the four steps of digital transformation

The four steps of Digital Transformation

Andrew SmithSenior Director, Strategy & Operations

IoT Device Partners, Microsoft

Here’s what we’re covering

Four steps of digital

transformation

Differences between

PaaS & SaaS

P&L opportunities

by partner type

How to partner

with Microsoft

Digital Disruption and the 4th Industrial Revolution

1780s

Mechanized production Mass production Automated production Digitized production

1870s 1970s 2015+

Digital Transformation

Business Insights Operational Efficiencies

New Business Models

Features and Rev Streams

Sensor proliferation

Data collection, transfer, storage and processing

New insights - understanding product and service more deeply

Process engineering and product engineering improvements

Cost reduction

Time to market reduction

Predictive maintenance

Provision of services alongside devices and hardware.

Devices / hardware / machines delivered “as a service”.

Enablement of ancillary businesses, new businesses and transformed businesses

Market offering

• From “MRI Scanner” to “Remote

diagnostics subscription”

• From “Industrial Machine” to

“Machine uptime subscription”

• From “Thermometer” to

“Temperature Control Service”

Profitability

• From hardware margin to

subscription margin

• From capex to capex+opex

Customer relationships

• From transaction relationship to

annuity relationship

• From procurement relationship to

business owner relationship

Transformation in your…

End Points Security Connectivity Business Consultants

Distributors Developers

IoT Partner Value Chain

Services Regulators

Suitable for more complex solutions requiring high

controllability, high customization, with low endpoint

volume

IoT … “as a service” models

Suitable for less complex solutions and common use

cases requiring low degree of customization, with high

endpoint volume

IoT … “as a service” models… in Microsoft

SaaS

Azure IoT CentralFully managed IoT SaaSNo cloud solution expertise required

Built on the same Azure IoT Platform Services

Azure IoT Solution AcceleratorsSolution accelerators for customers with cloud solution expertise and the need to fully customize

PaaS

Opportunities for P&L transformation by business type


New Insight

opportunities

Enhance customer

experience by

understanding how

product features are

used.

Operational

efficiencies

Increase speed to

market and reduce cost

through process

automation.

Business Model

changes

Subscription-based

services.

New Revenue

opportunities

Consumer apps

represent a new channel

for future services.

ISV


New Insight

opportunities

Remote monitoring of

systems and processes.

Operational

efficiencies

Remote troubleshoot

and problem resolution.

Service engineer arrives

with right parts to fix

physical infrastructure.

Business Model

changes

Selling repeatable

solutions and retaining

IP.

New Revenue

opportunities

New services offerings

such as business

consulting, data science

and device lifecycle

management.

System Integrator


New Insight

opportunities

Remote monitoring of

systems and processes.

Operational

efficiencies

Single relationship and

billing for customer

including applications,

infrastructure and cloud.

Business Model

changes

Aggregation of

hardware and software-

based connected device

solutions for specific

verticals.

New Revenue

opportunities

Subscription-based

revenue.

Higher margin for

higher value services

than pure hardware

distribution.

Solution Aggregator


New Insight

opportunities

Insight on how product

is used in the field.

Operational

efficiencies

Decrease manufacturing

downtime by predicting

and resolving issues

before they happen.

Business Model

changes

Product as a service.

New Revenue

opportunities

Attach and monetize

new services.

Device Builder / OEM

Case studies

Connected Buses

• Wi-Fi access point

• Trip information

• Traffic information to non-passengers

• Multi-lingual

• Ticketing, subscription

Commuter mobility app

• Passenger experience

• Connect cameras

• Address GPS 'canyon-effect’

• Driver connectivity

• Fleet management

Wi-Fi hardware & infrastructure

Image needed

Kontron’s Digital transformation

• Application ready I-IoT framework

• Consulting & development services

• SLAs to operate IoT network

End-to-end

4.0

Value for

Kontron

• Extended offer and services

• New business models (pay per use, SLA…)

• Operation efficiency in our manufacturing

Value for

customers

• Enable our customers in their digital journey!

• Easier, simpler, faster, cheaper digital transformation

Start with the business model

Outcomes from a Business Model Workshop

Define value

proposition

Understand

organizational

impact

Assess

organizational

capability

Secure

business

stakeholder

buy-in

Input to

Architectural

Design

© Strategyzer

Business Model Canvass

Revenue StreamCost Structure

Partnerships Value Proposition Customer

Relationships

Customer

Segments

Resources

Key Activities

Channels


Partnerships Customer

Relationships

Customer

Segments

Resources

Key Activities

Channels


Value Proposition

Business Value

© Strategyzer




Relationships

Customer

Segments

Resources

Key Activities

Channels

© Strategyzer

The Customer




Relationships

Customer

Segments

Resources

Key Activities

Channels

© Strategyzer

Organizational Capability


Partnerships

Resources

Key Activities


© Strategyzer



Relationships

Customer

Segments

Resources

Key Activities

Channels

Costs


1. Solution Architecture

tells us what services will be used

2. Business Volumetrics

determines scale of messaging & services

To estimate costs we need 2 things:

What’s the cost of an IoT Solution?

Cost Structure

Costs

Azure Pricing Calculator

Cost Model

Revenue Stream


Cost Structure


Relationships

Customer

Segments

Resources

Key Activities

Channels

Revenue and Pricing

© Strategyzer

© Strategyzer

Business Model: Predictive Maintenance



Relationships

Customer

Segments

Resources

Key Activities

Channels

• Hardware (Machine engineering,

Sensors etc.)

