A better way to IoT: "Buy and build"

Original equipment manufacturers need an IoT strategy

Machine operators are looking for equipment and digital solutions that improve performance. They are on the hunt for equipment providers who can help them reduce downtime, enhance efficiency, improve product quality—and ultimately improve their margins.

According to McKinsey, remote asset condition monitoring can reduce maintenance costs by 30% and cut machine downtime by 50%. Uptime equals revenue for equipment operators, giving OEMs every incentive to build smarter products that monitor equipment health and catch problems before they arise. These products enable you to be more proactive and efficient with service calls, solving problems faster. They also enhance equipment performance, helping your customers to improve operational efficiency and improve output quality.

To survive and thrive in this new era, OEMs must start offering connected products. Smarter equipment integrated with the Internet of Things (IoT) helps build a future in which you deliver a better customer experience. With insights into how your equipment performs and which features customers value most, you can increase the cadence of product development.

The value of connected equipment goes beyond uptime. For equipment makers, the source of value is steadily shifting from hardware to software and services. With intensifying global competition and increasing commodification, margins are eroding quickly. IoT-connected equipment opens the door to offering new revenue-generating services that bring in more, and more consistent, cash flow than a traditional one-time sales model. These services range from remote monitoring and aftermarket sales to new business models such as Equipment-as-a-Service.

Creating an IoT strategy is complex, and executing it is even harder. Building solutions on your own can be challenging, leading many OEMs to look for a trusted advisor to accelerate the creation of resilient IoT services.

If you don’t take action now, trust that your competitors will—and soon. The benefits are too great to ignore.

Buy, build, or both? Choosing the best approach to develop smart, connected products

So, how do you get started on your journey to offering smart, connected equipment? Which path offers the most scalable approach, the fastest time to implementation, and is the most cost-effective to build and maintain?

The question many equipment manufacturers face is: Should you build an IoT solution in-house from the ground up, with unlimited customization to meet your specific needs? Or should you buy a commercially available platform as the foundation of your strategy, even if it lacks certain features you want to support internally-facing operations or externally-facing customer services?

There are pros and cons to each approach. Soon, we’ll explore why “buy or build” is a false choice.

Building your own IoT solutions: The pros and cons

You might think it’s best to create your own solution. After all, you know your products better than anyone, and understand what information and services your customers want. Let’s see what you can expect if you build your own IoT solutions from scratch.

The pros

The benefit of building your own IoT solutions is clear: The freedom to design it from the ground up and create a solution tailored to your needs, and the needs of your customers. You have control over the scope and functionality of your IoT solution. You can leverage in-house expertise to identify the information you want to generate for internal consumption or performance metrics to share with customers.

You also have the flexibility to integrate the solution with your current systems and processes. You can also align the IoT solution to your existing IT strategy, deploying it on the systems and clouds that you already use in harmony with your IT architecture.

The cons

Yet for all the perceived advantages of building your own IoT solutions, the list of cons is far longer. Together, these cons introduce headwinds that make it harder to launch new IoT-based services quickly, and harder to maintain them so they deliver sustained value. When you build your own solutions, it centers attention for IoT projects on the technology rather than focusing on your intended outcome. When project teams get bogged down by technical details, user needs take a back seat to engineering.

