This blog post provides a summary of IDC Manufacturing Insights' attendance to the recently held inaugural Best Practices for Automotive conference, hosted by SAP in Detroit, Michigan, October 12–14, 2015.
The inaugural Best Practices for Automotive conference, recently hosted by SAP in Detroit, Michigan, was a meeting of the minds to discuss where the automotive industry is headed in light of the historic technology advancements taking place. For subscribers, a more complete summary of the event is available here.
Among the many tracks and sessions throughout the conference, one in particular captured my attention because it highlights the possibility of using fairly simple technology to "connect" millions of cars on the road today. In the session, SAP partner Wipro addressed the challenges and opportunities that face automotive OEMs in retaining customers and delivering exceptional customer experiences through connected vehicles.
Alan Chakra, a consulting partner at Wipro with an extensive history in the automotive industry that includes development of the first "connected car platform" nearly 15 years ago, shared details of Wipro's joint development project with SAP about achieving better customer retention through a connectivity platform. Chakra called attention to the 257 million vehicles on U.S. roads today, of which 190 million, or nearly 75%, are onboard diagnostics (OBD) II enabled. The opportunities this presents to enhance services even for older vehicles is intriguing.
Onboard diagnostics is a standardized digital communications port that provides real-time data as well as a standard series of diagnostic trouble codes that help identify vehicle malfunctions in the vehicle. Automotive OEMs have made the OBD-II Data Link Connector the primary connection point through which all systems in the vehicle are diagnosed and programmed. Traditionally, when the "check engine" light illuminates on the dashboard, drivers of older vehicles need to visit their dealership or service center and a mechanic attaches the vehicle to a diagnostic machine, which spits back diagnosis codes that help identify the problem.
Source: Chakra, 2015
With an installed OBD-II Bluetooth interface (shown above, costing less than $10 each) that connects to the cloud and unlocks access to the real-time data streaming from the vehicle, the standard car repair equation changes. Now, through a variety of smartphone apps specifically designed for the customer, the service technician, and the account manager, potential malfunctions can be identified before they cause a breakdown. Customers can receive alerts to schedule a service visit from their preferred vehicle service provider or see estimates of parts/service costs from area service centers and select one to complete the work. Alternatively, the dealership can proactively reach out to schedule the service visit. Once a service center has been selected, the service manager can order parts based on the diagnostic codes, shortening the duration of the service visit and increasing customer satisfaction.
This offering leverages a number of SAP products including SAP S/4 HANA as well as Vehicle Insights, Wipro's connected car platform. It provides an example of the opportunities that exist for the automotive ecosystem to enhance aftermarket services, capture more parts and service revenue, and improve customer retention. Most interesting is the opportunity this offering presents for older vehicles to enable a new level of customer engagement to drivers.
The question looms as to who will be the ultimate provider of these OBD-II interfaces. At this stage, there are multiple entrants jockeying for a role. I have seen examples in the past few months of automotive insurance providers (e.g. Progressive), communications service providers (e.g. Verizon), auto dealerships, and automotive OEM's all offering flavors of accessing the data that can be accessible through the OBD-II port. The subject of data privacy and ownership is central to this conversation, and it will need to be addressed as adoption grows. There is no doubt that connectivity will continue to be a driving focal point for the automotive market. Even as regulations and developments continue at the far end of the spectrum with the evolution of autonomous vehicles, there continues to be an interest in connecting all current vehicles on the road in some meaningful way, and OBD-II provides an attractive method.
As I wait for my OBD-II device to arrive from my car insurer, I welcome any community members to share experiences. Who should own or have access to the data the device will capture? And, more importantly, what happens to my insurance rates when my "hard braking habit" is discovered? Stay tuned!