Connected Products: The New Imperative For Discrete Manufacturing

Lorenzo Veronesi

The convergence of digital technologies with physical products is enabling a new wave of connected, intelligent products that are poised to radically transform the discrete manufacturing industry. Manufacturers are therefore striving to create platforms that enable a seamless flow of information to enhance operational performance and support data monetization.

This implies that while traditional product delivery remains a fundamental step, manufacturers in this space need to become more focused on data management, as this is the area where most value-add will be.

On this journey, IDC currently sees companies diverging on their digitization journeys. In fact, 54% of manufacturers are facing a digital transformation deadlock as they are not able to progress on their DX initiatives, and only 5% are in a good position to use IoT data to create new business models and additional revenues. This implies that most discrete manufacturers are not able to fully benefit from the transformation and risk losing market share to those that can reap the advantages and opportunities of digital technologies faster.

But what exactly is the root cause of these challenges? According to IDC, it comes down to the failure to integrate new digital processes with existing operational processes. To overcome this, manufacturers need to consider the following:

Creating a whole new value proposition via an ecosystem of partners and suppliers

Using platforms as a means to deliver a more enhanced customer experience, at the core of which is a connected product or service, is nothing new. In fact, we are now at a stage where industry leaders who haven’t thought about this are being disrupted by competitors who are digitally enabled.

For example, Airbus created an aviation open data platform called Skywise. It’s essentially an IoT platform that collects data from multiple sources including onboard sensor data, flight schedules, aircraft/fleet configurations, aircraft condition monitoring reports, parts replacement, and technical requests. And with that, Airbus aims to become the platform of reference used by all major aviation players to improve operational performance. So essentially, Airbus is reselling the collected data to the market. Lufthansa is doing something similar, offering, in collaboration with SAP, a reporting platform to deal with overhaul challenges.

Many companies, even smaller players and those serving niche markets are now looking for a platform-based business model approach. In fact, IDC currently sees a strong push from the C-level suite at end-user organizations that are in need of a platform, but also systems integrators that orchestrate ecosystems using a third-party platform.

Enabling a data-driven, rather than process-driven approach, to product innovation

Discrete manufacturers also have to integrate their innovation models, whose purpose was to foster the creation and market delivery of digital products, with the new imperatives coming from the digital economy. And what exactly does this require? It means combining the traditional process-driven PLM model with a new model where data is at the center and different business processes have ways to tap into this data. A key example of this is the digital twin.

Digital twins, essentially virtual lifelike representations, can be used to manage multiple aspects of a manufacturing business, including highly complex, customized products, and connected assets, such as manufacturing plants or facilities and the assets within them. Digital twins are perpetually fed by data and processes from multitier supply chains, service plans and execution, and the operating environment to ensure the most up-to-date view of the past, current, and future performance and condition of these products, assets, facilities, and plants.

Investing in next-gen operational processes

Discrete manufacturing organizations are facing unprecedented pressures on their ability to innovate, engage with customers and consumers, and maximize returns on their assets. They can only adapt to these pressures and succeed through digital transformation with smart manufacturing and Industry 4.0. This requires the creation of data-infused, connected products that can “communicate” throughout their entire life cycle. These features also enable manufacturers to have greater transparency across assets and systems, as well as across their supplier networks (knowing where material is coming from). In fact, information is everywhere, from input to output. But smart manufacturing also means augmenting the factory worker with smart machines and technologies.


There are enormous opportunities for end-user organizations to reap along their DX journey. IDC advises that the most important aspect is to keep focused when creating business value and investing in key digital transformation scenarios, particularly when it comes to IT.

Technology investments, most notably in IoT, are a critical component of DX, and manufacturers that have made investments in this area are already seeing advantages, such as greater visibility into actual asset performance.

However, manufacturers will require their new and existing business applications to support advanced ways of operating that are built on new capabilities enabled by IoT. Take a holistic view of your assets and ensure your people are prepared for change.

To learn more about how discrete manufacturing is dealing with the disruption of connected products, please join us for our webinar on Tuesday, September 11.

Lorenzo Veronesi

About Lorenzo Veronesi

Lorenzo Veronesi is a Research Manager for IDC Manufacturing Insights EMEA. In this role, Veronesi leads IDC Manufacturing Insights' "Worldwide Smart Manufacturing" Research Practice.