• Slower time to market lets competitors outpace you.
  When building an IoT solution from scratch, you’ll need to spend time assembling technology building blocks before you can even start building the value-added applications. For a point of comparison, think about the weeks and months it takes to procure, build, and configure an on-premises data center, versus the hours and days it takes to spin up cloud computing resources. And when it comes time to update the software, you are on your own. Plus, speed is key to learning: The faster you can launch IoT solutions, the sooner you can measure what works and update your strategy.
• A bigger up-front investment means a longer payback period.
  Building your own IoT solutions generally means investing a larger upfront amount. You need to build the baseline, non-differentiating components of an IoT platform you would otherwise get out of the box. Higher up-front costs make corporate buy-in challenging—to say nothing of the resources you are diverting from other parts of the business.
• In-house skills are at a premium.
  You’ll need developers and engineers with a broad range of skills to connect IoT devices, create user-friendly platforms, and align IoT services with business goals. Expertise is scarce. Can you attract and retain that talent? Beecham Research has found that in-house expertise is rare—87% of companies they surveyed felt that they lacked the right expertise to select and procure the right approach to device connectivity, for example.
• Scaling on your own is incredibly difficult.
  Companies with sufficient in-house expertise can build a workable pilot project. But approaches that are feasible for a handful of machines or dozens of sensors can quickly run into roadblocks when it is time to add true enterprise capabilities to your project. Manufacturing services using connected equipment require enterprise-grade IoT solutions: High availability, security by design, scalability to tens of thousands of devices, multi-tenancy, fast recovery times, and efficient data management.
• IoT solutions are a service, not a product or a project.
  IoT solutions you develop are not projects with a defined start and end date. They are not products in the traditional sense of build, sell, and ship. Rather, they are services with a lifecycle that you have to support. They require continued maintenance, customer support, and improvement. Because the lifecycle for software products is much shorter than for equipment, you can expect multiple software updates for every generation of hardware you design and ship. As developers shift from building new products to supporting, maintaining, and updating existing products, they become a cost center—leading to inevitable tradeoffs between maintaining what you have and building new innovative products.

In other words, when pursuing a “build” strategy for your IoT initiatives, with the right talent, you have the opportunity to build an exquisite solution. The solution may be beautifully engineered, but it will likely be slower out of the gate to launch. A custom-built solution tends to be inflexible to change. It requires upkeep that draws resources from your other initiatives. Costs scale fast, so you can’t afford to have successful pilot projects scale without breaking the bank.

All these limitations mean that far more often than not, in-house projects ultimately lead to a dead end.

Buying an IoT platform: The pros and cons

What about the other end of the spectrum? Does buying an out-of-the-box IoT platform tailored to specific use cases lead to IoT solutions that fulfill your smart equipment strategy? There are numerous IoT platforms offering plug-and-play capabilities out of the box—what’s the value of using a standardized approach?

The pros

When you purchase an IoT platform, you can expect to gain a partner that offers a certain level of industry and application expertise. Take advantage of pre-built tools that help you launch services around common use cases, such as remote monitoring or predictive maintenance, to see faster value. With the IoT partner hosting and managing your IoT solutions, your team can focus on adding customer value rather than managing infrastructure, configuring device communication, building security measures, and other aspects that make IoT challenging. In addition, many IoT providers build a partner ecosystem that makes it easier to adopt complementary technologies from a group of industry providers.

The cons

While there are clear advantages to buying a platform, choosing the wrong platform can be constraining.

• Opportunities can be limited.
  For equipment manufacturers, the world of IoT is large and expanding. Buying a point IoT solution, such as one designed for remote monitoring, can help you launch a service faster than building it yourself. However, it is inherently limiting. When you need to expand to other use cases, such as smart field services or performance management, you may need to start from scratch. Additionally, it will be more challenging to build a competitive differentiation because you will be limited to the vendor’s pre-configured solutions.
• You may be locked into a single environment.
  IoT spans the continuum from on-premises to hybrid cloud to public cloud to edge. Your vendor may only operate in a limited set of environments, leaving you at a disadvantage when you need to expand quickly and efficiently. There is value in being able to bring the same IoT solutions to new environments without changing your approach.

In reality, most OEMs will not be able to use a platform right out of the box. Even though pre-built platforms can simplify certain use cases, every deployment usually requires some level of configuration, especially if your use case is unique or complex. While an IoT platform you buy can accelerate execution, you’ll still need to customize it to align with your unique products, strategy, and customer needs. The best approach combines the benefits of buying a platform to speed up the execution of your strategy with the flexibility to customize it with extensions and capabilities that differentiate your business.

The solution: “Buy AND build” your IoT platform

The fastest, most sustainable path to IoT innovation is not to buy or to build—it’s to buy AND build. This means buying a flexible IoT platform as the foundation for innovation and differentiation. Ready-to-use solutions help you achieve strategic business outcomes quickly, while intuitive tools enable you to easily build your own services on top. You get a solid, reliable, scalable IoT platform as the foundation, with the ability to innovate and stand out in the market.

The buy and build approach helps you execute your IoT strategy quickly and sustainably. This covers everything from your smart, connected products (i.e. digital equipment) to customer engagement and go-to-market plans. It includes the customer-facing services you want to launch, the internal systems needed to support these services, and the technology architecture and roadmap required to execute on your vision.

