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Demos have never gotten so real. Demos have never gotten so intense. Some people are always against giving live demos. In IoT, there is no way around it. No real things, no real IoT demo. So how to do it better? Today, 70% of the world economy has become services, and this percentage continues to grow worldwide. The United States produced 79% of its 2010 GDP in services. Majority of the companies believe that by 2020 they will be competing primarily on service basis. As the service shift sweeps across all corners of the economy, it brings both opportunities and threats to companies that produce and sell technology products. Many companies that make industrial equipment, scientific instruments and computing devices are seeing their margins shrink relative to the prosperity in adjacent service businesses. It is no surprise that such traditional product companies are seeking a “service strategy”. Image Added In technology, the boundary between hardware and software is blurring. Software is infiltrating more and more technology products that used to function only by mechanical rules and analog signals. Google has created a driverless car that navigates itself with sensors and software. This trend is not stopping. Hardware-based technology companies often find themselves falling behind their innovative software counterparts in identifying new value for customers. In more dramatic cases categories of hardware technology got replaced by software. No one still buys radio or CD player anymore. Today software is threatening to replace hardware-based networking. The “commoditization trap” for hardware seems impossible to escape without a product strategy backed by software innovation. The growing dominance of services and the disruptive innovations of software are the two megatrends that will shape all technology businesses in the next decade. To continue their success, hardware-based product companies need software and service transformations. Such transformation requires new approaches in how technology is developed, delivered, commercialized and consumed. This approach, which we callTechnology-as-a-Service (TaaS), is the rising future for technology sectors. This model has already been showcased in the computing industry. Today’s most successful companies in this industry are no longer HP or Microsoft, but are companies like Salesforce, Amazon and Google. Salesforce is well known for its Software-as-a-Service (SaaS) success. Amazon has expanded itself into Infrastructure-as-a-Service (IaaS). Google has always made available its technologies as services and are coming out with more services for enterprises. Simply put, service is economic transactions of value without ownership transfer of the underlying asset(s) from the provider to the customer. TaaS is proprietary technology empowered by software and provided as “services”. Unlike the traditional generation of labor-based services, the services of TaaS are highly software-enabled, on-demand, customizable to business contexts, and often virtually delivered by a system of hardware, software and people. Unlike in traditional product model, TaaS uses technology tools to deliver dynamic functions and solve business problems in close collaboration with customers. A TaaS based business model uses software to increase its functional versatility, and leverages ecosystem to expand the scale of value created for the customer. There are 10 important characteristics that set TaaS apart from traditional technology products and traditional services.
Image Added In the next decade, TaaS will become the dominant model to commercialize technology. Apple transformed its business and then its industry by turning devices such as iPhone and iPad into personalized service hubs, supported by technology systems and business ecosystems. New technologies such as solar power and 3D printing are choosing TaaS models to go to market. Established technology companies including GE and Siemens are turning monitoring and diagnostics technologies into services. TaaS is a proactive strategy against technology commoditization pressure, but it is also a strategic transition that must be carefully planned and executed. This is because a set of technical, commercial and operational capabilities would be required for TaaS, many of which can be new to product-based technology companies. A three-stepped approach, starting with “asset-based services”, moving to “function-driven services” and then to “business-defined services” allows a company to gradually build up capabilities towards a successful TaaS model. Companies that lead in this transition will create the future prosperity for the industrial sectors and the enterprise businesses.
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