• Connectivity

• Software Dev

• Data Science

• E2E Integration

• Security

• Engineering

• Operations (Process, Data)

• Project Management

• Business Analysis

• S/W development

• H/W device partner

• Cloud

• Security / auditing

Brand

• Association with innovation

New Revenue Opportunities

• Improved SLA

• Product utilisation insights

Customer experience / Insights

• Process insights / remote

monitoring

Efficiency / Cost Reduction

• Reduced downtime

• Improved service planning

• Increased machine utilisation

Product improvement / reliability

• R&D insights (common faults,

machine utilisation)

• Direct sales force

• Distributors

• Resellers

• Aerospace

• Automotive

• Medical

• Oil & Gas

• Medical

• Concept Development & POC

with 5 “friendly” customers

• Potential move to subscription-based “as a service” model

• Revenue model – ensure revenue scales at least as fast as costs do and ensure we

are incentivised only on factors under our control

• Cloud costs depend on approach (e.g. predictive maintenance cost greater than

remote monitoring due to compute load)

• Costs can be estimated once architecture and business volumetrics confirmed. How

costs scale also confirmed in POC

Technical Architecture

An Architectural Design Session is a one to multi-day engagement driven by

technical sales that maps technical solutions to customer opportunities.

Designing the technical architecture

Architectural Design Session Outcomes

✓ project scope

✓ solution requirements

✓ technical implementation approach

✓ risk assessment

✓ resources needed

✓ cost and timeline

ADS Types

Solution-focused

Envisioning

Proof of Value (PoV) scoping

Architectural Review

Target Audience

Business sponsors to articulate needs

Technology executive team to understand impact

Lead architects, developers, DBAs, operations, etc.

What is an Architectural Design Session (ADS)?

Key Deliverables

Vision/Scope document

Architecture Assessment document

Proof of Value (PoV) project plan

Proof of value

Common Proof of Concept Blockers

Avoiding the Proof of Concept Trap

Lack of executive

buy-inLack of resources

Prohibitive cost to

scale

Business value is

unclear

Difficult to justify short-term

impact of pilot

Is this a qualified opportunity? Use BANT (Budget, Authority, Need, Timing) criteria.

Proof of Value Checklist

Complete the Business Case with the customer stakeholders

Get commitment ahead of time that if a PoV proves the desired business outcome,

steps to progress towards full production.

Examples

Machine X is currently serviced reactively (as it breaks) resulting in production halts whenever it goes offline

Manual-based production scheduling and sequencing generating problems in quality (rework, scrap) that are difficult to trace

Examples

7% increase in production line uptime

12% reduction in rework/scrap

Examples

Instrument Machine X with basic remote monitoring to trigger when certain thresholds are exceeded

Add sensors to detect anomalies in production materials

Identify customer stakeholders

Microsoft IoT solution support

Business Model Workshop

Architectural Design Session

IoT Accelerate

Reference Architecture

Tune-up

Case Studies

Broad Partner Enablement

Amplification

Partner-ready BOM

Seller quota

retirement

One Commercial

Partner Catalog

Microsoft IoT Solution Support

Build-with Go To Market Co-Sell

IoT Accelerate co-funding

Concept development

Proof of Value (POV)

Pilot/Proof of Business (POB)

1

2

3

Energy

Retail

Factory/Industrial

Security & Surveillance

Healthcare

Buildings

Target verticals

Events

Webinars

Evidence

Tune up

Go To Market Build Ready

GTM: Microsoft tools to help scale your solution

Tune-up examples

Foundational

document providing

guidance for how to

message the partner

solution to

customers.

Customer-ready

slides with a strong

solution story,

intended to start the

conversation with

customers, help

drive interest in the

solution, highlight

differentiators, and

communicate

business value.

Customer-facing

one-pager

summarizing key

points about the

solution and

communicating

solution value—

great for e-mailing

to customers.

Helps sales teams

quickly understand

the partner

solution. It includes: ▪ Elevator pitch

▪ Understanding the

scenario

▪ Types of accounts to

target

▪ Next steps

▪ Partner sales

contacts

Co-selling with Microsoft

Why Co-sell?

Microsoft’s platform

grows as a result

Enterprise sellers get to

introduce new innovation to

their customers

Partners get introduced

to new customers in

new geographies

WIN WINWIN

Co-Sell RequirementsArea Requirement

Repeatable

Solution

OCP

Catalog

Co-Sell

Ready Status

Seller Incentives

Eligible

MSXEngagement ID with “Repeatable” in Notes, Engagement in Completed Status, reviewed and approved

by CSA team. ✓ ✓ ✓ ✓

Backgrounder

Partner has Microsoft Partner Number (MPN) ✓ ✓ ✓

Partner Sales Contact for each solution and geo

(one contact can cover multiple) ✓ ✓ ✓

Completed Company Profile

(Company Logo, Company Description) ✓ ✓

Azure Platform Solution Information (Azure Business Model -Unbundled and/or Bundled, Avg 12-month

deal ACR and Avg 12-month Partner Revenue) ✓ ✓

End Customer Segment (Enterprise, Corporate, SMB) ✓ ✓

BOM

Signed PR and Co-Sell Release Form* ✓ ✓ ✓

Solution Pitch Deck (10-slide limit)* ✓ ✓ ✓

50-word Solution Description* ✓ ✓ ✓

Reference Architecture* ✓ ✓ ✓

Customer 1-Pager* ✓ ✓

Systems

Partner is onboarded to Partner Sales Connect and trained to register Deals ✓

Approval by the cross-org Solution Map committee

* Tune Up can be used, but is not required Field gets credit and quota attainment for selling your solution

CDS gets scorecard credit for co-sell

the four steps of digital transformation

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