How “buy and build” unlocks IoT value

When it comes to choosing an IoT strategy, “buy and build” is the best way forward. Rather than using resources to reinvent the wheel by re-creating the functional building blocks of an IoT platform, you can focus your time and energy on what differentiates you from the competition.

Figure 1: Buy and build unlocks IoT value.

When you “buy and build,” you start on day one with 80 percent of the IoT functionality you need, right out of the box. The right platform offers a rock-solid foundation with features and capabilities you’ll need for enterprise grade IoT: Security by design, the ability to scale from pilot projects to global portfolios, integrations to make the most of your IoT data, and more.

Then, you can build out the remaining 20 percent of your IoT strategy, focusing on what makes your business unique and delivers an outstanding customer experience.

There is one prerequisite to a successful “buy and build” strategy: The ability to build new services, integrations, and applications efficiently with the IoT platform you’ve bought. Go too far down the one-size-fits-all vendor approach and you will lack the flexibility to optimize your solutions for your customers. Choose a platform that provides minimal pre-configured solutions, and you will be forced to build your own approaches to non-differentiating IoT platform features (like large-scale device management) from scratch.

The business benefits of “buy and build”

• Minimize total cost of ownership.
  The cost to build—and maintain—your own IoT capabilities in-house is significant. Buying the right IoT platform means you can avoid the substantial costs of development and instead focus on winning, serving, and retaining customers.
• Scale from pilot programs to global operations.
  Look for a platform that can expand to multiple sites. You should be able to manage devices and data points using the same platform and interfaces, whether for an initial proof of concept or global operations.
• Integrate with existing applications.
  IoT analytics benefit from easy integration with your existing enterprise applications. Choose a platform that offers plug-and-play integration with leading software and provides a wide range of extension options, enabling you to use business data, models, and output effectively.
• Run with reliable, secure operations.
  Security is critical for enterprise-grade IoT. Select a platform that supports efficient and accurate firmware and software updates to patch vulnerabilities, while protecting against cyberattacks such as DDoS.
• Enhance the customer experience.
  With the rise of fast, responsive self-service apps in the consumer space, your manufacturing customers now expect more from their business apps too. Create solutions with platforms that offer information and control through an intuitive, modern user interface (UI). You can build these innovative and differentiating solutions, specific to your market, customers, and products, on top of a solid, pre-configured IoT platform foundation.
• Serve every stakeholder.
  Remember all those stakeholders we mentioned—your product managers, operations technicians, developers, and more? The “buy and build” strategy provides pre-configured solutions to meet their needs, giving them the information and capabilities they need to contribute to your organization’s strategy.
• Achieve strategic outcomes faster.
  All the benefits listed above help you achieve your strategic goals faster. Even when building new, differentiating solutions, a solid IoT platform foundation with robust device management, scalable architecture, integrated data management, and strong security allows you to build faster and at a lower cost.

Keep in mind that these benefits are not universal to all commercially available IoT platforms. These are the benefits of a “buy and build” strategy, which relies on choosing the right platform as your foundation for innovation.

Cumulocity for “buy and build”

Cumulocity is the award-winning, industry-leading IoT platform that enables organizations to rapidly deliver groundbreaking IoT-enabled business transformation projects. It empowers equipment manufacturers to create and deploy smart, connected devices to achieve strategic goals: Delivering machines that operate more reliably and efficiently with higher-quality output, increasing revenue from maintenance and aftermarket sales, and transforming business models with a more flexible range of equipment purchase options.

Key capabilities of the Cumulocity platform help our customers outperform:

