smith
smith
smith
smith
smith

Building the offer—finding the value

Sept. 27, 2017

How and what do we charge for this IoT framework? 

We’re launching an IoT framework. We call it Voice of the Machine. And in this process, I’ve

Parker Hannifin's Jeff Smith

repeatedly heard this question: “After building this out, are we going to make any money?”

Answering this question is specific to each business case. And though I won’t answer that question here, I will share some insight on the path to get there.

For the most part I have found it an easy task to get everyone in agreement as to the ‘WHY’ surrounding the initiative. What becomes more challenging is defining the offer and the corollary to that: How and what do we charge for it?

Below, find some foundational motions to execute in pursuit of such a new business model.

Who cares?

We share the enthusiasm that this new frontier creates for us and for our customers. That said, we understand that it is critical to demonstrate that we’re solving a problem that people care about, at scale. At scale is the key here. We have been able to find a multitude of problems that many of our customers share. The trick is to synthesize the problems they all care about.   

Find Jeff's perspective on the future of IIoT in this video.

Centralize services

With our breadth of products and number of divisions, the only way to approach a connected-product initiative is through a centralized team. After making, selling and shipping products, we now have to pivot and understand what it means to have an ongoing relationship and shared risk with our customers. Having a centralized team that can learn the nuances of how to build out these new motions has been invaluable. This also establishes a container where all your tribal knowledge can reside.  

Commercialization process

If your program is going to fail, fail quickly and cheaply. Defining a clear and concise commercialization process eliminates ambiguity and uncertainty about who is doing what. When working with other groups or divisions that do not report to us (and may not always agree with our approach), having a clear rules-of-the-road with clear lines of who is doing what has reduced our overall delivery timeline. 

The flow of money

Can your new business model work inside your organization? I ask this question and suggest strongly that whatever model you come up with (be it a full SaaS or a hybrid CAPEX), make sure that your accounting department is involved and that process flows out the path of the transaction. You see, the technology you are building is not only disruptive to the market, it can also be disruptive to your accounting department.

Lastly, in this new world of IIoT-connected products, finding the right business model and the right pricing scheme (to use a clothing analogy) has not made it to the ‘off the rack’ stage. It is all made to measure. The right model will appear as a result of working through some of the elements above.

Jeff Smith is the IoT business-development manager with Parker Hannifin.