Jun 1, 2017 | 4 min read

LiveWorx Highlights IOT Manufacturing Promise

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In evolving markets like Industrial IOT, leading tech and platform vendors such as PTC, Cisco, and GE are working to reflect the current state of customer needs, while shaping conversations about the future.  At PTC’s LiveWorx Technology Conference last week in Boston, there were a few prominent themes in presentations and conversations. 

First, adoption of industrial IOT is steady, but more gradual than optimistic expectations from the past couple of years.  Next, the technology landscape is so fragmented, and changing so quickly, that customers are looking for guidance applying the appropriate tools to the tasks at hand.  Further, interest in applying Connected Industry principles throughout the product lifecycle (from design, to deployment, to service and maintenance) is extending to the customer lifecycle as well (from prospecting, to marketing, sales and ongoing support).   Platform vendors are realizing that it is difficult to “boil the ocean” with Industrial IOT, and PTC is now sharpening its business focus on the manufacturing industry, looking to accelerate market adoption with a new suite of Manufacturing Apps.

Pushing through initial market challenges

A common refrain at LiveWorx this year was that IoT projects are taking a long time to move past the proof of concept stage into production, and as a result vendor revenues are not scaling as fast as they would have thought in light of the massive hype in the space.  Cisco released a survey finding that nearly three quarters of projects were unsuccessful in moving past POC stage.  There are good reasons for this – and it is not necessarily a sign that there’s anything wrong in the market -  it is more likely that expectations were too aggressive.  Combining Information Technology with Operational Technology requires bridging cultures and business processes – but above all IoT projects need to demonstrate business value.  There are new stakeholders in Industrial IoT projects, and the vertical specialization and domain expertise required is typically much deeper than with an ERP software project for instance. 

Looking to fast track IoT with kits and apps

Tech vendors are keen to accelerate the adoption curve for IoT projects so they can start generating revenues, and this week there were several examples of new approaches.  Microsoft is now building solution kits for Azure IoT to get customers 80% prepackaged and 20% customized.  PTC launched its Manufacturing Apps.  Deloitte launched a “Turnkey IoT” program in partnership with PTC, HP, National Instruments and others.   One of our goals at Momenta is to help map the appropriate technologies to the appropriate solutions, and guide companies to more repeatable solutions along vertical lines. 

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Focusing on manufacturing IOT to “cross the chasm”

The content and focus at LiveWorx clearly placed the transformation opportunities in manufacturing at the forefront. The team at PTC sees manufacturing as its premier business opportunity – at a briefing with investors, Heppelmann described the untapped market numbering in hundreds of thousands of factories worldwide.  Author Geoffrey Moore spoke to partners on Monday, and several times I heard PTC people (including Heppelmann) talk about IoT as the transition from “systems of record to systems of engagement.” PTC’s strategy heartens back to “Crossing the Chasm” (Moore’s best known book) where companies employ a “bowling pin” strategy, targeting one market at a time until they “cross the chasm” to mainstream acceptance.

From vision to integrated reality

LiveWorx had roughly 4,000 attendees in Boston during a busy college graduation week, drawing from PTC’s base of traditional CAD and PLM users along with the growing constituency for the ThingWorx platform. The keynotes and demos highlighted an increasingly integrated vision of CAD, PLM, SLM, Augmented Reality and IoT in a single portfolio – targeting the business needs of manufacturing and industrial users. Reality is starting to catch up to vision – as one PTC developer relations person commented: “Last year was about the idea but the products were stitched together; this year the demos are real and the technology really works.” 

ThingWorx IOT platform fully subsumed into the PTC fold

When I attended LiveWorx in 2014 PTC’s vision was unproven, and there were plenty of skeptics that regarded the push into IoT with the acquisitions of ThingWorx then Axeda as a risky gambit. 

3 years on, the company’s IoT revenues are approaching a $100 million annual run rate, while the team has effectively navigated a business model transition from selling product licenses to subscriptions.  CEO Jim Heppelmann’s credibility with investors has increased along with the stock price, and PTC has staked out mindshare leadership in industrial IoT software.  So far, PTC’s approach – keeping IoT as a separate business unit while gradually integrating the existing businesses – appears to be working, a noteworthy model for others to follow.

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