• Rapidly build, test, and scale IoT-based solutions.
  Self-service tools accelerate your implementation and adoption of customer-focused IoT solutions. Your team, along with your customers’ subject matter experts, can quickly enhance your IoT solution’s capabilities and bring innovative products to market faster.
• Leverage ecosystem of partners to create end-to-end solutions.
  Through Cumulocity’s partner ecosystem, we provide pre-integrated and validated offerings. This includes technology partners who contribute functional capabilities embedded in Cumulocity; device partners that provide plug-and-play interoperability to gateways and sensors; solution partners who create domain- or use case-specific applications for verticals; systems integrators who help our customers stand up IT and OT solutions; and a developer ecosystem of technical users who use and contribute reusable assets such as microservices.
• Enterprise grade security and reliability.
  Cumulocity is built for the future of manufacturing, when entire lines of business rely on dependable and secure IoT performance. The enterprise-grade platform helps you efficiently manage millions of devices, maintains uptime in the face of a mass disconnect or DDoS attack, and protects valuable data.
• Integrate with any enterprise app.
  Integration is a value multiplier. Make the most of your IoT data by integrating applications and functions including field services, customer care, CRM, and ERP systems, wherever they are running. This helps you streamline operations. Common use cases include automatic condition-based monitoring, maintenance scheduling, and proactive ordering of parts. The possibilities are as limitless as the number of applications you can talk to.
• Empower domain experts with self-service tools.
  Create an army of citizen developers, from your staff to you customer base, with intuitive tools that simplify the process of creating innovative new products. Machine operators, process engineers, and plant managers can use streaming analytics tools and predictive capabilities to detect trends and anomalies in areas such as predictive maintenance. It’s possible with powerful tools, delivered through a simple UI.

The (many) ways Cumulocity supports a “buy and build” strategy

The platform you buy matters. Cumulocity stands out as a scalable, enterprise-grade platform that helps you generate value faster and reduces total cost of ownership (TCO).

Faster ROI through pre-built applications

Cumulocity includes several pre-built applications designed to simplify and accelerate the implementation of IoT solutions:

IoT Cockpit

A single dashboard to manage and monitor IoT assets and data. Customize your view with widgets and smart rules to visualize data from a business perspective.

Digital Twin Manager

A self-service application that brings devices into business context, visualizes and interacts with assets, integrates with business processes, monitors all the important device properties in one place, and syncs across a multi-tenant architecture.

Streaming analytics

Access, analyze, and act on both historical and real-time, fast-moving live data from IoT devices. Powered by Apama, the industry’s leading streaming analytics engine, you can define streaming analytics with easy-to-connect building blocks—no coding required.

Analytics Builder

A no-code, drag-and-drop tool for building analytic models that use streaming data to generate new data or output events. User-defined operations can trigger alerts, trigger new operations, or change how your devices operate.

Application Builder

Quickly develop HTML5 web applications without coding. By using widgets connected to Cumulocity’s GitHub, your applications will receive regular updates.

Professional services

Accelerate the development and deployment of new solutions with services delivered by IoT and business solutions experts.

Future-proof your IoT success

Easily scale to thousands or millions of devices

The bulk device management capabilities allow you to onboard, update, and manage as many devices and IoT gateways as necessary from a single screen.

Develop once, deploy anywhere

Cumulocity is an independent, open platform that can run in any combination of the cloud, on-premise, or at the edge, giving you the flexibility to grow in the future and deploy on almost any device and infrastructure, integrating with any enterprise app. Analytics can even be pushed to the edge, running autonomously on low-powered, miniaturized devices in the field to decrease network usage and handle significant events when connectivity is down.

Cloud agnostic: Freedom for your future

By working with a cloud-agnostic platform, you can avoid vendor lock-in for your cloud storage providers. As pricing for remote storage evolves, you can take advantage of the freedom to optimize on cost across vendors.

Outsource API and microservices updates

As the platform continues to evolve and improve, responsibility for ensuring compatibility with your integrations remains with Cumulocity. You can be confident that system upgrades will not impact your existing integrations.

True multi-tenancy

Manage different customers or business units using different tenants across cloud providers, ensuring true data segregation and security.

Get started fast with “buy and build”

Equipment makers have an opportunity to build connected products that deliver greater value and improve the customer experience. A “buy and build” approach is the fastest, lowest risk strategy to produce tangible business outcomes. And with IoT initiatives, success breeds success: The more successful you are with creating and scaling one solution, the more support you will gain for future initiatives—whether they are new lines of connected products, new digital services, or new business models incorporating EaaS.

When you employ a “buy and build” strategy, you get 80 percent of the capabilities ready to go out of the box. You can then focus on building the last 20 percent of your capabilities to best serve your customers. Focus on what makes your business special and leave the technology for building IoT to those who have made it their core business. To find out more, see what Cumulocity can do for you. And when you’re ready, sign up for your free trial to start doing great things with the #1 low-code, self-service IoT platform.