Digital Transformation of the Connected Product Economy

1. August 2020
Digital Transformation of the
Connected Product Economy

2. Digital Transformation
is Business Transformation
Leaders understand what their business can
become, and must become, when they
embrace meaningful Digital Transformation.
Digital Transformation is not incremental
improvement. It is becoming something
different. Some things must die - old ways
of thinking, old ways of doing, old ways of
creating and monetizing value.
To survive in this unpredictable, post-pandemic
world, connected product companies will have
no choice when it comes to transformation.
You will do it, or it will be done to you.
Michael Campbell
CEO
EdgeIQ
www.edgeiq.io

3. Content
Executive Summary …………………………….…………………………………………………....…..… 5
The Connected Product Economy & CRM for Machines ............. 7
New Technology Stack ………………..............................................................…......... 11
Monetizing Digital Transformation ……….………………..……...…..…………....…... 16
Closing Remarks ………….….……………...................................................................……... 19
About EdgeIQ
EdgeIQ is CRM for Machines™ and the leading provider of software infrastructure
for connected product companies and a cornerstone to their Digital Transformation
initiatives. EdgeIQ is an API-first platform that helps organizations invest their
resources on innovation outcomes, not undifferentiated infrastructure software.
To connect, visit www.edgeiq.io, email contact@edgeiq.io, or on Twitter @Edge_IQ.
3

4. In 3 - 5 years, every industry
will be digitally remastered
- Mark Raskino, Gartner
4

5. Executive Summary
5
There is a Digital Economy, a Sharing
Economy, a Gig Economy, an API Economy,
an On Demand Economy and pretty much an
economy for every technology inflection point
in every market segment over the past three
decades.
We turn our attention here to a market
segment that started its digital transformation
journey twenty years ago and then stalled. It is
one of the largest, most powerful yet complex
‘economies’ that spans multiple vertical markets,
extending beyond the planet even into space.
It is one of the few megathemes that truly
bridges the physical and digital domains.
This is the Connected Product Economy.
The Connected Product Economy consists
of companies that make products that connect
to a network for the purpose of remote
monitoring and management, operational
control, data dissemination and integration with
other systems and applications. It also includes
the customers and the distribution and service
organizations that support the Connected
Product value chain. Finally it also includes
the network infrastructure and cloud services
that bind the ecosystem together, physically and
virtually.
Digital Transformation.
The term is ubiquitous.
But what does it really
mean?

6. $2 trillion
Spent in 2019
on Digital Transformation
6

7. The Connected Product Economy
and CRM for Machines
7
Salesforce did much more than democratize the
management of customer data by putting it in
the cloud and delivering software as a service.
What began as a sales automation tool
became one of the most powerful enterprise
technology platforms, and one of the most
valued companies in the world. Salesforce
created a whole new economy of customers
connected to sales and marketing organizations
like never before. The power of Salesforce was the
enablement of, and the management of, an
entire ecosystem around a business and its
customers.
A similar kind of Digital Transformation is taking
place around organizations that make connected
products. What was once a simple connection
between a device, an application and a user is now
a complex and powerful web of interactions, data,
events and decisions. This is the Connected Product
Economy.
CRM for Machines, like the original CRM
platform, will create and provide billions, if not
trillions of dollars of value. It is the framework for
managing the lifecycles of billions of connected
devices, consumption and management of their
data, the underlying network infrastructure,
the ecosystem of applications, support and
distribution partners and of course the
hundreds of millions of customers that
use them.
Making the shift
from buzzword,
to buzzworthy.

8. 8
CRM for Machines
There are tens of thousands of companies
that produce, sell and support connected
products today - from dialysis machines and
digital signs to connected cars and industrial
robots. Today’s Connected Product Economy
represents tens of billions of devices for
billions of customers at millions of
organizations. Connected product makers
began the journey more than twenty years
ago with simple ethernet connections to
copying machines and HVAC systems.
But the movement stalled in the early
2000’s and growth was linear, not exponential
as analysts predicted. Even as the number of
connected devices grows, the connected
product experience fails to deliver for the
customer and the manufacturer.
We know that Digital Transformation means
more than implementing new technology,
or connecting your product to the cloud.
Eventually you may see value in AI and
Machine Learning - once you conquer the
fundamentals. The transformation will
require organizational change, potentially
converting your product into a service and
creating new pricing strategies and business
models. One hundred years ago, a connected
product was a mechanical device with a
power chord. Today, it’s a device that is
connected to a network and to a limitless
number of users, organizations and
applications. A connected product is also
“smart”. It has the ability to gather data about
itself and its environment. It can process and
act upon this data, store and forward it.
The new connected
product is more
than components,
connectivity and
the cloud.

