A Forrester Consulting June 2016

Thought Leadership Paper

Commissioned By Xively By
LogMeIn

Simplifying The
Complexity Of IoT
Unlock The Full Value Of IoT With
Robust Connected Product
Management
Table Of Contents
Executive Summary ........................................................................................... 1
Connected Products Open New Possibilities For Product
Manufacturers ..................................................................................................... 2
Connected Devices Require A Back-End Management System ................. 3
Many Firms Are Missing The Opportunity To Use Device Data .................. 4
Connected Device Functional Priorities Shift In The Future ........................ 5
Many Firms Seek To Expand IoT Functionality Using Third Parties .......... 6
Key Recommendations ..................................................................................... 7
Appendix A: Methodology ................................................................................ 8
Appendix B: Demographics/Data ..................................................................... 8

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 1

Executive Summary connecting and managing the fragmented array of

Product manufacturers are engineering new internet-of-
things (IoT)-enabled features and services into commercial,
industrial, and consumer products to differentiate their
products, improve customer experience, and create new
ways of engaging with customers.1 Having digital
information about connected device use and location
enables product and process managers to use software to
create better, personalized experiences for customers that
result in brand preference, customer retention, and,
ultimately, higher revenues and profit.
In April 2016, Xively by LogMeIn commissioned Forrester
Consulting to evaluate the key priorities and objectives of
manufacturers of IoT-enabled connected products. To
explore this trend, Forrester developed a hypothesis that
tested the assertion that manufacturers of connected
products must go beyond just connecting their devices and
focus on elements such as managing the devices and
transforming their business by engaging with customers in
new ways.
Forrester conducted a quantitative survey of 232 companies
focused on manufacturing or developing a connected
product and five in-depth qualitative interviews with similar
companies. We found that the priorities, challenges, and
focus of manufacturers that have already deployed an IoT-
enabled connected product often vary from firms that are
planning to deploy IoT-enabled connected products. This
supported the hypothesis that manufacturers of IoT
products often focus initially on ensuring IoT-enabled
connectivity and having a range of functionality to support
their connected product initiatives.
devices; capturing and analyzing connected product data
and transforming this into actionable insight; and
transforming the process or engaging with customers.
Implementing these functions is important but challenging
for most manufacturers.
Most firms are collecting data from connected
products, but fewer are using this data. Only about
one-third of firms are leveraging captured connected
device data to provide insight to internal stakeholders and
partners, personalize interactions with customers, or
profile and segment customers. This highlights a missed
opportunity for leveraging valuable customer data, as
most companies focus their time and resources on just
connecting products and capturing data rather than
creating actionable insights from the captured data.
Product manufacturers need third-party support to
maximize IoT efficiency. Enabling IoT products requires
a wide range of skills and capabilities that most firms are
not adequately equipped to provide. With support needs
ranging from connectivity to security to device
management, firms are relying on partners to help provide
the technology (i.e., platforms) and expertise to help
operate their connected devices effectively.

KEY FINDINGS
Forresters study yielded the following key findings:

Manufacturing firms deploy IoT-enabled connected

products to achieve various benefits. The majority of
manufacturers deploy IoT-enabled connected products for
differentiation. Other benefits of these connected products
include enabling new monitoring capabilities for products,
generating new revenues, and enhancing customer
experiences.

Enabling IoT products requires a wide range of

capabilities and functions. Firms that plan to deploy or
have already deployed IoT connected devices are
focused on enabling many capabilities, including

