The IBM keynote presentation at the Siemens PLM conference in Phoenix, Arizona. Presented by Paul Brody on 12 March 2012.
This document contains a view of how I think product development strategy is changing in the electronics industry, particularly in my role as the electronics industry leader.
These are my personal views and while they are presented in my capacity as an IBMer, this document shouldn't be considered an official viewpoint on the industry from IBM or an official statement of IBM's corporate strategy. The view expressed in this document is just one perspective among many that exist within such a large and diverse consulting & technology organization.
The summary message of the document is that we are entering a new era of product development - one in which our old certainties are no longer reliable.
In the past, we really focused on developing products - specific physical items. More recently, companies like IBM and others moved to develop systems and services - networks of products and solutions.
Today, we are about to enter a new era - one where we design solutions targeted at business models. Thinking not just about performance metrics of a device or results of a business process in a system - but end-to-end business performance.
This is very very difficult to accomplish, but if we can do so, we can reap enormous rewards, face few competitors, and generate enormous value for our clients.
Tiresomely repetitive predictions of change“Will someone tell the Internet of things to shut-up” – GigaOmFeels like TomorrowLand at DisneySome of the predictions feel irrelevant for my industryI don’t sell to consumersI don’t care what’s going on at FacebookNobody’s going to give my product away for freeEveryone wants to keep calm and carry onI beg to differ.
Analytics: from descriptive, to prescriptive to self-awareSocial Networking: from acute (periodic posting, usually TMI) to ambient (continuous and automatic) – human telemetryConnectivity: from LTE WiFI (expensive to cheap)
Where Social Networking meets AnalyticsUsing data from interactions and file systems, we can predict which engineers are your most productiveWe can predict which engineering concepts are most likely to succeedWe can tell which of your engineers are risk takers and which ones are dependably conventionalWhere continuous connectivity meets social networkingWe can change user behavior with very subtle nudgesWe make habits and we can break themWe achieve huge insights into mood, behavior, health and state of mindWe can predict mistakes and fatigue – and intervene
Product Life Cycles:We’re used thinking about them as getting shorterNow they’re getting longerProduct & Systems DefinitionProducts are getting simpler and variants fewerBUT systems are becoming vastly complexUser ExperienceConsumer-grade experience meant easy but not robust or “enterprise class”Enterprise-class was not expected to be so but now it is and it mattersWhat kind of user is needed to operate or service your systems?What kind of skills and education do they have?We can’t say RTFM anymore
Value comes from software, content and services so the device itself becomes less criticalProduct transitions destroy profitabilityOrganizations and consumers are not able to absorb the full pace of changeCase Example: In Government / Enterprise:Longer aircraft life cyclesCase Example in Consumer:Longer phone & PC life cyclesUS car
Products are becoming simpler, with fewer variantsConsumer space: fewer phones, varaints, more “one size fits all”Cell phone companies coming to market with far fewer products & variantsEnterprise space: fewer models, versions, variantsBoeing eliminated many options/ choices on the 787 to keep cost downSystems complexity, by contrast, is increasing dramaticallySystems are becoming self-organizing and self-awareCase Example: heterogenous wireless networksBlend WiFi with 3G and 4GBlend on-site radios with cloud systemsCell sites change shape and area based on demand, usageOptimization is continuous and automatic
Remember when the smart-alec at the help desk told you to RTFM?User experience design is now based on consumer standardsProcesses that would have been considered fine in the past are now considered brokenWhat’s driving this:The War For TalentGlobal shift in skills, locationsBusiness model transformation – what skill does it take to use your product? How does that person cost and how much time do they take
New technologies let us do all kinds of cool thingsUnderstand how our products are being usedManage and monitor them in the fieldOptimize user behaviorBuild hybrid and self-aware systems & solutionsThis is changing the business models that we can deploy:We can offer services and solutions instead of productsWe can shape how products are usedWe can offer new features on existing hardwareThe result is a new era in product development
The Three Eras of Product Design:Then: Era 1: Product DesignNow: Era 2: Systems EngineeringNext: Era 3: Business Model DesignWe’re entering into the era of business model design
When we made products, they got commoditizedTo stay ahead, we shifted towards to software and servicesServices also became, to some degree, commoditizedWe invested in consulting and solutions vision, but customers kept unbundling usTo push the envelope we started designing business models and signing up resultsTelecom case example: All three “eras” are present in the IBM portfolio todayEra 1: You can buy IBM hardware for your telecom data centerEra 2: You can buy software and services solutions such as outsourcingEra 3: We sign up to run your IT organization and Critical end-to-end business processes and we guarantee increased BUSINESS RESULTS to our customers.
When we made products, they got commoditizedTo stay ahead, we shifted towards to software and servicesServices also became, to some degree, commoditizedWe invested in consulting and solutions vision, but customers kept unbundling usTo push the envelope we started designing business models and signing up resultsTelecom case example: All three “eras” are present in the IBM portfolio todayEra 1: You can buy IBM hardware for your telecom data centerEra 2: You can buy software and services solutions such as outsourcingEra 3: We sign up to run your IT organization and Critical end-to-end business processes and we guarantee increased BUSINESS RESULTS to our customers.
What Business Are We In?Do we make communications gear, or do build & operate mobile networks?Do we make trucks or are we in the logistics business?Do we make weapons or are we peacekeepers?Do we operate mobile networks or are we an capital asset leasing business?Who is our customer?Users aren’t always the same as customersIf you use Facebook, you’re the product, not the customerIf you advertise on Facebook, you’re the customer
SpectraYield buys harvesters and other farm equipment and modifies it to provide detailed real-time telemetrySepcraYeild gives this equipment to farms for free or at deeply discounted costs compared to buying the equipmentSpectraYield uses the data flow to enable profitable real-time commodities tradingIn this case, the customer is wall streetFarmers are the productIt’s the Facebook model applied to B2B
We’re elevating the importance of industry skills across our organizationIBM Academy of TechnologyIBM Industry Academy --**NEW**New Global CoCs make our top industry talent deployable anytime anywhereWe’re integrating our organization to focus on solutions that create valueBye-bye software group: hello the new STG that includes hardware & software togetherNew STG is investing heavily in industry skills (more retail experts in STG than GBS)Appliances like Netezza – everything in one package, ready to go