On 29 and 30 June, I attended the Connected Car Conference 2016 in London, a conference for car manufacturers, suppliers, insurance companies and other service providers. For me this was a great opportunity to really understand where we are with connected car initiatives internationally
There are many definitions of 'connected cars', but generally it means that vehicles transfer information to and receive information from the environment. As many other authors have already said, the adoption of connected car services is unstoppable. The question is: how to get a profitable piece of the pie? As one of the panel participants, a parking services provider, summed it up: "Due to the enormous variety of operating systems, platforms, devices and the increasing speed of innovation, it's hard to make money from connected cars."
Another speaker looked at it differently. The total investment in connected services hardware and the related costs for data usage are still seen as high. However, if commercial parties were to join forces and cooperate, then they could build a beneficial business case. Integrating the costs of data into the actual value proposition (for example, like a Spotify subscription including an unlimited data stream) would increase the uptake of connected car services.
Instead of looking at how to make money, would it be better to look at how to use connected car services as a way to cut costs? JCB, the construction equipment manufacturer, has adopted connected features as a key competitive advantage in its value proposition. Examples include its location-tracking (as a large proportion of its equipment is rented), analysis of idle hours and on-board diagnosis. All these features reduce the total cost of ownership of the equipment.
OEMs, retailers, car leasing companies and car insurance companies are currently setting up their digital strategies. The key questions are: 'How can we incorporate data from connected cars into our business model?', 'How can we create a beneficial business case?' and 'What can we do and what can't we do, in light of privacy regulations and security issues?'. Fundamental questions that are not always easy to answer. So maybe we should start with concrete applications and see how they could impact the organisation.
You might expect companies to have adopted a lot of these features already, but it is manifestly more difficult than you might think. The key take-away from the conference is that the development of new and sometimes disrupting services does not always allow for extensive analysis, but more often requires companies to take a leap of faith and trust in the emerging technology. But having a clear end-goal in sight will always help on the journey!
Auteur: Stijn de Groen, Senior Management Consultant.