Contributed by Jeff Fortin, Director of Product Management for Intelligent Platforms at Wind River
It’s very clear to me that a key emerging trend is the transition from Capex (capital expenditure) to Opex (operational expenditure). A simple way of explaining this is that businesses will offer services instead of building ‘boxes.’ For example, the dot-com revolution, including the emergence of apps, always revolved around services.
But for traditional businesses, they built ‘boxes.’ They were great with consistently creating product lines that provided services. But to upgrade these services, they would have to update the entire physical system. If you have an energy sub-station, there’s millions of dollar’s worth of capital built into that sub-station and Utility is not going to allow full upgrades just because the product provider has a new and interesting idea. The sub-station will most likely sit there for 20 years when replacement is necessary. So in this case, you’re only innovating over a long period of time.
With IoT, you’re selling a service instead of equipment. Energy companies can sell the switching services needed for the sub-station at a rate of kilowatts per hour or whatever is needed to power the station instead of building the physical structure. That is a radical new way of doing energy and industrial and building automation.
You can see the major impact in the medical field. The cost of healthcare concerns everyone. Folks are worried about the costs of chronic diseases and treatments like managing diabetes or patient rehabilitation. These are all very expensive when done in a clinic. However, if I could provide a service to a customer that allows them to get access to a therapy, then insurance companies would gladly pay for that, especially if I have a way to monitor the effectiveness of the therapy.
Overall, medical technology services are a win-win for insurance companies.
Thank you so much, Jeff, for your compelling thought leadership this month!
But the conversations with Wind River and other digital business thought leaders will continue at DocuSign MOMENTUM 2015 in San Fransisco from March 10th – March 12th. Register here to attend the fun!