In this installment of my blog series on transformation in the High Tech industry, we'll discuss how to reinvent the product portfolio to take advantage of the continuing rise of smart, connected products and platforms that are further accelerated by 5G and edge technologies.
Historically, most products were sold in a transactional manner with little to no changes to the product functionality and customer experience post the initial purchase. Internal product development processes were built around this paradigm, with major new product launches occurring maybe once per year and matched with internal sales processes built around a one-time product sale.
Fast forward to today, and these legacy mindsets and business processes no longer work, requiring companies to undertake major redesigns to unlock greater enterprise value. This process starts with the very concept of the product portfolio.
Unlocking the Value in Smart, Connected Products
By 2025, there will be roughly 56 billion connected devices worldwide, 75% of which will be connected to an IoT platform (see figure). Product portfolio reinvention is needed to capture this growing market opportunity and deliver on evolving customer demands. Two key things are driving the need for this transformation, both of which take place when a product becomes smarter and connected:
With greater intelligence on the device or the edge, it can be enhanced with AI/ ML algorithms, creating an opportunity to deliver new capabilities and experiences that were not previously possible.
The product can be continuously upgraded and the customer experience can continue to evolve and improve over time.
In theory, High Tech organizations are well positioned to be digital disruptors who lead in this new world, create completely new types of solutions and expand their addressable markets. Unfortunately, many historic product leaders are behind new entrants and have yet to achieve commercial success at scale. Only few have developed the cutting-edge capabilities required to enable top-line growth. Leadership requires developing new alliances, integrating IoT/edge capabilities within their portfolios, for many acquisition of startups.
5G will yield approximately $13.2T in global economic value by 2035
Global edge computing market is projected to reach $251B by 2024, with CAGR of 12.5% from 2019 - 2024
By 2025, there will be roughly 56B connected devices worldwide, 75% of which will be connected to an IoT platform
Source: Accenture Research, P&S Intelligence, Forbes
Subscription revenue streams are key to meeting customer demand and sustaining top-line growth.
Legacy portfolios tend to focus on one-time transactions within a finite ecosystem. The proliferation of 5G, edge and AI/ML technologies provides extraordinarily opportunity for reimaging the product and converting the flood of data from IoT-enabled devices into powerful new information streams, solutions and business models. Given the explosive growth in these technologies, high tech companies are forced to reevaluate which products and services to develop, reassess how to monetize data assets and reconfigure their go-to-market strategies.
Organizations that can convert raw data into actionable information derive faster insights that they can in turn use to develop hyper-connected customer experiences. Within an ecosystem of partners responding to evolving customer expectations, it becomes possible to transform insights into winning combinations.
Five steps to reinvention
To reimagine their portfolios to offer hyper-personalized customer experiences, high tech companies can follow these five steps:
Discover the art of possibility: Identify customer use cases and problems to uncover new value-streams leveraging cloud technologies (5G, smart edge, AI/ML, etc.) to deliver continuous innovation to targeted market segments.
Refresh the product roadmap: Leaders are rethinking the roadmap to increase focus and investment on next-gen devices with enhancements and upgrade installed base. The roadmap should open new customer segments to drive growth.
Create a digital innovation factory: Build a customizable platform of end-to-end digital execution capabilities, combining multi-disciplinary skills to accelerate product launch at scale.
Redesign the value chain: Consider launching a dedicated innovation arm to drive use-case design and accelerate execution of innovation through partnerships and consortia, while owning delivery.
Shape the go-to-market strategy: Leverage the public cloud and private ecosystem to deliver a sustainable competitive market advantage of new product offerings.
High tech organizations must become the proactive digital disruptors that fundamentally reimagine their product portfolio to focus on the next generation of smart, connected products and customer experiences. Combining this reimagined product portfolio with the internal capability transformation described in my previous blogs will enable leaders to capture the market opportunities of today and of the future.