SAG_Twitter_MEME_Lumbered_with_Assets.jpgCompanies have a love-hate relationship with their physical assets.

They tend to be capital intensive, they break down frequently, and they become obsolete too quickly.

Whereas new, digital-born enterprises are typically free of any physical assets such as fleets, factories, machineries or goods. This is the reason why they can move so fast, often resulting in exponential growth.

We have all heard the mantra that Uber is the world’s largest taxi company and it owns no cars, or that AirBNB is the largest accommodation provider but does not any property. Physical assets can drag down traditional companies and they can be reduced to pure asset providers, or device partners, thus losing direct customer contact. 

However, it is not a natural law that the digital challengers can hijack the customer relationships of traditional companies. If traditional companies fight back with the same weapons, a digitalized weapon powered by a true digital software platform, then they can fearlessly face the challenge.

Think of your physical assets as data-capture tools—for predictive maintenance, for capturing data for revenue purposes, as input for the Industrial Internet —wherever you are, whenever you need this information. Realizing this goal is essential if digital enterprises are to achieve further advancements that will benefit in the long term.

Leading industry company Bosch is one enterprise that has always been ahead of its competitors. This pioneering role has gone hand in hand with innovating its own business model over and over again.

Bosch is now the only company in the world actively addressing all three levels of the Internets of Things: The company offers key integration technologies such as sensors and software while also developing new services based on those technologies. This is a key investment for the Internet of Things and the Industrial Internet.

The technology and services supplier runs different applications in the Bosch IoT Cloud for connected mobility, connected industry and connected home and buildings – making its own assets ‘smart’ again. This is a clear statement for the digital challengers in the market.

To understand what makes today’s digital challengers attractive to consumers we have to take a look at their core competencies and differentiators based on their digital software-based technology. Building software skills and expertise is core to surviving in the digital world.

Becoming a digital enterprise can be achieved by making your products “smart” enough to deliver relevant data in real time. Think software first when thinking about business innovation. Think about the layer of differentiation and innovation, as Gartner calls it, as a platform from which you develop your digital capabilities in order to counter digital challengers and gain a competitive advantage.

It is also important to regain IT know-how: Take back the full responsibility and insight of your IT architecture, from wherever it is today. If software is at the heart of today’s innovations, then you must have the power to shape your IT architecture yourself. Expand the CIO organizational responsibilities beyond applications and IT operations management. Appoint a Chief Digital Officer, reporting directly to the CEO to assist the business units in operationalizing their data-centric new digital business models.

Today, technology and emerging business models are helping Digital Enterprises to address many of those issues, thereby changing physical assets back to what they are supposed to be — assets to an enterprise. Because a product’s software component is easier to update than its hardware component, shifting the balance in favor of software can help to keep the product up to date, thereby increasing its lifecycle significantly. Only then will your enterprise value its assets rather than feel lumbered by them.

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