Connected Products Open New
Possibilities For Product
Manufacturers
Businesses are always on the lookout for the newest
product or service that is going to give them an edge over
their competitors. Given the increasingly competitive
landscape driven by technology-enabled consumers, finding
new ways to differentiate ones brand in the digital world is
critical for ongoing success. Many discrete product
manufacturers have found IoT-enabled connected products
to be a key opportunity for differentiation. In fact, 62% of
companies we surveyed that were involved with or planning
to be involved with IoT said that this differentiation was or is
a key driver for their companies getting involved with
connected products (see Figure 1).
Enabling new product monitoring capabilities such as
condition and performance measurements was also a key
driver. We spoke with the director of technology for a
manufacturer who was driven to use connected products
due to the challenges he was facing with the level of manual
support needed for existing products. He explained, We
were doing trials . . . and needed to be onsite for several
FIGURE 1
Decisions To Create Connected Products Are
Driven By Distinct Business Advantages
What were/are the key business drivers that caused
your company to create or begin creation of an IoT-
enabled connected product?
Enable competitive
differentiation by offering IoT-
enabled connected products
Enable new product
monitoring features
Expand revenue opportunities
from new products and services
Enhance customer service
53%
and support capabilities
Improve or personalize
customer experience
50%
Base: 232 discrete manufacturing companies planning to make or
currently making connected devices
(top five responses shown)
Source: A commissioned study conducted by Forrester Consulting on
behalf of Xively by LogMeIn, May 2016
2
months. We recognized it would be very challenging to
maintain this high level of support would we win the
contract. We realized the need for something more scalable
that didn't require onsite resources.
Other drivers for connected products included:
Expanding revenue around new services.
Enhancing customer experiences and customer service
capabilities.
We realized the need for something
more scalable that didn't require
onsite resources.
IT director, manufacturer of scientific instruments
THE CONNECTED PRODUCT JOURNEY IS COMPLEX
There are a lot of components of a connected product for
manufacturers to think about, but when initially entering the
IoT space, their main focus is on connectivity. When we
asked manufacturers that currently have devices available
how much time was spent on various product capabilities,
connectivity was at the top of their list, representing about
20% of the total effort. However, the reality is that many of
the key drivers for IoT cant be realized by just connecting a
device. We spoke with a manufacturer of connected
scientific products who described how his company
navigated this evolution beyond just connectivity. The
companys first product was focused just on connectivity,
but for its second device, it expanded applications and
62% integrations of the device data. And for the next generation,
it built software updates and support into the devices. With
more and more companies creating connected devices,
61%
connectivity itself is no longer a unique differentiator that is
going to drive success and transform the business.
61%
Our survey results highlighted some significant differences
between those product manufacturers that have already
developed a connected product and those that are planning
to develop a connected product. Maintaining data privacy
and security and capturing device data were the top
priorities for both categories of connected product
manufacturers; however, there are some key differences as
well (see Figure 2):
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devices are significantly more focused on features to help

FIGURE 2
manage and support these connected devices compared
Priorities Vary Among Companies That Already with firms that are planning to deploy connected devices.
Have Connected Devices Versus Those That Plan
To Deploy Identity and access management (IAM) security. One
of the most important security aspects of IoT is how
What are the top five priorities/features you devices and their authorized users authenticate when
considered or are considering during the product connecting to other systems. Firms that have already
design process for your connected product(s)? deployed connected products are more focused on this
Have device Planning device feature than those that are planning to deploy them. The
44% security control plane that facilitates transactions between
User data privacy and security
46% devices and the internet also requires authentication,
identity, and access management solutions. Forrester
Collecting data captured by 41% expects that certificate-based authentication as well as
the connected devices 40%
device ID, IP geolocation, and geofencing-based tracking
Standards to facilitate 28% will play a great role in device authentication.2
integration 39%

Connected device 43% Connected Devices Require A Back-

management and support 34% End Management System
Identity and access 44%
management 33% Operating a connected product opens the doors for various
business benefits, while simultaneously introducing a
Base: 232 discrete manufacturing companies planning to make or number of new business challenges. Getting devices to
currently making connected devices connect is the first and most straightforward step. But
Source: A commissioned study conducted by Forrester Consulting on companies currently see or expect to see the greatest
behalf of Xively by LogMeIn, May 2016
challenges with IoT on the back end, with data and device
Standards to facilitate integration. Examples of IoT- security and device management (see Figure 3). In order to
enabled products have been around for a long time;
FIGURE 3
however, they are based on industry use cases with
Key Challenges When Implementing IoT-Enabled
varied requirements. There are no universal IoT protocols, Connected Products
software interfaces, data formats, or interoperability
standards. The result is that manufacturers that have
already deployed IoT-enabled connected products Where does your company see or anticipate seeing
the biggest challenge with implementing your IoT-
recognize the difficulty with developing a set of common
enabled connected product(s)?
standards to facilitate integration for all types of IoT (Only showing No. 1 ranked challenge)
connected products. In comparison, firms that are
planning to deploy connected devices are more focused Data and device security 38%
on identifying standards to facilitate connected product Device management
17%
integration. and support
Connectivity 16%
Connected device management and support. The
breadth and variety of connected products are expanding, Data collection 13%
and more device manufacturers are incorporating Data analytics 12%
sensors, connectivity, and intelligence into their products.
These factors are driving requirements for connected Data integration and usage 4%
device management solutions to help manufacturers
configure, manage, monitor, and troubleshoot IoT- Base: 232 discrete manufacturing companies planning to make or
enabled connected products in real time. Survey results currently making connected device

