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When and why should products be connected?



Since the mid-1990s, I’ve been involved in a number of ‘connected planet’ initiatives at Philips –projects which we would now recognize as being part of the ‘connected products’ or Internet of Things (IoT) phenomenon.

Today there’s a tremendous amount of attention and research happening around connected products, and as with any emergent technology, as products move from early adoption to mass market, the cost of smart components is rapidly declining. The sensors and microprocessors, operating systems and digital interfaces used in connected products now are more accessible than ever before.

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In my view, if companies have a consumer product selling at more than €50-100, they should seriously consider if that product could – and should – be connected.

What Should You Consider When Introducing Smart Connectivity?

First, consider the value connectivity will bring to customers and consumers, and in turn what value that can generate for your organization. For instance, consider the value generated by Philips’ new Bluetooth-enabled Sonicare toothbrush, which allows users to give and get feedback and advice around their brushing patterns and, through an app solution, make it fun for kids to use.

Sonicare’s connectivity also allows for the collection of data concerning products in the field, such as usage information, hardware status, triggering the purchase of brush heads and more. Combined with user profiles, this can give powerful insights to drive customer journey mapping across the lifetime of a product. Similarly, that same data can be used to improve product development and create better-targeted marketing campaigns.

And just imagine what will be possible with products elsewhere in the home? One commonly cited example is of lighting and heating being controlled through an app; however, the possibilities are seemingly endless. An air purifier could give advice around environmental conditions, and the connectivity of any number of personal medical and health devices actually enable the entire home monitoring market.

Once you’ve figured out the value that can be generated from products and data, how do you ensure that the right propositions are created? First, you need to create very clear user stories using Agile development (including a lot of prototyping) and validate these with consumers – your most important stakeholder here.

Second, make sure your selected use cases work! This is especially true with connected products, where service, reliability, speed and responsiveness are important. Now, I’m not saying it’s necessary to have all use cases covered from the start, but you should have a clear vision on where you want to go based on a representative sample.

When defining a connected product, not only should you look to the user stories directly related to the product, but also to the ecosystems they connect to and the value that can be generated from them. With Philips’ Health Suite Digital Platform (HSDP), we are creating new user stories on a versatile platform. This means that key stakeholders from across businesses must work together more closely, creating products that can link up internally and enable additional user stories.

Let's assume that you’ve done your homework well. You’ve created the right user stories, and the data models of your connected product have been correctly defined. Soon enough you will start receiving data from those products in use. For this you’ll need to be prepared. First, by keeping the data secure and regulating access, and second, ensuring that it’s ready to analyze and drive additional value and insights. It’s this ‘secondary’ aspect of the connected proposition that must be developed in parallel (or even before) you bring connected products to market.

Do not underestimate the work that this phase takes; data is fiddly, highly detailed and requires significant resources to fix and clean when data models are broken.

The Impact of Connected Products on Value Chains

Connected products are in the process of completely transforming value chains. In Service, for example, remote connectivity gives technical support teams access to products from afar. This in turn allows them to gather data, check status and in more and more cases, allows for remote service and repair. The reduced need to ship products to and from service centers brings clear benefits. Taking it one step further, imagine the kind of customer services that could be delivered when you don’t even have to wait for a problem – where the need for service can be anticipated and pro-active steps taken to solve it? To close the loop, all of the information generated by this flow of data can feed back into R&D processes, where these valuable insights can inform future product propositions.

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Many products can use dramatically simplified hardware components as a perk of being connected. User interfaces can move to mobile devices like smartphones and tablets; Philips Lumify, an ultrasound product, is a great example of this. At the same time, the number of sensors going into devices is increasing. Therefore, it’s important to seriously research and consider how to utilize all the data coming from these sensors.

The shifts I’ve described here require much stronger cooperation between key departments in any organization. Innovation, product management, product development, operations, procurement and of course marketing and sales all stand to be profoundly impacted by the advent of connected products. All in all, there are exciting times ahead.

Hans van't Riet

Order to Cash Transformation Leader

Beginning his career in Healthcare, Hans van’t Riet has worked with Philips for 24 years across the value chain in Innovation, Marketing & Sales and Operations, holding leadership roles in several businesses in various geographies and markets including Singapore, Malaysia, Hong Kong, Germany, Austria, Belgium and the Netherlands. He is currently leader of the Order to Cash Business Transformation and has a track record of delivering successful End to End transformations for the organization.

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