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Highlights
- Software-defined products are helping reduce the cost of products, improve customer experience, and drive ease of operations for businesses.
- Evolving business models like servitization and complexities around hardware supply chains are driving the shift to software-defined products.
- Companies across industries are already embracing softwarization and the integration of digital technologies in products.
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Product transformation
Software-defined products are accelerating product transformation.
Digital technologies are at the heart of today’s businesses. Going beyond helping deliver unique customer experiences and business operational excellence, they are also enabling companies to extend their product life cycles, participate in the full value chain, and add new functionalities to existing products seamlessly, securely, and reliably. Software-defined products (SDPs) are leading the way to product transformation, helping reduce the cost of products, improve user experience, drive ease of operations, and more. Realizing the benefits of SDPs, more and more product companies have increased their investments in technologies that can extend their product life cycles and the trend is only expected to continue.
Fundamentally, conventional products are hardware-defined. They typically need custom hardware design as per the specifications and follow the complete cycle of design, manufacturing, and sustenance. On the other hand, SDPs are implemented as a set of services defined in software and enabling certain functionalities as per the product specifications. They are hardware-agnostic, highly configurable, and each service mapped to a specific code which enables independent execution.
As SDPs are hardware-agnostic, there is no dependency on hardware, hence the life cycle of a SDP includes only design and support, with little or zero reliance on manufacturing. They can also be deployed on various types of commodity hardware run on standardized platforms such as mobile phones, industrial edge devices, certified commercial off-the-shelf devices, edge containers deployed on edge clouds or on-premise workstations, and so on.
Upgrading conventional products would need hardware redesign, associated prototyping, manufacturing iterations, rollout of the new physical products, and a supply chain revamp. However, upgrading SDPs can be done quickly by leveraging the underlying products software capabilities and connected secure cloud-based digital supply chains, thus leading to faster delivery to end users.
The need for it
Evolving business models like servitization and complexities around hardware supply chains are driving the adoption of software-defined products.
What we have seen is that enterprises that define themselves as software product companies have realized better market reach compared to traditional enterprises with products centered around hardware. What’s also driving the shift to software-defined products are factors such as the following:
New revenue generating models like servitization need new frameworks that allow dynamic updates. These would also require product specifications to be agile. With industries shifting to everything as a service, multiple business stakeholders are simultaneously using products that are agile and support multitenancy.
Supply chains are becoming increasingly challenging with businesses handling huge bills of materials. Large hardware-defined portfolios are also becoming very complex, hence there is a need to reduce custom hardware development. As businesses expand into new market areas, they are under pressure to reduce time to market.
Software enablement extended to products is becoming an imperative as industries increasingly take the software-defined approach, for instance, software-defined networks, software-defined automation, software-defined grids, software as a medical device, and so on. Adopting SDPs can help companies standardize and harmonize technologies they use and reduce their software bill of materials.
Value propositions
Original equipment manufacturers (OEMs) can potentially transform themselves into software businesses by expanding the software-defined products in their portfolios.
Doing so can help them build core intellectual property (IP), solutions, and remote R&D capabilities, which reduce dependency on manufacturing units and the need for investments in building complex test infrastructure and skilled teams.
The agility brought by SDPs also help enterprises to speed up product releases sometimes simultaneously across markets globally, monetize the investments made, venture into adjacent markets, and drive additional revenues from associated services.
SDPs enable easier post-market support through digital channels as opposed to relying more on-field support. Businesses can build and leverage digital supply chains and offload their hardware supply chain responsibilities to commodity hardware manufacturers that can perform the heavy lifting. This will bring in more cost efficiency, while helping enterprises focus more on end-user experiences.
We explore the SDP play across a few industries and how best companies can take the SDP route to drive business value. Before that, let’s look at some of the quick wins enabled by SDPs.
New functionalities for products
New functionality releases can be done simultaneously across markets globally. As machine learning can be enabled easily with SDPs, products can learn autonomously and adapt to the environments whenever and wherever they are deployed.
Better customer experience
Product companies can connect directly to their end users without relying on their traditional supply channels of distributors, channels, and system integrators. With connectivity as a key theme, SDPs help provide “out of the box” connected experience to end users just like how today’s mobile phone users are able to directly get started with their phones with very limited support, thanks to enhanced user interface, improved connectivity, and the software backbone the phone manufacturers provide.
