What is product digitalization?
Product digitalization is turning traditional products into connected, intelligent, data-generating systems. The goal is not just to make it “smart”, but to continuously collect data, push improvements, unlock services, and adapt to how people actually use it.
This involves cloud-connected features, control interfaces, and real-time product analytics. It means making it part of a bigger digital ecosystem, one that feeds strategy, operations, and innovation.
And despite what many assume, product digitalization goes far beyond IoT devices. It’s already embedded in industrial equipment, consumer goods, financial services, and other sectors.
Benefits of product digitalization
Implementing organization-wide digitalization (using cloud applications and a tailored portfolio of digital tools) can boost EBIT by 5 to 8 percentage points. The gains come from automations, better data usage, and freeing up teams to focus on continuous improvement and product innovation.
Faster development
Digitalizing your product helps you iterate faster, test more efficiently, and push updates without lengthy production cycles. The result? Speed without chaos and a clear path to relevance in fast-moving markets.
Smarter decisions
Digital products generate better, more granular data about usage patterns or performance metrics. That means your teams stop working on gut feeling and start evolving the product based on what actually works.
New business models
Want to move beyond one-time sales? Digitalization opens the door to flexible models: subscriptions, usage-based pricing, feature unlocks – or even completely new service offerings.
Scalability built-in
A digital product doesn’t hit a ceiling the way physical-only ones do. It’s easier to integrate with other platforms, localize for new markets, and expand functionality as you grow.
How to make product digitalization work
Product digitalization sounds promising (and it is), but it’s also easy to fall into the trap of endless experimentation with no real outcome. Here’s how to keep things grounded.
1. Start with high-friction areas
Don’t fall for tech-first approach. Look instead at what’s slowing you down today:
- Is your product’s performance invisible after it leaves the factory?
- Are customers calling for support you could’ve prevented?
- Is your sales team losing deals because buyers can’t test or simulate use?
Pick the top pain point. That’s your entry point, and not a 12-month roadmap. Start where friction is loudest, then work backwards to find the best digital lever.
2. Redesign your product’s value chain with data in mind
Map the full product lifecycle: from design, to usage, to maintenance, to disposal, and ask:
- Where do we lose insight?
- Where do we rely on assumptions?
- Where could automation or feedback loops add clarity or speed?
Digitalization must imply enhanced visibility. Build digital touchpoints where your teams (or clients) are currently flying blind.
3. Build the right foundation: modular, connected, and scalable
This is where things often stall. If you’re reinventing everything from scratch, it’ll take forever. Instead:
- Use APIs to connect digital features with legacy systems (no need to rip and replace).
- Choose a cloud infrastructure that supports real-time data flows and cross-device sync.
4. Design for usable data, not just more data
Telemetry is only valuable if it feeds better decisions. So:
- Identify the KPIs that matter (downtime, usage patterns, service intervals, client churn…).
- Build your product to capture those metrics in structured, business-relevant ways.
- Feed this data directly into systems your teams already use (such as ERP, CRM or BI tools).
5. Create space for iteration from day one
Avoid the trap of building a digital product as if it’s a static deliverable. Instead:
- Ship MVPs that solve one sharp problem, fast.
- Get client feedback early, especially from those managing, using or maintaining the product.
- Build in the logic to update or extend your product over time (e.g., OTA updates, feature toggles, user-level analytics).
Off-the-shelf vs custom-built: which path to product digitalization?
There’s no one-size-fits-all when it comes to product digitalization, and that’s exactly the point. Whatever choice you make, it should depend on one thing: what will get you further, faster, without locking you in. Here’s how to think it through.
When off-the-shelf makes sense
Off-the-shelf (OTS) platforms (like device management dashboards, customer-facing portals, digital twin engines) can be a smart move when:
- Speed matters more than uniqueness. If you’re looking to validate a concept quickly, or get something live in 6–8 weeks, OTS tools can be your shortcut.
- You’re solving a common problem. Features like remote monitoring, predictive maintenance, or standard integrations (e.g., SAP, Salesforce) are often better handled by mature third-party tools. They are already tested, updated, and secure.
- You have limited tech capacity. If your team isn’t ready to maintain a custom stack, or you want to avoid building internal complexity early on, go OTS and focus your energy on client experience and business outcomes.
Keep in mind that most off-the-shelf tools will require adaptation, especially around branding, workflows or data structures. And beware of vendor lock-in: check exportability, custom API access, and contract flexibility.
When custom-built is the smarter investment
Custom-built platforms are worth the effort when:
- Your product requires unique digital logic. If your business logic, client workflows, or product interactions are highly specific, trying to bend an OTS tool to fit will cost more than building from scratch.
- You want full control over data and IP. Data is your competitive edge. If the way you collect, structure, and act on it is core to your strategy, go custom. You’ll avoid compromises later.
- You’re building a long-term ecosystem. Planning to layer on AI, integrate across verticals, or enable third-party development? A tailored architecture will let you evolve faster, on your own terms.
Consider starting with core modules that are off-the-shelf and custom-building only where differentiation matters most. It keeps speed without sacrificing ambition.
Embracing product digitalization with Near Partner
One of the main takeaways from the above is that product digitalization is a long-term strategic move. But to make it work, you need more than a pile of tools. You need a partner who gets the big picture and the nitty-gritty, right from the start and all the way through.
At Near Partner, we build systems that understand your product, your users, and your ambition. You can benefit from our tailored expertise across key areas:
- Low-code development: Rapidly prototype digital features or integrations without the typical coding delay. We get your digital layer live faster while keeping it flexible.
- Salesforce development: Connect your product data directly to CRM, service, or IoT workflows using Salesforce. We design customized apps and dashboards that close the feedback loop between your product and your operations.
- Custom software development: Think sensor-driven telemetry platforms, cloud-connected control systems, you name it. We take care of the full stack (architecture, APIs, UX, testing and deployment) so your digital product works the way you envision.
Reach out and let’s build the digital core your product needs to thrive.