show that firms that have already deployed connected (percentages may not total 100 because of rounding)
Source: A commissioned study conducted by Forrester Consulting on
behalf of Xively by LogMeIn, May 2016
 4

maximize the potential for having a connected product,
companies must be able to ensure the data from those
devices remains secure and that the devices have proper
management and support.
The challenge of securing and managing these devices is
exacerbated by a number of factors:
Complexity and volume of devices. IoT-enabled
connected products are more complex than traditional
products, and this complexity is a challenge for 43% of
companies surveyed. As well, managing these devices
and capabilities at scale is a challenge for 41% of
companies in the IoT space, as it requires the proper
infrastructure and resources that many businesses are
not properly equipped for.
technology, whereas companies looking to get into the IoT
space lacked the right internal personnel and still struggle
with defining the capabilities of their devices and working
through the bugs.
Cybersecurity is the one thing I
would have looked at more compared
to before. The ability to build in
cybersecurity solutions would help
me sleep better at night.
Managing director, manufacturer of connected cars

Unforeseen issues that come with new products. It is

impossible to predict everything that will happen or could Many Firms Are Missing The
happen with a new product. As companies enter the IoT
arena, 37% recognize that they dont have all the answers Opportunity To Use Device Data
and anticipate facing new challenges. This is also true for
companies that already have devices as well as those The majority of companies with an IoT device are collecting
that are still in the planning phase for a new device. data from connected products, but fewer firms are actually
using this connected device data. Less than a third of
Need for seamless security across products, surveyed manufacturers are leveraging captured data to
applications, and services. Core benefits of connected
products include the ability to utilize the data to understand FIGURE 4
device usage and feature adoption and to enhance Most Manufacturers Store Data, But Far Fewer Use
applications and services using device location and status It
information. Our survey results showed that keeping data
secure is or will be a difficult challenge for 60% of IoT
product manufacturers. As connected product data is used How does your company currently utilize and/or
manage IoT-enabled connected product data?
in multiple use cases, it is critical to validate, authenticate,
(Select all that apply)
and secure the data and access to captured data and
Store data captured by
insight across all channels. Addressing these security connected products for 51%
issues is more challenging for firms that already deploy future use
connected IoT products (37%) compared with those still Profile and segment
34%
planning to build a connected product (24%). As well, our customers
interviews highlighted that security is more challenging for Protect and secure
small companies than larger companies. A global product 33%
sensitive data
manager for a large appliance manufacturer stated: By
Provide data-driven insight to
being a Fortune 500 company, we know our devices well. 33%
stakeholders and partners
Knowing our appliances well provides improved security.
Personalize interactions with
By running in house, we can better control the resiliency. 32%
individual customers
We have partner APIs, not open APIs.
Leverage captured data to
The barriers to responding to these challenges vary 29%
make decisions in real time
substantially based on the IoT maturity or experience of the
company. Challenges for companies experienced with IoT Base: 232 discrete manufacturing companies planning to make or
were primarily related to security and insufficient currently making connected devices
Source: A commissioned study conducted by Forrester Consulting on
behalf of Xively by LogMeIn, May 2016

