Upon departing SAP’s Best Practices for Automotive event a few weeks ago in Detroit, I was struck by one thought: change is so rapid in this industry, that it is exciting, yet daunting to think about what we’ll be discussing next year at this event, and elsewhere.
100+ year old automotive manufacturers are indeed digitally transforming into technology, mobility, and communications companies – we’ve all seen multiple quotes to this effect from automotive CEOs. With this transformation, there are multiple challenges and considerations for automotive manufacturers. Here are the key threads I took away from the Best Practices for Automotive event:
- Internet of Things (IoT) Ecosystem: Bosch said automotive manufacturers “need a comprehensive IoT ecosystem for new business models and opportunities”: absolutely, as this will provide the scale required for operations, revenue, and innovation platforms. Ecosystems of partners are required to design, develop, deliver, monetize, service, and improve vehicles throughout their lifecycle, across an extensive value chain. In fact, according to the 2016 IDC Global IoT Decision Maker Survey, two of the top three criteria for manufacturers selecting vendors to work with them on IoT are their ability to pull together a holistic solution from multiple vendors, and a strong list of partners to support/contribute to the project.
- Automotive as a Retail Business: My retail industry colleagues at IDC often discuss the ultimate goal of the customer’s “omni-experience”. Now, even automotive companies are increasingly thinking this way as they have the opportunity to engage with owners throughout the lifecycle of a car. Potentially, these companies could build profiles of customers or customer types based on vehicle usage – where they go, what in-car content they engage with – so the right offers and content can be delivered at the right time. It’s a little reminiscent of the early dot-com days, when opt-in policies were established to give the customer control over the information they received.
- Open Innovation and Crowdsourced Design: Industry darling (or threat depending on your perspective) Local Motors’ business model is to crowdsource design for cars, manage materials, work with a small set of tier one suppliers, and oh-by-the-way, 3D print the car – essentially, vertically integrated micro-manufacturing. This approach, to put it mildly, could be disruptive. Note they have also applied this approach to industries as diverse as consumer hard-goods and aerospace. Open innovation, championed by the likes of P&G and 3M, is not a new concept but it’s a revolutionary concept in the automotive industry. Automotive manufacturers are already working more closely with many of their tier one suppliers, particularly in the high tech and chemical industries, as well as universities around the world to advance complex systems, material, and technology.
- Connected Vehicle Security: You probably heard of the 2014 Jeep Cherokee that was hacked by a white hat (good guy) to prove the point that some connected vehicles have security holes in them that could be exploited. Not good for the connected, and autonomous vehicle business but in the long run a public service to those companies involved in connected vehicle design and development. In fact, the hacker, who now works for Uber, presented at the Best Practices for Automotive conference – opening everyone’s eyes up to the need for strong security to be designed into the vehicle and the vehicle code, both by the OEM as well as (perhaps even more importantly) their suppliers. With suppliers essentially becoming design partners to many OEMs, the security imperative in vehicle design becomes not only a PLM issue, it’s a supply chain issue as well.
It’s clear that the vehicle is becoming a hub of connected experience: whether it’s connecting to your mobile device, your home, or the cities you travel through. Drivers increasingly will have the expectation that they can access the information and content they need in a vehicle, whether software updates, infotainment, or retail offers. Even more so when autonomous vehicles become a pervasive reality, and people actually have the time to safely engage with this content inside their cars.
My colleague Heather Ashton and I will be writing extensively in the next year on these topics and the future of the connected vehicle, within our Connected Vehicle Report Series. We look forward to continued discussion with you on this exciting, dynamic market, throughout the year and beyond. Until then, as always, I welcome your thoughts at firstname.lastname@example.org.