Smart connected products for resilient revenue

New digital services for a truly connected world

The expectations of your customers, management, and business partners are changing quickly as the world continues to become more connected. From the hospital bed to the manufacturing floor, being an innovation leader means increased pressure to stay ahead of the competition by:

• Shortening development cycles.
• Delivering a Connected Customer Experience.
• Diversifying your revenue by moving from equipment-only sales to digital services.

The Internet of Things (IoT) is the foundation enabling you to deliver smart connected products and innovative new services to differentiate, grow, and increase customer loyalty.

 

The numbers tell the story

• 80% of equipment loses contact with the end customer.
• 8x greater total shareholder return among machinery companies that combine hardware, software, and services, compared to laggards.
• 95% of McKinsey Machinery and Industrial Automation survey respondents who expect to change their business models to be successful in the future.

These numbers confirm you should and must keep pushing forward. Read on to meet real-world pros at connected products, see how you can connect products faster and achieve measurable business results, and how to overcome the challenges that might be hampering your journey to IoT maturity.

Figure 1. IoT maturity curve.

Why smart connected products?

What would happen if you stuck to only offering direct equipment sales? It’s a bleak picture: Your competition would start offering more flexible pricing and services programs. This would make it tougher to acquire and keep new customers. Margin and top-line revenue would shrink as sales would fall flat. Revenue would come from a smaller number of customers. Your organization would end up only being able to compete on price.

And eventually—get left behind.

But it’s relatively easy to deploy quick and simple IoT use cases that are low risk and act as a clear proof of concept to stakeholders. If you can demonstrate to your customers that you can create value for them in new ways, you’ll find yourself with a resilient recurring revenue that future-proofs your business. Freeing you up to focus more on innovation and design of new products and services to attract new customers.

Six reasons to get started

1. Reduce downtime and maintenance costs. Smart connected products are less costly to maintain due to fewer on-site service calls. Real-time data keeps you informed of potential problems to address immediately—no need to wait for product failure. Get proactive with your field services and enable field service technicians to be sent to the right area at the right time, optimize your available resources, and reduce your organization’s carbon footprint in the process. McKinsey has shown remote asset condition monitoring can reduce maintenance costs by 30 percent and cut machine downtime by 50 percent. On average, Cumulocity customers realized a decrease in maintenance costs by 50% and a 23% increase in first call repair rate. Inspire customer confidence in your products and services by providing exceptional service and operational efficiencies.
2. Accelerate growth with new revenue streams and improve margins. Smart connected products can double services revenue within three to five years, without making large investments in CAPEX, developing new products, or building extensive cost reduction programs, McKinsey reports. EBIT margins for services can be up to four times higher than those for original equipment. In fact, Cumulocity customers who connect their products report an increase in service revenue up to 31%, an increase in sales volume by 4.5%, and an increase in total revenue in one year up by 2.4%. 
3. Provide the features your customers want. This is the era of the Connected Customer Experience, and IoT is at the front and center of it. For decades, companies have been selling products with features that they love but customers ignore. The capture of data and discovery of insights on usage and performance from connected products helps you engage more deeply with customers and offers loyalty-building value.  In a hyper digital world, users can compare products and test such features before committing to purchase—so they must be fit for purpose. Track how your products are being used and build new features that existing and future customers really need.
4. Execute on your sustainability strategy. No matter the IoT use case—remote monitoring, smart field services, or performance optimization—there are sustainability benefits for you and your customers. IoT is a huge ESG value driver and an enabler of an organization’s sustainability strategy. Sample deployments include smart metering, smart water management, energy management, and air pollution monitoring.
5. Offer Equipment-as-a-Service. Making heavy investments in expensive assets is a risky business for anyone. Enterprise customers want to avoid big CAPEX investments, keep expenses in line with revenue, and better manage costs. This has triggered a shift to wanting to pay for tangible outcomes. By offering Equipment-as-a Service, with charges based on actual usage (not downtime), you create revenue on a recurring basis, across the entirety of the product lifecycle, rather than on a one-off basis.
6. Build lasting customer relationships. Improve your customers’ experience using insights on usage and performance from your connected products. Engage with your customers more frequently to help them get more value from your products. Customize service levels and pricing based on their use to deliver a truly unique and personalized offer that meets their business needs to drive growth and revenue.

Four companies succeeding with connected products

These innovators are leading the way in using IoT to create a Connected Customer Experience, increase operational efficiency, and generate new revenue in a truly connected world.

Dürr—the future of IIoT

Background: Dürr makes and services robotic paint stations used by major vehicle manufacturers. To avoid costly errors during painting, Dürr wanted to monitor, gather, and process real-time data on rotation speed and air supply at the paint stations. A critical requirement was managing the stations autonomously at the edge. In other words, aggregate and analyze data locally without having to send it to the cloud.

Solution: Dürr develops a software tool (based on the edge technology of ADAMOS) that seamlessly records all data from the automotive painting process. This creates a “digital fingerprint” for each painted body. If a quality problem occurs, the cause can be determined immediately using the recorded data.

Outcomes:

• Reduced errors, thanks to real-time signals every 8 milliseconds.
• Lower manufacturing costs.
• Better, faster decision-making.
• Operators design and manage streaming analytics “on the fly.”
• Won the German Innovation Award 2020 with EcoPaintJet, a ground-breaking innovation for the highly selective painting of cars.