provide data-driven insight to internal stakeholders and
partners; personalize interactions with customers; or profile
and segment customers (see Figure 4). These results
highlight a largely missed opportunity for companies to turn
connected product data into actionable insight.
However, the idea of just collecting the data and letting it sit
dormant is starting to change. Some companies have been
able to leverage data and see a direct benefit to their
operations. For example, a manufacturer of connected lights
anticipated the central role of IoT data in the future, saying:
In the next 10 years, [IoT] will focus around who owns the
data. The market will be shaped in this way. We will start to
see an expected value from all data we are collecting.
IoT-enabled connected product manufacturers plan to use
product data to address four key use cases:
Integrating data with existing business systems. Most
companies are already sitting on a vast amount of data
captured about their customers and products. Combining
this existing data with new data captured from IoT-
enabled connected products can help firms unlock new
business insights and revenue opportunities.
Profiling and segmenting customers. Firms can use
connected product data to gain a better understanding of
the customer profiles. Connected device data can help
firms understand customer preferences and activities to
enhance and personalize customer and end user
experiences. One product director for a connected
wearable manufacturer explained: We want to use the
devices to better understand users needs. Because of
our link functionality [which connects the wearable
devices to popular applications], we have a much better
idea of what they like to use the product for.
Providing a feedback loop for improving existing
product features. For companies that have already
deployed connected devices, 45% identified improving
that product based on device data as the top desired use
of the data in the next one to two years. These
manufacturers recognize that the first version of a
connected product doesnt always have all the relevant
features and characteristics that the end users want or
need. This issue is far less of a concern for manufacturers
that are in the process of creating a connected device.
Providing insights for internal teams, partners, and
suppliers. For companies developing a connected device,
44% said the ability to provide data-driven insight to various
stakeholders, including internal employees and partners, is
5
a key data use case. These companies focus on helping
internal stakeholders prove the value of connected
products by providing feature and usage insight in order to
drive future product enhancements and updates.
Connected Device Functional
Priorities Shift In The Future
As the breadth and variety of IoT-enabled connected
products expand, the focus and priorities of connected
product manufacturers also shift. In particular, as connected
product manufacturers look to the future, they find that
security and device management capabilities will be critical,
but connectivity overall is expected to be a much lower
priority (see Figure 5).
As companies consider additional expansion of their IoT
capabilities, their focus turns toward expanding and improving
the user-centric features of their connected products.
Specifically, 52% of surveyed manufacturing firms are
planning to implement predictive analytics capabilities to
identify future customer engagements. As well, 42% plan to
capture product operational analytics to inform their corporate
IoT strategy in the next one to two years. Additional future IoT-
enabled connected product functions will expand connected
product capabilities to enable communication with other
products; integrate data with partners; and allow existing
business enablement solutions to expand engagement
opportunities with partners and customers.
FIGURE 5
Security And Device Management Features Are
Top Capabilities In The Future
What capabilities will be most important for your
companys IoT-enabled connected products in the
next one to two years?
(Ranked top three)
Data and device security 64%
Device management
53%
and support
Data analytics 52%
Data collection 47%
Connectivity 41%
Back-end data integration
22%
and usage
Base: 232 discrete manufacturing companies planning to make or
currently making connected devices
Source: A commissioned study conducted by Forrester Consulting on
behalf of Xively by LogMeIn, May 2016
 6

Many Firms Seek To Expand IoT IoT platforms are an important element for IoT
enablement. Manufacturing firms use many different
Functionality Using Third Parties
technology elements to enable their IoT connected
products. In particular, 34% of surveyed manufacturers
Enabling IoT products requires a wide range of capabilities
that already have deployed IoT connected devices use
and functions focused on connecting and managing the
platforms to manage their connected products. The value
fragmented array of devices; capturing and analyzing
of IoT platforms is exemplified by an interviewee, who
connected product data and transforming this into
explained: A platform is the key piece for connecting. The
actionable insight; and transforming the process or
platform enables the service and product teams to review
engaging with customers. Each of these functions is
product data and to help build better products machine
important to achieving the comprehensive benefits of
learning and budding new capabilities that OEMs are
deploying IoT-enabled connected devices; however, these
looking to take advantage of. So much more can be done
functions are still very challenging for most manufacturers to
with the data now.
deliver (see Figure 6). Our survey highlighted four key
findings that reflect how manufacturers are responding to Manufacturers that plan to deploy IoT products are
these challenges: very interested in security support. Security solutions
are significantly more important to those firms (44%) that
Third parties play a key role in enabling IoT functions.
are planning to deploy IoT connected products. Reporting
Many manufacturing firms rely on third parties to support
dashboards are also important to support these planned
and enable processes related to their connected devices,
IoT connected products.
ranging from providing application software development
kits (SDKs) to using device data capture and analytics. Security expertise and reliable solutions are a must
for IoT partners. Deploying IoT-enabled connected
products is complicated. Using the tools and capabilities
FIGURE 6 currently available today enables manufacturers to
Managing And Securing Connected Products Is leverage third-party resources for improved efficiency. As
Very Important, But Still Very Challenging For a manufacturer of appliances put it: The future of the IoT
Most Manufacturers world depends on where you draw the partnership line.
We can't and don't need to do everything ourselves.
How important and challenging are each of the
following capabilities for your firms IoT-enabled
connected product(s)? The future of the IoT world depends
(Percent rated extremely or moderately
important or challenging) on where you draw the partnership
Important for IoT Challenging to deliver
70%
line. We can't and don't need to do
Connect
61% everything ourselves.
Secure 70%
56% Managing director, manufacturer of connected cars
Manage 74%
57%

