Are your products and services intelligent enough for your customers?

17 September, 2018

By Thomas Offermann, SAP Business Expert

Many companies have arrived at a dead end. Their products look like their competitors’ and are of similar quality. Their prices are just as squeezed as their competitors. How will they differentiate in the future? How should they add value to their customers so that they remain loyal?

The answer is Smart Products and Servitization. Digital products and services that are intelligent add-ons to the company’s existing products, delivering customers an even better, more fun, or otherwise more value-creating experience.

One example of a Smart Product is an app on a truck driver’s mobile phone that pushes messages. The app collects data about everything from driving behavior to vehicle conditions. It advises the truck driver how to drive more efficiently and in a more environmentally friendly way, and what to do if key vehicle functions break down.

Another example can be found in a chemistry company that manufactures plastic compounds for different industries. Instead of developing a physical prototype when customers want something new, the company simulates the prototype digitally in real time, even in many different variants, so customers can experience a new product before it’s put into production. This not only makes the engineering much easier, it also saves significant development costs.

From processes to products

The possibilities are endless. But if you want to survive in the business universe of the future, you need to climb a step higher on the digital staircase.

Companies have digitalized for years, primarily with the aim of optimizing internal processes. Manual processes have become digital, and some processes have even been automated. But the potential is far greater. Digital transformation occurs only when its power spreads throughout the company and transforms the company’s products and the way they are used.

Industry 4.0 gives companies access to all kinds of data and technologies in the cloud, including big data analytics, the internet of things, and artificial intelligence. Industry 4.0 is a game changer for any company in any industry because it helps to develop every company’s product portfolio and services, no matter how analog they might appear.

Engage customers in product development

How do you get started? And how do you develop products based on digital technologies with which you are hardly familiar? The answer is simple: All product development starts with customers.

Developments in consumer digital markets affect developments in industrial markets. As consumers, we are quick to adapt new technologies and devices when we see their value. We thus know which solutions and products help us in our everyday lives – at home and at work.

That’s why we recommend that companies put a lot of effort into workshops and interviews with customers and end-users. What do they need? What are their expectations about future products? What will ultimately increase customer loyalty?

By involving IT experts, engineers, and Design Thinking advisors, you can innovate with efficiency and agility. It is critical to understand that success starts out small, i.e., with a smaller project that creates success within the organization and provides a platform for the next project. Design Thinking first ensures that all aspects of a given challenge are assessed, then makes sure that dimensions of different solutions are thoroughly investigated. Within a few days, you are ready to develop a concrete solution or product, set a strategy, and start developing.

Your IT partner is also your product developer

No matter what new digital products and services your workshops and interviews end up with, new capabilities are required to run the process from start to finish. Your trusted IT partner must have the competences to support you not only in optimizing processes, but also in developing new innovative products and services that reach all the way to end users.

This requires high-level IT expertise, deep engineering knowledge, and the ability to design, innovate, and drive change management. This means that your IT partner’s role in the value chain also changes character.

At Atos, we are well on our way in developing this new role. We have run a range of new development projects for our customers, and now design products that reach all the ways to our customers’ end users. For manufacturers, the benefits are clear: When they move beyond the factory walls and ask their customers what they really need, their product development is much more precise and creates immediate added value for their customers.