SMEs in the ecosystem of Industrial Internet
Despite large enterprises being at the forefront of the development of Industrial Internet, small and medium-size enterprises play an important role in contributing to the growth of its ecosystem. According to Karan Menon, Researcher, Industrial Internet at Tampere University of Technology, each player, whether big or small, brings something unique to the game, and also needs the other players in order to survive.
“Smaller companies have the benefit of having very detailed expertise and specific kind of knowledge. Furthermore, SMEs are more agile, have less bureaucracy, and can easily partner up with other companies to achieve their goals. Large manufacturers, on the other hand, tend to have more financial resources and overall technological capabilities,” he says.
In addition, bigger players on the field have the advantage of having access to more data. Thus, using intelligent technologies, they are able to collect much more information from their own sources in comparison to their smaller competitors.
For SMEs, being up against larger companies in the market also means having to be careful before embracing the digital connectivity and open innovation networks. Menon continues: “When contributing to an open value network there is unfortunately the risk of getting eaten by the bigger fish. Having to deal with intellectual property rights of solutions and products that were developed in common, for instance, can lead to smaller players being disadvantaged. In some cases, cooperation may result in the acquisition of the small business by a larger company, which means that the first one of the two disappears.”
The necessity of mutual platforms
Despite having addressed the risks, Menon strongly supports the basic idea of an open platform in which all operators can join and work together in order to create innovations.
“When you think of modern B2C services such as Uber and Airbnb, you see that it’s not about products, but platforms. B2B and the industrial internet is no exception. Instead of people it’s just about data. If you want to build an entire functioning ecosystem, creating a platform is the only way, because you need to provide means for the whole supply chain to communicate and interact,” Menon states.
“When you think of modern B2C services such as Uber and Airbnb, you see that it’s not about products, but platforms. B2B and the Industrial Internet is no exception. Instead of people it’s just about data.”
To put it simply, platforms are the base on which technologies can be built. And the more builders the better. “No organization exists in isolation. Providing real value to stakeholders requires combining different data and diverse sources of information. Handling large entities is where open platforms come in most handy,” Menon summarizes.
The future of pay-per-use business model in manufacturing
The superiority of platforms over products is closely linked to another key development in the field of intelligent technologies: the shift towards pay-per-use business models. Large equipment manufacturers, for example, have adopted this trend and succeeded in transforming their business models accordingly. Instead of selling the actual machines to their customers, they provide them with usability and reliability.
“When you think of material handling, for example, the term itself actually reveals the driver behind the business. It’s not really about lifting gear per se, but what it does and how it benefits the customer. The same goes for aircraft engines. Utilizing smart technologies enables equipment manufacturers to become service providers,” Menon says.
To be able to deliver the expected value to customers – and preferably exceed them – companies need to be on top of everything that may affect the performance of their products and solutions. Thus, having multiple players collaborating on an open platform is immeasurably valuable.
“Selling the outcome that a certain device or a machine has been designed to deliver is in way a lot riskier than selling just the machine. Especially if the final price that the customer pays is being determined based on the quality and performance of the deliverable. In this sense, it’s very logical that business operators welcome all the input they can get,” Menon concludes.
Karan Menon works as Researcher, Industrial Internet at Tampere University of Technology
Karan Menon on Twitter: @menonkaran
Image credit: Alex_Po / Shutterstock.com