Analyze 70%
60%

Engage 66%
59%

Base: 232 discrete manufacturing companies planning to make or

currently making connected devices
Source: A commissioned study conducted by Forrester Consulting on
behalf of Xively by LogMeIn, May 2016
 7

Key Recommendations
IoT-enabled connected devices help discrete product manufacturers bridge the physical and digital worlds. Ingesting
information and context gathered by sensors embedded in the products enables manufacturers to differentiate these
products, transform business processes, and generate new revenues. To realize the many benefits of IoT-enabled
connected products, manufacturers must do the following:

Recognize the range of capabilities necessary to enable seamless IoT-enabled connected products.
Deploying smart connected products requires many functions focused on connecting and managing the
fragmented array of smart devices, capturing and analyzing connected product data, transforming this captured
data into actionable insight, and transforming processes or engagement with customers. Each of these functions
is important to achieving the comprehensive benefits of deploying IoT-enabled connected devices, but most
discrete product manufacturers are not able to address all of these functions easily or simultaneously.

Consider IoT software platforms to simplify the process of deploying smart connected products. A new
category of enterprise software IoT software platforms is emerging to simplify the process of developing,
connecting, controlling, securing, and capturing insight from connected products and assets. Manufacturing firms
recognize that many of these IoT platform functions are important to enabling their connected products; however,
many firms are challenged with implementing comprehensive IoT platform functionality.

Seek third-party assistance from third-party vendors with security expertise early in the process. The
wide range of technology components, platforms, and capabilities necessary to seamlessly deploy IoT-enabled
connected devices is challenging for many firms. In fact, many manufacturers do not have the internal skillsets to
deploy connected devices. In particular, third-party partners with security and integration expertise as well as
reliable, scalable solutions appeal to IoT decision-making stakeholders in manufacturing firms. As well, utilizing a
partner allows companies to focus their resources on more important tasks, such as providing greater customer
value, rather than having to worry about connectivity and security infrastructure challenges.
 8

Appendix A: Methodology
In this study, Forrester conducted an online survey of 232 manufacturing organizations located in the United States, Canada,
United Kingdom, Germany, France, Japan, and South Korea. Survey participants included decision-makers in product
management, product design, product development, product engineering, information technology, and product strategy.
Questions provided to the participants asked to what extent and in what ways their organization is currently investing and/or
planning to invest in connected device manufacturing. Respondents were offered a small incentive as a thank you for time
spent on the survey. The study began in April 2016 and was completed in May 2016.

Appendix B: Demographics/Data

FIGURE 7
Survey Demographics: Country And Company Size

In which country do you work? Using your best estimate, how many employees
work for your firm/organization worldwide?
France
13% 5,000 or more employees 29%

1,000 to 4,999 employees 27%

North America
500 to 999 employees 19%
32% Germany
14%
250 to 499 employees 15%

100 to 249 employees 9%

Japan 50 to 99 employees 2%
United Kingdom 15%
13%
South Korea
13%

Base: 232 discrete manufacturing companies planning to make or currently making connected devices

(percentages may not total 100 because of rounding)

Source: A commissioned study conducted by Forrester Consulting on behalf of Xively by LogMeIn, May 2016
 9

FIGURE 8
Survey Demographics: Industry And Current Device Offerings

Which of the following best describes the industry Does your company currently manufacture a
for which your connected product was designed? connected device?
Computers, IT hardware 23% 62%
Industrial machinery 17%
Automotive 12%
Industrial electronics 10%
Consumer packaged goods 9%
Industrial products 6%
Life sciences 4% 20%
18%
Clothing and apparel 4%
Oil and gas 3%
Medical devices 3%
Yes No, but we have No, but we have
Metals, mining, forestry 2% one in development plans to start
Appliances 2% to bereleased soon development

Furniture, home furnishings 1%

Other 2%

Base: 232 discrete manufacturing companies planning to make or currently making connected devices
(percentages may not total 100 because of rounding)
Source: A commissioned study conducted by Forrester Consulting on behalf of Xively by LogMeIn, May 2016

Appendix C: Endnotes
1 Source: Brief: The Two Fundamental IoT Business Opportunities, Forrester Research, Inc., January 25, 2016.
2 Source: An S&R Pro's Guide To IoT Security, Forrester Research, Inc., August 14, 2015.