{"id":5561,"date":"2017-04-25T18:58:56","date_gmt":"2017-04-25T22:58:56","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-digit\/submission\/ptc-making-industrial-companies-slightly-more-interesting-with-arvr\/"},"modified":"2017-04-25T18:58:56","modified_gmt":"2017-04-25T22:58:56","slug":"ptc-making-industrial-companies-slightly-more-interesting-with-arvr","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-digit\/submission\/ptc-making-industrial-companies-slightly-more-interesting-with-arvr\/","title":{"rendered":"PTC: Making industrial companies (slightly) more interesting with AR\/VR"},"content":{"rendered":"

One of the biggest overarching questions surrounding the advent of digital technologies is how existing companies can evolve their business models and product offerings to incorporate such nascent technologies. PTC is a company that has (to date) very successfully made that evolution.<\/p>\n

PTC is a software and service company that creates enterprise software platforms to help manufacturers design, operate and maintain complex products and machinery. In recent years, it\u2019s transformed its traditional computer-aided design (CAD) and product lifecycle management (PLM) offerings to focus on IoT-enabled software \u2013 allowing connected products to capture and analyze information on clients\u2019 machinery and equipment. And enterprises have responded well to these changes \u2013 PTC\u2019s customer base includes blue-chip names such as Bombardier, Philips and Caterpillar.<\/p>\n

\"\"<\/a>Even more recently, PTC has layered AR\/VR offerings on top of its software offerings. In November 2015, PTC acquired Vuforia, self-touted as the \u201cworld\u2019s most widely deployed AR\u00a0platform,\u201d with the intention of bringing AR\/VR to enterprise.\u00a0As one of PTC\u2019s division presidents states, \u201cThere\u2019s a conundrum in IoT: smart connected products contain digital data, but a technician in the field has no way of seeing that data.\u201d Vuforia\u2019s platform allows enterprise developers to create enterprise apps; for example, Boeing developers have used Vuforia to build AR content such as step-by-step maintenance instructions and engineering design reviews.<\/p>\n

Through apps on Vuforia, users can augment digital information on top of physical products. For instance, a field technician for Caterpillar can use an iPad to scan a QR code on the hood of the Caterpillar\u00a0truck, which projects a 3D model of the truck engine onto the iPad screen. The screen also shows key stats on the engine and can pinpoint exactly what is malfunctioning on the 3D rendering (based on data sent from sensors on the engine), thus saving the technician time and effort to diagnose and fix the engine problem.<\/p>\n

Immense value creation for enterprise customers<\/strong><\/p>\n

PTC\u2019s AR offerings create immense value for enterprises in the following ways:<\/p>\n

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  1. Ease of use<\/strong>: AR has incredible potential applications in enterprise, but adoption has been slowed by a lack of easy-to-use tools for content authors (particularly in industrial applications where these enterprises may not have much developer talent available). PTC\u2019s AR offerings for industrial enterprise don\u2019t require in-depth programming knowledge, enabling enterprises to quickly and easily create AR experiences so that its employees can seamlessly service and operate products in a smart, connected world.<\/li>\n
  2. Synergies between IoT and AR\u00a0platforms<\/strong>: \"\"<\/a>With the increased data collected from connected products, PTC\u2019s customers can then feed such data into the AR platform, giving employees not only a realistic and easy-to-understand rendering of their equipment, but also real-time updates and diagnoses of problems.<\/li>\n
  3. Cost savings<\/strong>: The potential for cost savings are huge. In the Caterpillar case above, what originally would take several technicians multiple maintenance checks to do can be done with fewer technicians and with fewer manual service checks. Considerable training costs can be reduced as well; technicians no longer have to read and memorize huge training manuals and can conduct real-time support with step-by-step guidance projected through AR on their screens.<\/li>\n<\/ol>\n

    Perfecting the value capture model<\/strong><\/p>\n

    PTC has had to evolve their pricing model continuously to capture appropriate value in this new data-rich, connected system. PTC charges a flat platform fee based on # of users, and then charges per asset based on a scale of asset classes: a big piece of mining equipment (less frequency of data transfer, but more data per transfer and more mission-critical) is going to be charged differently than a connected smoke detector (high-frequency, low-bit data transfers). The AR offering is an upsell feature that is offered alongside the IoT platform offering. A critical part of capturing value from the AR feature set will be quantifying and articulating the abovementioned cost savings (and thus ROI) from the AR capabilities.<\/p>\n

    How to continue to grow the business<\/strong><\/p>\n

    There are several things that PTC should do to continue expanding its AR business:<\/p>\n

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    1. Closely link its AR offerings to its IoT platform<\/strong>: this will be a key differentiator against its competitors if PTC\u2019s customers are able to optimize the data collection and feed it into their AR apps.<\/li>\n
    2. Strengthen the platform by increasing content authors<\/strong>: \"\"<\/a>by fostering more content authors on its Vuforia platform, PTC can increase its total addressable market; many enterprises out there may not even know what AR can do for their businesses (beyond obvious use cases in healthcare, retail, real estate, etc). This will strengthen the platform on both sides. As seen in the graphic on the right, while PTC has shifted Vuforia’s focus to be on industrial enterprise, a wide range of industries currently build on the Vuforia platform.<\/li>\n
    3. Convey the value of AR<\/strong>: many enterprises, particularly in sleepier industries like industrial machinery, are skeptical around the value of AR. By developing key success stories with certain enterprises and tangibly measuring the ROI (e.g., \u201cour customer was able to increase the # of maintenance checks per technician from 2-3 \/ day to 5-6 \/ day\u201d), they will be able to sell into these industries more effectively.<\/li>\n<\/ol>\n

      AR\/VR has an abundance of sexy applications, from gaming to retail to some literally \u201csex\u201d-y use cases. Industrial\/manufacturing applications may not seem like the most exciting space, but the value creation potential here is huge. If PTC is able to stay on the forefront of manufacturing software needs, they can ultimately end up being a huge platform winner in the impending enterprise AR\/VR content war. And if winning isn\u2019t exciting, what is?<\/p>\n

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      References:<\/strong><\/p>\n