PTC Joins the Physical with the Digital to Create the New Reality of the Internet of Things

Jim Heppelmann at ThingWorx 2015

Jim Heppelmann at ThingWorx 2015

PTC is no longer the Internet of Things best-kept-secret. LiveWorx, an annual event started by ThingWorx, the IoT platform developer PTC acquired eighteen months ago, is now the largest, fastest-growing IoT event, according to the company.

The 3-day event opened May 5th in Boston, with a number of announcements. In addition to updating and enhancing its IoT software, PTC has announced it is acquiring ColdLight, a machine learning and predictive analytics startup, for approximately $105 million. With this acquisition, PTC strengthens its IoT platform in the area that could provide the highest value when things are connected:  data analytics. There is not much to gain if the data generated by billions of sensors only adds to information overload rather than leading to new insights.

Specifically, ColdLight brings to the PTC table its expertise in making predictions, helping in preventing product failure and downtime.  The combination of ColdLight and PTC’s existing IoT solutions will deliver on the promise of the IoT:  Automatically and continuously learning from data, discovering patterns, building predictive models, and offering prescriptions or recommendations for action.

Another interesting piece of news, pointing to where one can find the low-hanging fruits of the IoT, was the partnership announcement with ServiceMax. The two companies plan to combine their offerings to provide a new approach to service management. With the Internet of Things, predictive and proactive service is what customers, in any industry or line of business, will come to expect.

Addressing the 5,000 attendees at the event and online, PTC’s CEO Jim Heppelmann provided the big picture for the IoT. The physical and digital worlds have always been separated, observed Heppelmann. Tracking a product, for example, was done only with a warranty card and the customer served as the sensor, providing information about the product and its use. This led, among other things, to the proliferation of call centers, the main channel by which companies got feedback on their products.

Similarly, the digital world of enterprise applications (e.g., CRM), has been disconnected from the physical world, limiting the benefits these applications provide to their users. But with the IoT, “we’re entering a world of new reality—digital and physical are distinct but inseparable,” said Heppelmann.  The “things” are part digital and part physical, part cloud and part premise, part client and part server. In this new reality, the thing has a voice, the voice of the product. “We have to make this new reality a PTC reality,” Heppelmann summed up his vision and ambition for the company.

The IoT big picture was outlined last November in a Harvard Business Review article by Heppelmann and Michael Porter of the Harvard Business school. Yesterday, Porter and Heppelmann provided further IoT insights from their upcoming HBR article, scheduled to be published in September.

The first article was about how the IoT drives a new wave of value-chain-based productivity gains, reshaping industry boundaries and creating new industries. Yesterday, Porter called the IoT “Lean on steroids” because of its potential to drive waste out of the economy.

In the second article, Porter and Heppelmann are focusing on the internal implications of the IoT: How companies are going to change and how they are going to organize themselves to take advantage of IoT opportunities.

Heppelmann suggested a number of possible new groups or functions for companies in the IoT era, requiring new talent and increased investment in training and acquisition of new skills:

  • A unified data analytics group which serves as a single point of data aggregation and is led by a Chief Data Officer;
  • A “design collaboration” function: As the R&D process is in great flux in many companies, product design becomes a systems engineering problem. A new type of collaboration between IT and R&D is required to embed new features and functionality into a product through software, sensors, and connectivity, enabling the product cloud;
  • A DevOps group: A new organization in charge of testing, implementing, and communicating the ongoing changes to the product via the cloud;
  • Customer Success Management function: Abandoning limited transaction-based interactions with customers, this new group will nurture customer relationships by proactively maximizing ongoing value for the customer.

In addition to re-thinking organizational structure and human resources, Heppelmann also offered 10 questions companies contemplating the IoT should ask.  For example: Which product capabilities to pursue? Should functionality be embedded in the product or the cloud? What data to capture? Should we change our business model? Should we sell product data to outside parties?

Massachusetts Governor Charlie Baker also spoke at the event, introduced by Porter who predicted that Massachusetts is going to be a “great actor” in IoT. Indeed, in the event’s program, Baker’s speech was titled “Advantage Massachusetts: How the State is Poised to Become an IoT Industry Cluster.” But the Governor either didn’t get the memo or, more likely, decided to postpone the launch of Mass IoT to another day. He did speak eloquently about Massachusetts’ innovation economy, how it has already become a focal point for the new field of informatics and analytics (answering ”the demand for people who can find the information that matters”), and what he is doing to help startups and small businesses.

Porter has written extensively about the competitiveness of economic clusters, Silicon Valley being a prime example. Massachusetts (i.e., Boston) could become the new Silicon Valley for the IoT era, capitalizing on its traditional strengths in engineering and hardware design. Let Silicon Valley’s software eat the world. Boston’s success in integrating the physical with the digital could be the next big thing.

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