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Over the last ten years, we have seen the transformation of Bosch first into an IoT company, and more recently into an AIoT company. IoT – the Internet of Things – provides basic connectivity and already enables important use cases such as condition monitoring or data-driven applications for physical products. AI – Artificial Intelligence – is the new game changer, utilizing the massive amounts of data we can generate from the IoT to help us understand how our products are performing in the field and how our customers are using them. New digital features for physical products can be enabled using the combination of AI and IoT together – or in short, AIoT, as we are now calling it.

In today`s digital world, no stone is left unturned. Even companies with traditional businesses around physical products and equipment are now at the forefront of the digital revolution. Product companies, OEMs, manufacturers and equipment operators are continuously digitalizing to make their businesses more customer centric, automate repetitive tasks, and even create new digital businesses. Smart Connected Products are the next step in the evolution of physical products, enabling new digital features and services. Smart Connected Solutions help equipment operators to continuously improve Overall Equipment Effectiveness (OEE). Data, Artificial Intelligence (AI) and software are the key enablers. The Internet of Things (IoT) is providing the connectivity between physical products and equipment with the cloud. AI in combination with IoT-generated data creates new insights and predictions. It is even enabling autonomous vehicles, products and equipment. This is a huge step forward from the basic IoT applications of the past. AIoT – the Artificial Intelligence of Things - is the next paradigm shift. AIoT provides the foundation for Smart Connected Product and Solutions. By combining AI and IoT, AIoT has the potential to profoundly change the way in which we will do business in the future.

However, in order to get there, it is vital to ensure that the many delicate little seedlings and pilot projects that we are seeing across the industry are transformed into real businesses and solutions at scale – either generating additional revenue, or saving time and money. This will require us to rethink how we are approaching the technical innovation potential of AI and IoT. We will only be able to realize its potential to the full extent if we ensure a strong focus on customer centricity, go-to-market, monetization and commercialization.

Taking customer centricity as an example, AI-enabled add-on features can significantly improve the experience of customers who were previously focused purely on physical product performance. AIoT truly has the potential to lift the performance of entire product categories to new levels – both from a UX as well as a quality perspective. The combination of digital and physical will enable us to constantly learn and simulate how products are performing in the field and how customers are using them. This in turn enables us to continuously improve the solution offering – and with it the customer experience. From smart traffic control systems and autonomous driving over drone-based building inspections to ever smarter kitchen appliances, we are already seeing how AIoT is changing the world of physical products. The same applies to the perspective of equipment operators, e.g., manufacturers, rail companies or energy grid operators, who utilize this new paradigm to constantly optimize their OEE (overall equipment effectiveness).

However, for every real AIoT success there are many stories of companies that run only prototypes and pilots, but never truly see this scaling to a level where it has real business impact. Creating a sustainable and scalable business enabled by AIoT is not easy. It takes a good combination of business acumen and technical execution capabilities to succeed. Having a strong focus on customer benefits is vital for success. Do not start an AIoT project without clear customer benefit definition which addresses a relevant customer or user pain point. Early in the project focus on commercialization models as well as the go-to-market model.

Digital-enabled business models for physical products require new approaches for sales and marketing. For a startup, this might sound natural, but for an incumbent it requires a thorough analysis of the existing sales processes and available skills in the sales team. Getting the product–market fit right and crossing the chasm from early adopters to a broader customer base requires a flexible business strategy and the ability to combine digital and physical capabilities. This is not an easy task — neither for a digital start-up nor a manufacturing incumbent — because you often need the culture and capabilities of both types of organizations.

This is where the AIoT User Group and the AIoT Playbook come in. Bosch has helped to initiate the User Group to bring together good practices from players in different domains and industries. Today, the AIoT Playbook provides a 360-degree perspective on smart, connected products and solutions:

  • How are AI and IoT enabling new business models?
  • What are the specific business opportunities for OEMs vs. equipment operators?
  • How can these new business models scale up to a level where they become relevant?
  • How can matching commercialization and go-to-market strategies be found?
  • How can co-creation, sourcing, and legal aspects be managed?
  • How to set up a delivery organization that combines data-centric, AI-centric and software-centric teams
  • How can agility, security, functional safety and robustness be ensured in an integrated DevOps cycle?

The Digital Playbook addresses managers with a digital transformation agenda, product managers, project managers and solutions architects. It provides teams with a set of good practices, a common understanding and a common language, to help with the successful application of AIoT and the creation of scalable businesses. A large number of real-world examples and detailed case studies help to ensure a high level of relevance and pragmatism – and make it tangible.

The Digital Playbook would not have been possible without the AIoT User Group and the many experts involved. It is my pleasure to work with such experienced experts in the AIoT User Group`s Editorial Board, which was initiated by my esteemed predecessor Michael Bolle – thank you. Special thanks to Dirk Slama (Bosch and Ferdinand-Steinbeis-Institute), who, as Editor-in-Chief, is responsible for making the Digital Playbook become a reality. Many thanks also to the other editors of the print edition: Sebastian Thrun (Udacity), Ulrich Homann (Microsoft), and Heiner Lasi (Ferdinand-Steinbeis-Institute). We also thank the other members of the AIoT editorial board: Prith Banerjee (ANSYS), Jan Bosch (Chalmers University), Ken Forster (Momenta Partners), Dominic Kurtaz (Dassault Systemes), Zara Riahi (Contilio), and Nil Willetts (TM Forum). Finally, my sincere thanks to all the other domain and technology experts who are listed in the AIoT Expert Network. The Digital Playbook would not have been possible without your contributions – thank you!

Dr. Tanja Rückert

Chief Digital Officer, Robert Bosch GmbH