanding new and novel requirements for manufacturing and customers

• Development and acceleration for new smart systems, services and solutions

• Supported by new internal processes, skills and roles required to adopt new tech and capabilities

• Supported by building and sustaining partner and ecosystem values

Most knowledge comes from human experience and expertise. Today, however, knowledge and expertise largely resides in functional silos and systems dispersed across organizations. Acting singularly, functional organizations are constrained by the resources under their control. Legacy processes and habits inhibit any natural ability to communicate and work together to solve big problems or create new solutions.

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Smart SystemsDesign and

DevelopmentProcess


smart systems design and development process

Smart systems design is a new discipline that lies between the fault lines of existing disciplines

Today, with the emergence of connected products and information-based services, even more complexity has arisen in the design of systems and services as well as in the core of the product.

Because networks add yet more complexity to the process and because just about everything will get connected, we strongly believe this environment requires combinations of several disciplines and methods in order to fully address the nature of smart connected business opportunities.

Convergence of design, strategy and innovation processes is creating a new smart systems design process

Business Strategy

Related Disciplines& Fields

Product & ServiceDesign

Innovation Processes

Graphic Design

Industrial Design

ServicesDesign

InteractionDesign

ComplexSystemsDesign

Product & ServiceStrategy

Line of BusinessStrategy

CorporateStrategy & Portfolio Mgmt

Innovation Processes& Mgmt

Design Thinking

Smart Systems Design

Design, as well as strategy, is concerned with creating values and making them visible, not to mention profitable. Business strategy and design today need to extend to the experience that customers will have with connected products, services, spaces or a mix of these and, therefore must integrate the processes and systems that are behind these experiences with decisions related to both design and strategy.

The convergence of design with strategy and related innovation processes will inevitably lead to a new integrated set of processes, methods and disciplines -- the advent of what we are calling Smart Systems Design.

recognizing the need for new methods and processes is a minimum requirement...

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Smart SystemsDesign andDevelopmentProcess

smartsystems


Skills

T

echnology

How can we drive empathy, participation and motivation? How can we put human sensibilities and behaviors at the center of the solution?

How can an organization turns its workers, partners, and customers into believers and contributors? How can we solve really big problems or create unique new offerings?

How can we move beyond a conventional view of technology where all tangible and intangible skills and assets including people, brands, technologies, relationships, and processes are fully leveraged?

How can we deliberately organize to anticipate technologies that are disruptive or sustaining in nature.....innovation that creates new (and unexpected) opportunities?

we need a radically new frame of reference...that leverages the convergence of design, strategy and innovation processes

Relationships

Skills Technology

Data & Content

Experience Behaviors

How can we better understand customer experience through the user’s eyes and through the creativity of multiple parallel participants?

How can we bettter understand the value of data and information coming from products, systems and people?

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DISCOVER How to use customer experience and technology uncertainty to reveal new opportunities

DEFINE Specific development opportunities including formal and informal relationships

DEVELOP System and services delivery modes including go-to-market design

DEPLOY Align investments with strategy and model

Understand likely evolution of competitive environment

Business modeldesign and vali-dation

User experienceand understanding

SYSTEMS DESIGN

We believe design needs to transcend discrete product or service innovation. Assuming that the role of design is only about making existing products or services more attractive no longer works. Business designers need to creatively imagine fully developed systems and whole marketplaces. Companies need to envision the design role as one that can address product, service and business systems.

RELATIONSHIPS

Problem solving for new Smart Systems opportunities must address tough questions: how can an organization turns its workers, partners, and customers into believers and contributors? How can we make changes that can impact multiple functions and organizations and ultimately solve really big problems or create unique new offerings? We are firm believers in the human element - the community as a manifestation of the system and visa versa. Behaviors of users, customers, teams, functions, leadership, all need to considered. Understanding empathy, participation, motivations - putting human sensibilities and behaviors at the center of the solution is key.

SKILLS

Companies need to move beyond a conventional orientation to technology skills and knowledge. Organizations need a disciplined process focused on optimizing all tangible and intangible skills and assets including people and competencies, brands and positioning, technologies and intellectual property, alliances, relationships and business and operational processes.

to conceive and design smart systems, organizations need an integrated approach...

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smartsystems


business model design and development needs to be truly creative .........

Which trends, forces and disruptions likely will shape the future competitive environment?

What value elements (e.g. embedded logic, networked devices, software, analytics, wireless, etc.) will increase and extend the value to the customer of our core offerings?

Can we design a superior solution offering that dominates market share or earns a substantial premium?

How can we best make, partner or acquire those value elements; who are the allies we should cultivate?

Are there new combinations of technologies, products, services and partners that can drive sustained differentiation?

Which value elements should we develop, which obtain by partnering and which by sourcing?

What formal and informal relationships among allies might exist in the future?

What characteristics should we use to describe our user’s and customer’s needs; how should we segment our world?

Which actual or potential segments are most attractive; which opportunities should we focus on?

Are customers measurably pleased with our offerings; do customers speak directly about their interactions with our company; does our brand reflect unique attributes?

Are there robust partners and communities that enhance users’ experience?

BUSINESS ORGANIZATION and DESIGNConfiguring core skills and relationships within an OEM are the basis for new innovation models

SMART SYSTEMS and SERVICES OFFERINGSOrganizing customer and user innovations

Unique / Distinct Features, Functions and Capabilities

Augmenting Capabilitiesand Services/Support

CustomizationModularityManageabilityBest-in-Class PerformanceEnvironment/SustainabilityProductivity and EfficienciesResource UtilizationContent ElementsSafety

Integrated OfferingsDirect Add-onsThird Party ExtensionsBundled FunctionsGuaranteeFinancial Incentives (e.g. lease)Loyalty ProgramsPersonalizationSelf-ServiceService Supplements/RangeUser CommunitiesSupport Systems

Systems and Solutions

Function & Content

PlatformCapabilities

DeliveryServices

What Unrealized Technology and Innovation Opportunities Are Available To Our Company?