9. 9
The new connected product is more than components, connectivity and the
cloud. It is reliant on a wide range of software services - from an RTOS to a full
Linux distribution, firmware and even third party applications and services - and
that’s on the device itself. The product almost always requires rich management
and orchestration software to deal with its users, its lifecycle and its integration
with the rest of the world.
There is a new technology stack required for today’s connected products - it is the
digital foundation of the Connected Product Economy.
Finally, technology is never for technology’s sake - it’s not just about connected
devices or products. This is about the entire value chain and ecosystem around
these devices. Those who embrace the journey, today, will retain and grow
market share, reduce operating costs, enjoy new revenue streams and perhaps
fundamentally alter their business models. Any combination of even some of
these benefits will quickly lead to higher valuation and ensure that your business
survives while others become footnotes in their industries.
Imagine. Decide. Do.

10. 10
79.4 zettabytes of data
by 2025
IDC predicts that 40 billion
connected devices will produce

11. New Technology Stack
11
It is not as simple as components,
connectivity and the cloud anymore.
Connected products, and the gateways
they sometimes connect to, have more
prcessing power and storage capacity
than entire data centers had 30 years
ago. The Connected Product Economy
consists of billions of Internet-enabled
devices, billions of customers, millions
of applications and petabytes of daily
data production. With all this new
horsepower and limitless connectivity,
software has become the core
infrastructure, the digital glue that
binds this hyperconnected and highly
distributed value chain today.
Early connected products may have had
an embedded RTOS (real time operating
system), a simple network connection
and perhaps a remote application. Then
came richer, full-blown Linux platforms,
multiple flavors of wireless connectivity
and the cloud. Third party services can
now run at the edge for machine
learning, advanced analytics or even
AI. And we are just getting started.
With dozens of connectivity options,
multiple global cloud infrastructure
providers, tens of thousands of SaaS
applications, an infinite number of
custom applications and billions of
users - there are infinite permutations
of connections and integrations to
manage.

12. 12
The software competency to deal with yesterday’s products was either
embedded software or a web application. Those requirements barely scratch the
surface of what is needed today and organizations are not equipped to deal with
these challenges.There is a new technology stack required to participate in the
Connected Product Economy.
Putting aside company- and market-specific applications, there is a collection of
capabilities that span all connected products. No matter how simple or complex,
or how they connect, what kind of data they transmit and whether they connect
to a public cloud or local application - connected products require a new
technology stack that consists of three powerful three layers:
• Device Lifecycle Management
• Data Orchestration
• Service Orchestration
Device Lifecycle Management
At the foundation of the new technology stack for connected products is
Device Lifecycle Management which includes several key elements:
Catalog of an organization’s devices, their standard configurations, native
software, perhaps location and what accounts and sub-accounts the devices
are associated with. Tools to simplify and automate device deployment and
configuration Mechanism for configurable periodic heartbeats and diagnostic
data with automated notifications and alerts. Rich and flexible software
management tools that will manage the operating system, firmware and
third party software. Mechanism to decommission devices, disconnecting
them from a network and even wiping software from devices.
Data Orchestration
IDC predicts that 40+ billion connected devices will produce 79.4 zettabytes
of data by 2025. It’s nearly impossible to conceive how much data this is -
approximately equal to a thousand Exabytes, a billion Terabytes, or a trillion
Gigabytes.
But what ultimately matters is having the right data at the right time, in the
right place and in the hands of the right systems and people. This is only possible
when organizations have the scalable and extensible data orchestration tools
as part of the new technology stack for their connected products. Data
orchestration is not merely building a pipe from devices to the cloud.
Devices and humans, or even basic web applications, do not speak the same
language. The challenge is consuming data as it is created, translating it and
normalizing it so it can be efficiently consumed, understood and acted upon
by a wide range of users, applications and systems.

13. 13
Data orchestration is not a single, smart pipe. It is a series
of pipes and valves that allow for the secure, intelligent,
policy-based and automated flow of data from
connected products to authorized users, applications
and services. It is important that these systems include
filtering and throttling of data as well as its federation.
Most users do not need or want all of a device’s data.
Users only want what is necessary to make decisions
and do specific things. The same applies to data storage.
In some cases a vast data lake is valuable for aggregated
analytics and machine learning purposes. This can
contribute to the powerful use of predictive and
preventative maintenance or even operational failure.
In some cases, specific users only want anomaly data,
for example when a device disconnects from a network,
stops performing, reaches an unsafe operating
temperature, etc.
Providing a policy-based framework to configure,
manage and automate these important capabilities
is an essential part of the new technology stack for
connected products.
Service Orchestration
Implementing countless integrations to upstream and
downstream applications, cloud infrastructure, databases
and other services is one of the most important and
complicated challenges for connected product
companies.
While connected product makers are likely to build
custom applications for their customers, it is likely that
a device will be connected to several or even dozens of
other third party applications and services. There may
be a local database running on a gateway, or in the
application itself. Perhaps an organization is using a
long term data store or data lake. Cloud providers have
developed analytics services to run at the edge. Service
events can be automatically pushed to support platforms.
Device data can be consumed by CRM, billing or ERP
platforms. And all of these may just be on the product
maker side.

