Not everyone can say they’ve been published by Harvard Business Review. Jim Heppelmann, President and CEO of PTC, can. The business executive has collaborated with Harvard Business School Professor Michael Porter to co-author 2 timely articles about how the Internet of Things is affecting all aspects of business. In October 2015, the duo released ‘How Smart, Connected Products Are Transforming Companies’ (a follow up to ‘How Smart, Connected Products Are Transforming Competition’, published November 2014) which explores how intelligent, connected devices are reshaping the way businesses operate today.
“It’s the third major wave of information technology, and it’s having an impact on strategy and competitive advantage,” Jim explains.
“This is an important point to understand the context. First we had information technology that came into being in the 70s and 80s, with business systems such as MRP, ERP, and supply chain management. Then along came the internet, and that supported a generation of innovation with networks of computers that were connected all over the world. For example, we could conduct e-commerce between our company, our suppliers, and our downstream customers.
“There were many great stories and successes that came out of this era and there were many companies that struggled or went out of business. The internet became mainstream in the mid-to-late 90s, and then by about 2010 things changed again. We all understood and used the internet every day, but the idea now was to put information technology into the products that we use every day, from cars to thermostats. This is where we are now, and it has created another profound impact because it gives us insight—deep insight—into the world around us.”
The phenomenon of today is known as the Internet of Things (IoT). Jim continues: “You will find tens of thousands of examples showing that our current processes are inefficient because of a lack of information. We don’t have adequate information to instruct us on how to do things better. Businesses can and should leverage connected technology to become much more proactive and predictive in their operations. Once we can collect data from smart, connected products and apply analytics to that information, we can suddenly do some very different and absolutely incredible things.”
Jim refers to car maintenance as a simple example of how IoT data improves operational efficiency and reduces the use of resources. All automotive manufacturers previously provided standard date-based intervals for servicing the vehicle, for example every 5,000 miles based on average use in average conditions, whether it needs it or not, just to be safe.