Apps in the industrial sector: stumbling blocks and pitfalls for industrial manufacturers

The previous blog posts in this series explored the potential offered by apps and digital revenue streams in the industrial sector, discussed which elements of the software architecture are commercially significant, and described the process for developing a commercially viable software architecture for industrial apps. In this fourth post in our series, we discuss some of our specific experiences, some of the successes and failures we have enjoyed and endured, and some of the solutions we have come up with in the course of client projects at industrial manufacturers and other industrial enterprises

Industrial apps often represent the first major digitalisation project

Many of our clients in the industrial sector tend to think of software development as just one element of equipment development, and so aim to finance it through income from industrial equipment sales. Conventional ROI analysis relies on allocating these software development costs to each unit sold. The problem with this approach is that it neglects all of the additional costs that arise over the software life cycle, such as operating costs and costs for ongoing development. Instead these turn up as unplanned costs in future financial years. In the face of these unexpected additional costs, initial euphoria can sometimes give way to rapid disillusionment. In this article, we’ve gathered together some key questions asked by our clients and offer up a few of our solutions. We’re here to help you rediscover your euphoria for digital products.

What business model and use cases will deliver the greatest success? 

Spoiler alert – sadly, many of our clients fail to even think about this question before starting out on their app journey. They launch into app development without having answered this key question. But what’s the point of a new app if you haven’t identified the commercial benefit for you and your customers? Or, for that matter, how it will be financed?

Providing the answer to this question is the job of the product manager. Product managers often have a great deal of experience in their particular sector. But their lack of experience in bringing digital products to market represents, for many businesses, a major challenge. And there’s a further hurdle. Often there just isn’t the time to find and onboard new staff able to offer both expertise in the relevant market sector and experience with digital products.

One way of getting around this problem is to seek the support of an external service provider who has successful executed comparable projects in the past and is able to hit the ground running. We usually start this kind of project with a joint workshop with the client, where we jointly identify and prioritise the use cases the app needs to cover. Because we’ve supported digitalisation projects at clients from a wide range of industries, we’re able to apply experience from similar projects and from other industries which are further along in the digitalisation process.

How do you calculate the business case for digital software and apps?  

Many businesses simply lack the experience to evaluate new, digital business cases. Development teams, used to developing less complex software architectures and with expertise largely confined to device software, frequently underestimate costs.

To avoid falling into this cost trap, it’s worth bringing in experts who possess the experience needed to rapidly estimate all related costs. These include software development and software operating costs, external costs for cloud platforms, etc., and potentially changes to manufacturing costs as a result of any new electronics.

How do I motivate a development team that’s out of its depth?

For lots of businesses and their employees, software development is uncharted territory. That’s why our role often includes actively getting the client’s development teams up to speed with and ready to take over this function. In this case, our experts will tend to hand over development to internal teams once one or more major steps towards realising a market-ready product have been completed.

As a business, you first need to ask yourself three questions:

• Are you aiming for the fastest possible product launch?
• Do you already have the people you need to achieve this?
• Are they available?

Software and app projects often represent quite radical innovation, meaning that businesses will often need to make changes to their organisational structure. You’ll find some fascinating insights on this topic in our study whitepaper “Radical innovation: go small or go home”.

The degree of overlap between machinery development and IT is growing rapidly. Two areas in particular – software development and 1^st, 2^nd and 3^rd level support for digital customer enquiries – will require the recruitment of new staff able, following an initial period of training, to take care of these roles in house. In today’s employment market, finding qualified staff able to perform these roles immediately is almost impossible. On top of development, we can therefore also support you with new operational and support tasks. To deliver cost-effective solutions, we operate development sites in Belgrade, Sofia and Porto and use partner enterprises to deliver operation and support functions.

As part of the process of developing digital offerings for the industrial sector, we also advise many of our clients on reorganising their R&D and related operations. A fundamental factor in ensuring the success of digital products and services is properly preparing the entire business for transformation – through, for example, an accompanying change management programme. It’s essential that all departments actively support the new products and services. If the sales department fails to make the adaptations needed to sell the new digital products and services, for example, your new digital offering is doomed to failure.

The digital product roadmap has to fit with the data strategy

The introduction of new digital solutions poses particular challenges for product managers. They have to keep the existing business going, produce a detailed spec for the first digital offering, work with other departments to develop a digitalisation roadmap and integrate that roadmap into the overall strategy. Product managers have to decide which products will undergo immediate digitalisation and which will hold off until the next product generation (via, for example, an app). Developing a data strategy, particularly for customer and user data, is a key factor for a successful outcome.

Plan cybersecurity from day 1

Development of a data strategy needs to be accompanied by the development of a technical concept for protecting these data. The cost of protecting your data depends on their value to potential attackers. Thanks to our data security expertise and our dedicated cybersecurity professionals, this is an area with which we can offer you full support. The earlier you develop your cybersecurity plan, the more cost-effective implementing the relevant technical systems will be. If you delay development of your cybersecurity plan until your software architecture is already in place, you may end up needing to make extensive changes, costing time and money.

Proxy POs enable agile, lower cost product management

Your product managers will, as a rule, speak the customer’s language and understand the product inside out. Unfortunately, it’s not uncommon to find that the product management and development departments speak different languages or that, over the long term, trying to face both ways (towards the customer and development) inevitably causes problems. Proxy POs offer a practical solution to this problem. The role of the proxy PO is to keep in close contact with product managers and thrash out any issues with the development team. To help reduce the product management workload, it’s important that proxy POs have sufficient expertise in the industrial equipment domain.

We have staff who specialise in this role and are used to working with our clients’ product owners. They bring with them many years of manufacturing expertise and personal experience from numerous digitalisation projects. By virtue of their close proximity to our technical experts, if a client wants an idea of the workload entailed by a new decision or feature, they can quickly find out for them. So product managers can quickly gain an insight into all of the potential consequences of any new requirements. 

Are you planning to develop new, digital products or services? You’re aiming for a short time to market and are looking for an experienced service provider who knows the industry and can offer you flexible support? Talk to us today about successful monetising digital services in the industrial sector and turning digital euphoria into sale. We can support you from the management consulting phase through to operation of the finished solution