IoT has long presented an important business opportunity for technology companies. The ability to use connectivity, data and AI to improve business operations has led to the transformation of many industries, and OEMs have been taking steps to integrate IoT technology into the production of their newest products.
There is no question that IoT has the potential to help OEMs realize improved efficiencies and increased revenues. But the existing approach of costly, lengthy IoT deployment through brand new equipment has left OEMs searching for a more immediate alternative to achieve results and jumpstart new implementations.
The brownfield IoT model enables OEMs to deploy technology on top of legacy products to realize their full value. However, the bigger question is whether OEMs will seize this opportunity to provide more value to their customers today or postpone until they release a future generation of IoT products, otherwise known as greenfield deployment.
Brownfield vs. greenfield model
Through brownfield IoT implementations, OEMs can realize new revenue opportunities from existing customers by selling IoT capabilities for equipment that’s already in the field. This is a vast improvement to the greenfield model, where OEMs rely on the replacement cycle to sell IoT technology as part of their latest generation of equipment — a process that can take years and drastically increase IoT deployment costs.
The brownfield IoT strategy enables real-time insights from existing devices, rather than just those that are ready to be replaced. Brownfield strategies expand revenue opportunities and strengthen the customer relationship for OEMs.
With added services and subscription models, those opportunities multiply. OEMs also reduce the risk of losing customers to a competitive platform because their customers are likely to stay within their current supplier ecosystem.
In addition, the design cycle of brownfield hardware is significantly shorter than greenfield. In many situations, off-the-shelf products can easily be modified and installed to connect to the entire installed base. That means OEMs can deliver IoT capabilities to their customers far sooner than if they rely solely on a greenfield model.
Customers are done waiting
Many of the largest customers have already recognized that a brownfield IoT deployment is their ticket to greater efficiencies and business value. But they’re not waiting for OEMs to figure that out. They need brownfield solutions now and are hiring third parties to provide products.
Businesses such as quick-serve restaurants and major retailers are already adopting this trend. Coffee machines, HVAC systems, ovens and refrigerators are just some of the devices that can be made more efficient with the power of IoT. And those benefits are being realized today with faster, more cost-efficient brownfield deployments. OEMs are already losing to specialist IoT vendors who are helping these customers connect their equipment from multiple vendors to leverage IoT sooner than OEMs could deliver.
By working with these third-party vendors who have embraced the brownfield model, customers are already reaping the benefits of IoT on their legacy devices without the help of their OEMs. That means OEMs are being left out of the loop and are failing to meet their customers’ needs.
The opportunity is now
Because most devices can be retrofitted to provide IoT capabilities, almost any OEM could shift their business model to sell IoT to their customers. By developing and deploying IoT devices that transform their business, these companies can become known for their software and their connected devices as they are for their legacy products.
As long as there is data to be captured and analyzed, there is an opportunity for an OEM to build and sell IoT technologies. The question OEMs should ask themselves is this: If your customers could know anything about their devices at any given time, how would it change their experience and value they derive from that equipment?
These answers will drive a new business model powered by IoT.
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