Create additional revenue streams
SDPs enable OEMs to play a part in the after-market service revenue streams. They also help in substantially reducing the software bill of materials as they are optimized for modern architectures that allow very efficient product development.
The software-defined way
Industries such as automation and control, life sciences and medical devices, and communications are taking the lead in adopting software-defined approaches.
Software defined automation in the automation and control industry
With the evolution of digital factories, integrating digital technologies like edge clouds, mobile apps, 5G networks, and AI with plant software and control systems has become more critical than ever. However, challenges of system software configurability, system scalability, and system upgrades remain.
Traditional plant and process controls are layered architectures organized into layers L0 to L4, and supplied by a plethora of vendors and range of customized products. Transforming sensors, input and output devices, and control systems as software-defined products will introduce configurability and scalability at L0 and L1 levels, and allow L2 and L3 functions to modernize through edge cloud-enabled digital transformation. Broadly, the SDP transformation breaks ISA95- defined four levels of transformation into two levels L1 and L4, which are connected to each other through next-gen communication technologies like 5G. ISA95 is the International Society of Automation standard for developing an automated interface between enterprise and control systems.
When an industrial automation company sought to attain flexibility and scalability of its products by migrating custom high-cost hardware to a cluster of low cost, commercial off-the-shelf devices, it took the software-defined approach. Following a defined architecture and a series of proof of concepts (POCs), the company could develop software-centric products that helped it achieve increased uptime and distributed application processing while overcoming stringent control loop timing constraints. This enabled the company to scale its products, protect its investments in software and algorithms, and lower product life cycle costs for end users.
Software-defined solutions in the life sciences and medical devices industry
The life sciences and medical devices industry is at the cusp of a large-scale product transformation journey, triggered by several global factors such as technological advancement, internet of medical things, miniaturization, personalization, AI-driven data analytics, and remote diagnosis.
With the growing focus on patient centricity, software-defined solutions for life sciences and medical devices industries particularly software as a medical device (SaMD) can be explored. These solutions can generate accurate clinical data that can be made readily available for the development of safe and effective healthcare solutions. They can also help in remote monitoring and appropriate healthcare delivery for aged, disabled, and needy patients. In fact, advanced SaMD and healthcare software solutions are already democratizing clinical and health data and reducing the healthcare burden on payers.
For instance, through a smart device that can accurately monitor the pressure to be applied during a therapeutic treatment being provided to support faster recovery, a medtech company enabled healthcare professionals and patients to measure the required pressure and take decisions to manoeuvre the pressure based on the data generated. The same device also enable patients to share treatment information with their physicians via smartphone applications. The innovation is helping increase confidence, trust, and reliability between patients and health experts.
Software-defined network (SDN) in the communications industry
Though evolving ecosystems powered by 5G, AI, cloud, IoT, and edge technologies offer OEMs and communication service providers (CSPs) many opportunities, there are challenges in effectively leveraging these technologies for business growth. Software-defined solutions for the industry can be explored through software-defined network (SDN) architectures. These can improve network efficiency and agility by deploying software-based network functionality along with a software-based network management layer on top of a networking platform. They allow organizations to govern massive amounts of data and network traffic in a flexible and cost-efficient way. The architectures are designed in such a way that they have programmable networking devices managed centrally through open API-based software applications.
Take the case of a network equipment manufacturer that was looking to accelerate the time to market for their leading SDN product line cost-effectively. Working with a partner, it was able to revamp the SDN product end to end with new feature development, regression and automation. The company was able to achieve reduced time to market as well sustain and scale its SDN product line at an optimized cost.
THE FUTURE BECKONS
Product companies must build SDPs into their product lines and make them part of their transformation strategies.
SDPs can support organizations in effectively managing product design, development, operations, maintenance, repairs, and upgrades throughout the life cycles of the products. Beyond cost savings and improved productivity, they help build a foundation for elasticity and enable simplified ways for companies to deliver products and services. They can be a game-changer—whether the plan is to extend existing products, upgrade them to meet changing market requirements, accelerate innovation, scale, or personalize user experiences.
As companies strive to overcome growing supply chain complexities, adopt dynamic business models, and tap new revenue streams with servitization, product companies must adopt SDPs early on, build them into their product lines, and make them part of their transformation strategies.
Adopting the right technologies and the right mix of talent plays a crucial role in driving value from SDPs. Enterprises that are looking to lead the software defined future would do well to team up with partners with deep product engineering expertise and the experience to help them navigate the softwarization journey.