What creative and disruptive players are present in the arena; what new competitive structure might these trends forge?

What is the evolving competitive and value structure and how can we align but distinctly?

How open and interoperable are our solutions; can we integrate and connect with peers in unique ways?

Does the company offer modularproducts and services that can also be integrated or purchased as packages?

How Can We Best Use Technological & Market Uncertainty To Our Advantage?

USER and CUSTOMER EXPERIENCEStructuring the elements to enable unique user and customer interactions

Customer Engagement

User Experience

Sales & Channel

Target CustomerEngagement & Brand

UX/UI EffectivenessEase of UseFunctionalityLook, feel & StyleConfigurabilityPersonalization CurationAutomationEnablingSimplificationCuration

Behavioral SegmentationIndustry SegmentationUser Segmentation AffinityEmpathyCommunityValues AlignmentStatus and RecognitionBrand Leverage/ExtensionCo-BrandingModular BrandingPrivate Labeling

Context SpecificCross-SellingDiversificationExperience CenterFlagship StoreGo DirectIndirect DistributionMulti-Level MarketingNon-Traditional ChannelsOn DemandPop-Up Presence

How Offerings Are Delivered Users

Positioning,Empathy and Affinity

Uniquely Enabled Interactions

Which value elements in which segments will give us a sustainable advantage?

Leadership StyleCompany CultureDecentralized Incentive SystemsTeam StructuresStaff DevelopmentStaff EducationPlanning SystemsCorp Venture Dev DevelopmentIncubatorsCompetency Centers

Monetization andWays To Make Money

Value Creating Networks and Relationships

Alignment, Leverage and Development of Resources

Micros ServicesPremiumRisk-SharingScaled TransactionsSwitchboardAd-SupportedAuctionBundled pricingCost LeadershipDisaggregated Pricing

Technology SourcingCommercial AlliancesCustomer CollaborationPartner Collaboration FranchisingOpen InnovationCrowdsourcingMerger/AcquisitionsMinority Investments

Intellectual PropertyKnowledge MgmtOrganizational DesignIT Sys and IntegrationLean/Flex ProductionLogistics SystemsProcess AutomationProcess EfficiencyStandardizationAnalyticsStrategic DesignInnovation Modes

SubscriptionsFlexible PricingFreemiumInstalled BaseLicensingMembershipMetered TransactionsFinancing

Business Design and Core Capabilities

EcosystemRevenueModel

Structure Processes & Systems

EnablingSkills

Technology& IP

What Business Design and Architecture Will Build Long-Term Success For Our Company?

What configuration of business skills, partners, business model and systems drives uniqueness?

Can we monetize our offerings in ways that are different from competitors or industry norms; can we make money and better margins via multiple revenue streams from different constituencies?

What Business Design Should We Pursue; Which Combination Of Value Elements Will Give Us An Advantage?

What organizational levers will best operationalize these priorities? How should they be configured?

What are our most important capability gaps to fill?

How can we align investment resources with our chosen strategy?

What top management priorities will lead to the most effective fulfillment of our market role?

What Management Priorities Will Allow Us To Realize Our Strategy?

What Unrealized Market Leadership Opportunities Are Available To Our Company?

Do our systems and solutions possess unique features and functionality that captivate customers?

Does the company deliver its offerings to customers and users in ways that challenge industry norms?

Do diverse partners help sell or deliver the company’s offerings?

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STRATEGY DESIGN

FORUMS, TOOLS& INTERACTIONSRESEARCH

DIS

COVE

R

Ex

plor

e

Ex

peri

ence

Map

Conceive

Participate Prototype ModelInnovate

Validate

DEFINE DEVELOP

ArchitectInvest

Build

Research, Analysis, Forecasts,Content & Reports

Player & Event Tracking Platform

Smart Systems Framework

Smart Systems Lab

Tech Discovery Forums

Domain Adoption Forums

Revenue &Business Models

Innovation Workshops

GrowthOpportunityAssessments

DEPLO

Y

We plan and build new businesses and growth opportunities by leveraging deep analysis, thoughtful interactions and unique systems and business model design and development tools

To discover, design and develop innovative smart systems, organizations must consider all the elements involved and the context they fit into. The benefits that will flow from the recognition that traditional strategy and product development protocols will not meet the needs of a connected business are nearly infinite.

Harbor Research Inc. has nearly 30 years of experience supporting new business creation and development. We continually strive to generate deep insight into what drives value creation and competitive advantage in our clients’ businesses and the economy as a whole. Harbor helps companies outperform their peers and rivals by instilling innovation into the core of their business development processes. We help client’s foster creative thinking, facilitate diverse perspectives and unconventional insight and, most importantly, we directly participate. The result is increased certainty around vital new business decisions.

We work collaboratively to help clients come to confident answers today while also building their capabilities for the future - we are passionate about creating lasting impact. We believe that innovation can be driven from systematic methods and that enduring capabilities and processes can be built to reduce the risks associated with new growth ventures. Every solution we propose is informed by a combination of real world experience and unique processes and methods that are tailored to the dynamics of your organization.

our approach is simple: help clients create and capture value by combining accurate data discovery and analysis with strategy development and creative systems-thinking

Documents

Experience Behaviors smart Developing New Growth systems ......Opportunities at the Intersection of Smart Systems, Services and the Internet of Things smart systems design. ... expanding