The impact the pandemic continues to have on manufacturers is truly unprecedented, shadowing most aspects of "business as usual" with a heavy cloud of uncertainty. However, businesses need to operate. For many, this means finding creative ways to capitalize on internal strengths – modifying offerings to fit new needs, rapidly developing completely new products or simply looking for new applications for existing products.
Revenue streams, however, should extend beyond selling physical goods, especially in today’s digital environment where a growing majority of products now offer some level of connectivity. Simply put, manufacturers should be better utilizing data. After all, as businesses struggle to navigate the new normal, they are still generating mountains of data and most have barely scratched the surface when it comes to exploring the opportunities data represents.
In a recent Boston Consulting Group report, Surprising Alternative Uses of IoT Data, authors Massimo Russo and Tian Feng spotlight a number of different examples of alternative data uses “linked to insights and application using the data outside of the intent of the initial IoT application.” The authors discuss, for instance, how IBM’s partial acquisition of The Weather Company yielded benefits the investment community could not initially recognize. Specifically, it turns out that weather sensors, combined with IBM’s processing capabilities, can yield highly granular forecasts which are valuable on their own and for IBM’s cloud ecosystem.
Manufacturing applications
When manufacturers couple strategic creativity with a solid data strategy, the opportunities can result in sustainable new business models. This is especially true when exploring alternative data use cases. For example, although fulfilling service contract commitments might be the initial use case of monitoring connected motors in a factory, that same knowledge of the uptime and duty cycle of the motor can actually infer valuable information about facility output. Russo suggests, when properly packaged, this is the type of information could prove quite valuable to a hedge fund.
Or consider the example of using collected data to build digital twins. “Comparing digital twin performance to that of deployed equipment can enable you to identify deviations and predict failures,” he says. “However, you could also license the digital twin to the customer so that they can conduct simulations as they consider changing parameters.”
Expanding horizons
According to the BCG report, technical or structural limitations as well as a lack of focus tend to be key reasons why industry has not seen more manufacturers embracing the idea of alternative data use cases. However, with the right approach, the opportunity still exists for manufacturers to capitalize on new data use cases.
Interested in getting started? Russo offers the following recommendations:
Map it out. In order to make the most of alternative data, the first step is to map out the ecosystem of the data you are generating either internally or across your connected deployments. Understanding what the ecosystem looks like is crucial to building an effective data strategy and recognizing who would be interested in available data.
Throughout the mapping process, it is important to avoid focusing too close to their own business or industry. After all, wealth potential further away from the core is something manufacturers need to explore. Specifically, manufacturers should shift thinking downstream. For instance, consider how your data could prove valuable to insurance, financial services or even healthcare sectors.
Partner up. The key to success is to find models that make sense for the organization and its capabilities. However, as manufacturers explore alternative use cases, it may also make sense to partner with analytic firms, perhaps with a revenue sharing agreement. A partner who focuses entirely on data analytics can play a key role in co-develop an offering, especially if its audience is a dramatic shift from the organization’s traditional customer base.
“The focus should be on mapping where your data could be useful, understanding who the players are across the verticals (aggregators and solutions providers) as well as identifying startups who are building offerings that could benefit from access to your data,” says Russo.
Although most manufacturers realize that their data is valuable, readiness to capitalize on data-centric opportunities varies significantly. “When you start thinking about your own data and combining it with other sources you can quickly build some meaningful offerings,” he says. “If you think about manufacturers like John Deere or critical component manufacturers, it shows the possibilities. The number of use cases where there is high value for the customer and where you can provide meaningful offerings for new customers continues to grow.”
