The Role of Accountants in the Age of Smart, Connected Products

As technology continues to evolve, smart, connected products are becoming increasingly prevalent in our society and in organizations. These products incorporate physical components, smart components, and connectivity components, creating a virtuous cycle of value improvement.

The rise of smart products presents new challenges and opportunities for accountants, who can provide valuable insights and guidance from smart products’ data.

What Are Smart, Connected Products?

Smart, connected products are devices or items that have digital capabilities, like sensors or software, enabling them to collect data, interact with each other, and connect to the internet for a variety of purposes, such as improving performance, providing new features, or delivering valuable insights.

There are numerous examples of smart, connected products across different industries and environments.

• Home Appliances: Smart refrigerators, washing machines, or ovens that can be controlled remotely, provide usage data, and even alert you when they need maintenance or when supplies are low.

• Wearable Devices: Fitness trackers and smartwatches that monitor and analyze your health data, such as heart rate, sleep patterns, and physical activity.

• Automotive: Connected cars that provide real-time diagnostics, GPS tracking, automatic emergency calling, and even semi-autonomous driving capabilities.

• Industrial Equipment: Machinery in factories that can predict maintenance needs, optimize performance in real-time, and provide data for more efficient operations.

• Smart Buildings: Thermostats, security systems, and lighting that can be controlled remotely, learn routines, and provide data on energy use.

• Healthcare: Medical devices that monitor patient health and can transmit data to healthcare providers, or even administer treatments.

• Agriculture: Farm equipment that can analyze soil conditions, apply precise amounts of water or fertilizer, and give farmers data to increase crop yields.

According to Porter and Heppelmann, smart, connected products have three core elements:

1. Physical components: These are the mechanical and electrical parts of a product. In a car, for example, these might include the engine block, tires, and batteries.

2. Smart components: These include the sensors, microprocessors, data storage, controls, software, and typically an embedded operating system and enhanced user interface. In many products, software replaces some hardware components or enables a single physical device to perform at various levels.

3. Connectivity components: These are the elements that enable wired or wireless connections with the product, allowing it to interact with the user, the manufacturer, or other products.

Connectivity can take several forms, including one-to-one connections, where an individual product connects to the user, manufacturer, or another product, and one-to-many connections, where a central system is connected to many products simultaneously.

Examples of central systems designed for consumers include home automation platforms like those provided by SmartThings, Apple HomeKit, Amazon Alexa, and Google Home. Robust platforms are developed for specific industries, such as the auto industry, food & beverage, and utilities.

Implications for Accountants

In some organizations the advent of smart, connected products may have profound implications for accountants. As these products generate vast amounts of data, accountants are positioned to play a crucial role in analyzing this data to provide valuable insights for decision-making.

Data generated by connected products is valuable on its own, but its value multiplies exponentially when combined with other accounting and operations data as well as data external to the organization. This data may include service histories, inventory locations, commodity prices, and traffic patterns, among other variables.

For instance, in agricultural settings, accountants can provide key insights by integrating data from humidity sensors with weather forecasts. This data synthesis can optimize irrigation systems, reduce water usage, and thereby increase the efficiency and profitability of farming operations.

In a similar vein, fleets of vehicles can benefit immensely from the integration of pending service needs data and location data for each vehicle. Accountants can analyze this data to assist service departments in planning parts staging, scheduling maintenance, and enhancing the efficiency of repairs.

The value of warranty status data may increase significantly when combined with product use and performance data. Accountants can help identify patterns indicating that a customer’s heavy use of a product is likely to result in a premature failure covered under warranty. Such insights can trigger preemptive service, preventing later costly repairs, enhancing customer satisfaction, and improving the organization's bottom line.

Accountants also can play a role in recognizing and capitalizing on revenue generation opportunities. Monitoring the data from products sold to customers can reveal usage patterns, performance metrics, and predictive maintenance needs. This information can be packaged into premium service offerings, creating an additional revenue stream for the organization. Accountants can help quantify these opportunities and advise on pricing strategies, ensuring that these services are profitable and aligned with the overall business strategy.

Conclusion

The role of the accountant continues evolving to become an integral part of strategic decision-making processes. This evolution can be supported in part by the growing capability to integrate and analyze vast amounts of data from smart, connected products.

In our data-driven era, the accountant's ability to understand and interpret complex data sets is invaluable. By capitalizing on these skills, accountants can help organizations unlock the full potential of their connected products, optimize their operations, and create new value.

Accountants, therefore, should stay current with technology trends and continually expand their skillsets to be effective in this evolving landscape. They need to be capable of understanding the implications of connected products and the data they produce, and be prepared to advise organizations on how to best use this data to drive business value.