We have put extremely powerful analytical tools into the hands of those that understand the production process the best opening a new era of streamlining and improvement.

- Manager Digital Factory, Dürr

Flexco—keeping the conveyors running

Background: Flexco is a leading industrial conveyor belt products and services company. Since its founding in 1907, it has focused on one thing: maximizing conveyor belt uptime, productivity, and safety in industrial applications around the globe.

Solution: Flexco took an industry-leading step into the future and began experimenting with IoT technology to transform heavy industrial equipment into a smart, self-monitoring solution for itself and its customers. In 2021, Flexco and Cumulocity began to co-develop what would become Flexco’s highly successful Elevate solution. The solution lets Flexco’s mining customers monitor their conveyor belt cleaning systems in harsh, hard-to-reach locations; predict when interventions are needed without having to constantly send out expensive field inspection teams; and save money by optimizing production.

Outcomes:

• Co-developed an IoT platform for internal and customer use with edge device, mobile app, and easy dashboards across 6 continents.
• Reduced expensive field service visits with customer self-service business model.
• Achieved <5-minute device installation and commissioning.
• End customer: Achieved 0.6% improvement in production output, worth more than $1M per year.
• End customer: Avoided $144K in lost production time to replace belt.
• End customer: Saved the site $24K in materials and $33K in reallocated labor.

With Cumulocity, we’ve been able to build customized components that differentiate our business and generate data-driven value with quick ROI for our customers.

- Travis Vliem, Digital Product Manager, Flexco

GreenFlex—powering growth with scalable IoT

Background: For over 12 years GreenFlex has been supporting companies and territories in all their sustainable development, decarbonization, and energy efficiency issues. Previously, GreenFlex had built its own IoT capabilities. But quickly, “We realized we needed a new platform to support our ambitions,” said Arnaud Dejean, IoT Technical Director at GreenFlex. “First, we needed scalability to connect more devices for production management, second, we wanted to make it easier for the operations team to set up and manage devices in the field.”

Solution: The Cumulocity platform provides GreenFlex with a robust, high-performance solution to manage thousands of devices across customer sites. Implementation is fast and simple, helping GreenFlex save costs and accelerate growth of its energy efficiency services.

Outcomes:

• Accelerate business growth and range of customer services offered.
• Monitor and control devices at hundreds of customer sites.
• Easily connect new devices from field operations.
• Expand the range of devices that can be connected.
• Connect 3rd-party providers on the cloud.

With Cumulocity, we can move faster and operate with more stability, so we meet our customers’ needs and enhance our ability to deliver energy efficiency.

- Sébastien Trédan, Chief Technical and Data Officer, GreenFlex

SMC—innovating smart field analytics

Background: SMC is a global leader in pneumatic systems that use compressed air to transmit and control energy. Customers are in automotive, electronics, machinery, IT, and healthcare industries. “We noticed our end users were wanting to get more information out of their machines but didn’t know where to start,” explained SMC’s digital business development specialist. Most of SMC’s components were already fitted with sensors. So, SMC took the logical next step, connecting those sensors to help customers understand how components are performing in real time.

Solution: “Smart field analytics” using IoT enables SMC customers to avoid downtime by predicting equipment maintenance needs. Data generated by sensors in SMC pneumatic cylinders is monitored in real time at the point of origin. Customers know immediately machine latency times and get alerts to prevent impending faulty productions.

Outcomes:

• Proof of concept shows value in less than one week.
• Quick solution delivery—to market in less than 4 months.
• Reduced downtime of equipment at customer sites.
• SMC can partner with customers to get reliable analytics tailored to each machine.
• More IoT innovations underway—such as early detection of air leaks and monitoring energy to optimize factory efficiency.

We have a very open partnership with Cumulocity. We have infinite knowledge in the area of machinery and data detection, and they have exceptional knowledge of data capture and analytics through IoT. Ours is the perfect union.

- Expert, Digital Business Development, SMC Deutschland

Make IoT Simple

Beecham Research shows that less than 20% of IoT projects are considered completely successful, so knowing where and how to start with IoT can be difficult. Partnering with the right IoT provider makes all the difference.

Connect products quickly and efficiently

Shorten your innovation cycles with the Cumulocity platform, best practices and advice from our Professional Services team, and prebuilt partner solutions. Focus on business results by using a platform that’s ready for you to connect and manage your products, easily develop applications to differentiate your offerings, integrate your IoT data, and analyze that data in real time to discover valuable insights.

Make the most of your IoT data

Most companies connect their things, then fail to go to the next step. So, they miss out on the valuable insights hidden in their IoT data. With Cumulocity, you’re empowered with easy-to-use IoT analytics so you can quickly see how to solve business problems, such as preventing equipment downtime and reducing maintenance costs.

Prove ROI in a short time frame

With Cumulocity, customers can opt for a buy and build approach to IoT to achieve strategic business outcomes very quickly. Customers benefit from a cloud-native, resilient, secure IoT platform with pre-packaged self-service applications. They can then leverage our tooling to build their own innovative and differentiated services on top.

Learn from success

We’ve guided projects that connect all kinds of sensor-enabled products for Equipment-as-a-Service, remote monitoring, predictive maintenance, and other critical business uses—we know the pitfalls and the best practices. We can also put you in touch with customers who have built connected products, so you can learn from their experience. In addition, Cumulocity customers have access to tips and tricks from our Tech Community and Customer Advisory Board and can network with other companies via our user group focused exclusively on IoT.