Silos changing: Smarter business initiatives for smart revenue and profit

This week, Mike Evans, Cambashi's research director, discusses business initiatives that respond to consumer and business demand for smart products and devices.

Experts at industry analyst and market consulting firm Cambashi contribute a regular blog titled Silos Changing exploring how new software applications enable manufacturers to implement business initiatives for the new economy.

Smart products’ design workflow is more complex than for purely mechanical or electro-mechanical products.  There is the challenge of implementing a new discipline.  This increases the systems integration load even in concurrent engineering design offices.

Manufacturers can increase but focus basic R&D investment on their core strengths.  The product owner needs know how to design a product’s architecture.

However, outsourcing or buying in components that don’t benefit from that basic R&D will reduce costs and shorten delivery times. In the case of software, there are many open source software components for embedded functions.

A symbiotic initiative is to be a leader in setting industry specific standards.

At present, only the Automotive (AUTOSAR) and Aerospace (DO-178B) industries have effective standards for embedded software development.  The companies that are part of the process defining standards will be in the best position to take advantage of the economies of scale when conforming components become available.

Management teams need to recognise that business models will have to adapt to a higher percentage of R&D costs.  However, individual components are likely to be more cost effective.  As time passes, miniaturisation and performance improvements will make components even more cost effective.  Requirements management initiatives leading to systems engineering and functional verification will support management teams trying to get the most value from this increased investment.

When there is a rapid rate of new products coming to market it becomes more important than ever to clearly separate product development from basic research.  A business initiative to actively manage the portfolio of new products in development could ensure that each successive instance of the product family is designed so that it can adopt the latest state of the art in those components or materials coming from basic research.

Smart products often disrupt well established product architectures of the dumb products they displace.  An example would be the touch screen keyboard replacing the keys on older mobile phones.  A business initiative could ensure every decomposition of the product into functions is independent of the mechanical, electrical or software implementation disciplines.

This mitigates the consequences of changing the derived requirements or interfaces. This is a modification of a well established initiative – modular design – where the product is decomposed into platform building blocks.  Each product instance can have varying capabilities yet most blocks identical.  A good example is HP’s printer division, with a product variant that lets a new proud dad send an email that prints a picture in grandma’s home.

Smart products have great advantages for manufacturers who want to increase their after-sales business.

Manufacturers can collect information about the customer and their usage.  If they do, in business environments this can be integrated into the manufacturer’s customer’s enterprise applications. That can enable customer managers to be much more responsive and improve performance.  In consumer environments, reacting to usage can improve customer experience.

Smart product functionality can improve often by loading new software into the product.  Regular improvements make it much more likely that the product owner will pay decent maintenance rates for products they have bought.  In business, there are options for remote fault diagnosis and repair.  Maintenance operations can be scheduled based on sensors that report the state of the product rather than on a time served basis.  There is the possibility to field upgrade a product, the ultimate form of postponement!

In future blogs, we will go on to write about the software applications deployments that help implement these business initiatives.