Equipment and machinery companies considering a transformation to embrace the Industrial Internet of Things (IIoT) need to develop a clear perspective to drive impact at scale.
Sell quality hardware. This was once the undisputed business model of traditional industrial equipment and machinery companies. As a growing number of components become commoditized, however, companies are finding that the formula for success has to change. Commoditization, along with intensifying global competition and a shift in technology stack value pools, is compelling industrial equipment and machinery companies to allocate resources that have been solely dedicated to hardware toward digital (Exhibit 1).
Seeing the limits of hardware-driven growth, industrial equipment and machinery companies are looking to the Industrial Internet of Things (IIoT) to develop new customer-oriented, revenue-boosting business models. On the operations side, IIoT could increase production efficiency. Whether the focus is on revenue from new business models, savings from more efficient production, or both, digital-enabled advances in manufacturing require IIoT transformation.