14. 14
The customer will also have applications connected to devices from enterprise
asset management systems (EAM), their own ERP platform and operational
applications. Add third party support and distribution partners and, again, the
permutations of applications and services interacting with devices and their data
can be tremendously complicated.
All of these applications and services will have unique ways of connecting, they will
have security certificates to manage and different user authentication schemes.
Complicating things further, devices are not always able to send and receive
data in real time. They interact asynchronously because they are programmed to
connect with networks, to receive and send data at specific intervals. These are all
factors that must be considered when designing, building and managing the
infrastructure to support connected products and their value chain. Integration
and workflow automation cannot be underestimated in value or complexity for
your connected product strategy and program.

15. 15
96%
of field service organizations say that IoT
and data management technologies are
core parts of their business.

16. Monetizing Digital Transformation
16
Even when it’s all about the customer - it’s about the bottom line - theirs and
yours. The financial benefits of thoughtful and well executed Digital Transformation
strategies for Connected Product companies are nearly limitless. The benefits are
above the line - new revenue. And the benefits are below the line - operational
savings.
How a Digital Transformation Reduces Costs:
There are still thousands of companies whose products require manual
configuration - either by the customer or a field tech. Even as organizations build
zero-touch configuration into their products, this step is prone to errors, resulting in
lost time, revenue and, again, increased support costs. Proper fleet and inventory
management integrated with automated customer deployment tools can save
thousands of dollars per customer for B2B products and many tens if not hundreds
of dollars for typical B2C products.
No matter how well designed and manufactured a product may be, problems will
arise. More than 60% of field service organizations are now profit centers. This puts
a premium on reducing the cost of delivering maintenance and related services.
Organizations must be able to diagnose and possibly fix issues without truck rolls.
This can be as simple as rebooting a device, issuing a patch or bug fix. The key to
reducing support costs is how fast problems are resolved and properly resolve these
problems the first time. Think of the cost savings for Tesla with the way it delivers
maintenance updates overnight to its vehicles all around the world.
Integration and Orchestration Architecture
The amount of time spent creating and managing integrations to third party
services and managing the data flow is immeasurable. These are costs often
incurred by hiring outside integrators, or taking valuable team members off
new feature development to figure out how to simplify certificate and
credential management for a cloud service.
Remote Monitoring and Repair
Fleet Management and Deployment Automation

17. 17
How a Digital Transformation
Increases the Top Line
Customer Retention and Referral
There is no better way to build brand loyalty and repeat business than
through high customer satisfaction scores. In the era of Connected Products,
customers expect a rich, reliable interactive experience that provides a
low touch or no touch implementation process, operational visibility and
simplified integration and management. In today’s hyper-competitive market,
no vendor can afford to be a laggard. Customers are loyal to those who invest
in their future and will flock to alternatives who do.
Increased Market Share
Similarly, buying organizations are looking for ways to decrease their costs and
improve their bottom lines. Customers are buying billions of dollars of product
and services from new vendors because the incumbents aren’t innovating and
can’t meet the business goals and financial constraints of today’s buyers. Even
small increases in customer retention and small increases in net new
customers leads to significant gains in total market share.
New Revenue Streams and New Business Models
Not all connected product companies will monetize a service wrapped
around their product, but many will. Whether it becomes a separate SKU or
a way of increasing the cost of the physical product, the new software-based
digital value chain creates new revenue streams for most manufacturers.
Servitization is becoming a key trend with many manufacturers. What starts
out as after-market service can evolve into a completely new model of
delivering products as services. A “Device as a Service” model is gaining
traction in markets from medical devices to network infrastructure. The
Connected Product Economy is finally learning lessons from consumer
products like shaving companies which provide razors and blades as a
monthly service. Three strong benefits emerge from this way of marrying
Connected Products and customers: (1) new sources of revenue (2) more
predictable and smoother revenue curves (3) higher margin and operating
profits.

18. 18
Digital Transformation and Shareholder Value
It doesn’t take a Nobel Prize in economics to understand that increasing customer
satisfaction and retention while reducing operational costs and creating new, more
predictable, higher margin revenue streams can and will increase market capitalization
and shareholder value.
There are some other benefits that can be as tangible and valuable that will also
contribute to the performance and growth of businesses which fundamentally
embrace digital transformation strategies. The best employees always want to be a
part of innovative and growing companies. Risk-averse, content 9-5ers are quite
comfortable with laggards and will ride it out with them until they lock the doors.
Building organizations for the Connected Product Economy will require the right
people with the right skills and motivations. The strategies and investments of these
companies will attract and retain not only great customers, but great people.

19. Closing Remarks
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This document is written for business and
technology leaders at companies that make
connected products. The intent is simply to be
a resource and a guide to help you think about
and act upon your own Digital Transformation
initiatives.
Whether you and your company are
contemplating, or already on your Digital
Transformation journey, we would like to help.
We offer a powerful set of tools and software
infrastructure for businesses just like yours.
I hope you will allow us the opportunity to
help you achieve your goals and do so faster.
Respectfully,
Michael Campbell
CEO
EdgeIQ
“There is no alternative to digital
transformation. Visionary companies
will carve out new strategic options for
themselves — those that don’t adapt,
will fail.”
- Jeff Bezos, Amazon

20. Discover how EdgeIQ can help you
Learn more at www.edgeiq.io
1.877.789.3343
contact@edgeiq.io