Our Musings on how Automation will Impact the Work of PricingNerds
When the "thing" in the Internet of Things is me, the knowledge worker.
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Recently, I wrote a couple of posts on how the industrial internet or IIoT is poised to create tremendous value for a wide range of industries. I cited GE Digital as a pioneer in this space highlighting the value of their robust suite of Asset Performance Management (APM) solutions. These solutions are enabling GE to improve business outcomes for customers with greater efficiency, transparency, and intelligence.
Few can argue against the benefits of making machines smarter. For example, a powerful way to leverage IoT technologies is in predicting and better managing both planned and unplanned downtime which can have a significant impact on businesses' bottom-line. Depending on market demand factors, lower downtime can translate into greater levels of output, which in turn increases sales and profits for producers. More predictable downtime can also reduce the need for expensive parts and labor thus reducing operational maintenance costs. On the capital cost side, the ability to manage downtime can also help extend the life of assets thus helping companies conserve cash to fund investment in other areas of the business. Sure, this technology delivers a lot of value but what if instead of dealing with machines, this technology is used to make someone like me, a business consultant or "knowledge" worker replaceable?
Yesterday, I met with a Boston-based start-up in stealth mode that is looking to further democratize the world of B2B data analytics by further automating some of the work I and other consultants do for companies. For example, as a pricing expert, I analyze my client's business by diving deep into their product, customer, and transactional data to identify opportunities to segment customers more effectively in order to reduce margin-killing practices like excessive discounting or giving away costly services at no charge. What if instead of bringing Roberto to run this analysis my clients could simply choose from a pre-built library of applets that would connect to their data to quickly identify and continuously monitor the precise products and customers that are falling outside the norm? All this possible with just a few clicks. Roberto has now been replaced by an applet - ouch.
Fortunately, my pricing work requires me to do more than to analyze neatly packaged product, customer and invoice data. In fact, the reason I am working with this startup is because they need help setting a price for their technology and platform. Setting prices that truly help startups capture the value of their offering requires a deep understanding the diverse needs of different market segments along with insights into competitive alternatives. Then the challenge becomes understanding the dollar impact that the technology delivers to customers. Additionally, you need to understand how to capture this value through the right pricing metric, offering structure and sales capabilities. Performing pricing strategy work remains challenging and complex and luckily for me, it hasn't been boiled down to a single algorithm, at least not yet.
For now, complexity, experience, and knowledge are on my side and my job is safe - phew! Back in July of 2016 McKinsey published a study titled, "Where machines could replace humans - and where they can't (yet). The authors also created an interactive tool where you can evaluate what % of your time could be taken over by machines. In the case of professional services they estimate that up to 39% of someone's time is up for grabs, with much of the automation occurring with data processing and data collection related tasks. Yes, the ability to automate anything that deals with reliable and somewhat predictable data like machine performance data or even data from many repeatable business processes is happening today. In the case of knowledge workers, the automation of some business process gets rid of the middle man, which is us. As complementary technologies like AI mature, automation will expand to more complex tasks. I don't know where this will ultimately take us, but I am sure we will adapt and figure out new ways to add value to our clients along the way.
Few can argue against the benefits of making machines smarter. For example, a powerful way to leverage IoT technologies is in predicting and better managing both planned and unplanned downtime which can have a significant impact on businesses' bottom-line. Depending on market demand factors, lower downtime can translate into greater levels of output, which in turn increases sales and profits for producers. More predictable downtime can also reduce the need for expensive parts and labor thus reducing operational maintenance costs. On the capital cost side, the ability to manage downtime can also help extend the life of assets thus helping companies conserve cash to fund investment in other areas of the business. Sure, this technology delivers a lot of value but what if instead of dealing with machines, this technology is used to make someone like me, a business consultant or "knowledge" worker replaceable?
Yesterday, I met with a Boston-based start-up in stealth mode that is looking to further democratize the world of B2B data analytics by further automating some of the work I and other consultants do for companies. For example, as a pricing expert, I analyze my client's business by diving deep into their product, customer, and transactional data to identify opportunities to segment customers more effectively in order to reduce margin-killing practices like excessive discounting or giving away costly services at no charge. What if instead of bringing Roberto to run this analysis my clients could simply choose from a pre-built library of applets that would connect to their data to quickly identify and continuously monitor the precise products and customers that are falling outside the norm? All this possible with just a few clicks. Roberto has now been replaced by an applet - ouch.
Fortunately, my pricing work requires me to do more than to analyze neatly packaged product, customer and invoice data. In fact, the reason I am working with this startup is because they need help setting a price for their technology and platform. Setting prices that truly help startups capture the value of their offering requires a deep understanding the diverse needs of different market segments along with insights into competitive alternatives. Then the challenge becomes understanding the dollar impact that the technology delivers to customers. Additionally, you need to understand how to capture this value through the right pricing metric, offering structure and sales capabilities. Performing pricing strategy work remains challenging and complex and luckily for me, it hasn't been boiled down to a single algorithm, at least not yet.
For now, complexity, experience, and knowledge are on my side and my job is safe - phew! Back in July of 2016 McKinsey published a study titled, "Where machines could replace humans - and where they can't (yet). The authors also created an interactive tool where you can evaluate what % of your time could be taken over by machines. In the case of professional services they estimate that up to 39% of someone's time is up for grabs, with much of the automation occurring with data processing and data collection related tasks. Yes, the ability to automate anything that deals with reliable and somewhat predictable data like machine performance data or even data from many repeatable business processes is happening today. In the case of knowledge workers, the automation of some business process gets rid of the middle man, which is us. As complementary technologies like AI mature, automation will expand to more complex tasks. I don't know where this will ultimately take us, but I am sure we will adapt and figure out new ways to add value to our clients along the way.