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IoT Turning Products into Information Services via the Cloud

By March 14, 2015Article

In my previous commentary, I identified four levels of value that can be derived from the rapidly evolving Internet of Things (IoT). In this post, I provide a real-world example of how traditional product companies can redefine their business by capitalizing on the data produced by their products via the cloud. 

en-Gauge Inc. is a family-owned business based in Rockland, Mass., which manufactures pressure gauges for safety devices such as fire extinguishers and defibrillators. Over the past 40 years since its founding, en-Gauge’s products evolved from mechanical gauges to digital gauges. The company recently introduced a new generation of sensor-based, cloud-connected gauges that will significantly change the nature of the company’s business. 

en-Gauge’s new gauges can capture data regarding the use of the devices the gauges are attached to, and this information can be used to react more quickly if a device or gauge isn’t working properly. The information also can be used to anticipate when problems might occur based on the usage patterns and enable the institutions using the devices to schedule proactive, preventative maintenance. The remote connectivity also can reduce onsite maintenance and inspection costs and ensure compliance with industry regulations. 

These immediate benefits from connecting en-Gauge’s pressure gauges clearly illustrate the first two levels of value gained from the IoT I described in my previous commentary – reactive and proactive. They can also translate into significant cost savings and greater profitability. 

But the connectivity of en-Gauge’s new IoT products creates two new levels of value that are fundamentally changing the nature of the company’s business. 

en-Gauge’s new products generate valuable new information that not only allows its customers to substantially improve their operations but also opens an entirely new business opportunity for en-Gauge. 

The company can aggregate and harvest the information generated from its gauges to provide valuable industry benchmark data to insurance companies and other third parties that they can use to better package and price their underwriting and other services. By packaging this new data stream from its connected products, en-Gauge created a new information services business that opens vast new business opportunities and a new revenue stream exponentially bigger and more profitable than its traditional product business. 

en-Gauge’s product for information services transformation process would not have been possible without the connectivity, analytics and economies permitted by the cloud. A growing number of brand-name, consumer-oriented companies are demonstrating the power of IoT and the cloud such as those in the wearables and smart home markets. 

However, only a handful of forward-minded business executives in traditional product markets are moving in this direction today. These enlightened executives see an opportunity to gain a competitive advantage in their increasingly commoditized traditional product marketplaces by converting data derived from their products into information services. 

Jeff Kaplan is the managing director of THINKstrategies, founder of the Cloud Computing Showplace and host of the Cloud Innovators Summit executive forum series. He can be reached at

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