CSC has conducted a considerable level of research into the use of the cloud in the automotive industry. The consulting and outsourcing solutions provider recently came up with a research project entitled “Driving in the Cloud”. Megatrends asked Paul Scott, Industry Strategist, Global Vertical Manufacturing at CSC, to explain the thinking behind this project.
“Driving in the Cloud is our vision of how the automotive industry will work in the future,” says Scott, “and it focuses on the lifecycle of the car, essentially from the cradle to the grave. There are basically two parts to this picture: the traditional part, namely engineering and manufacturing; and the ‘new world’ around aftermarket and service which is being driven by key technology trends: cloud technology, Big Data and social media.”
Fundamentally, there are two key factors that will lead to a successful business strategy shaped around the connected car, says Scott: how to use the data generated by connected cars, and how to store that data.
“There’s already a huge amount of data. The question is, what data to extract, what data to analyse? And then what should be done with the data afterwards, and how should it be used within an organisation? An OEM organisation includes sales, marketing, customer service and dealers, so it has to channel this information to the right people to use the information in the right way.”
Interestingly, Scott believes that concerns about data security and privacy have changed. “I think we’ve gone past that thought process. I think organisations have realised that the huge volumes of data need to be stored in some form of cloud-based architecture to allow easy access to it. Some of it is going to be made available to insurance companies or other third parties who want to sell services. So I see the cloud playing a big role going forwards.”
The OEMs are losing the race
The connected car is increasingly seen as offering opportunities to non-traditional automotive suppliers, and in terms of what happens to that data, Scott believes the car companies are being outplayed by insurance companies, for example. “They already have their dongles and black boxes in some cars, and are using that information. So why doesn’t an OEM capture and sell the information to the insurance companies? This goes back to one of my earlier points – how can an organisation take the data created by the combination of consumer and vehicle and use it to generate revenue?”
One oft-cited area is predictive maintenance, which can be used to get people to come into an authorised repair shop to get their car repaired. Scott agrees. “Under warranty, over 80% of people go into authorised repair shops; once a car is out of warranty, this drops down to below 25%. You can argue about the percentages but there’s a huge drop and therefore a huge potential for OEMS to capture additional service revenue and spare parts revenue.”
This would suggest that there’s a potential for the OEMs to capture that service, but there’s also an opportunity for smaller players, if they were able to buy that data, to join the race.
“Yes. Who owns the user interface? Who owns the data? The challenge for an OEM is how to get that data and how to utilise that data, how to turn it into information, and monetise it. This will take place within the OEM and across the overall ecosystem.”
Built-in or brought-in?
Delivering the desired connected vehicle experience is another area of debate, specifically around the question of brought-in or built-devices. “The OEMs are pursuing different routes and it will be interesting to see how the strategies unfold. If the OEMs are not careful, the car display will be reminiscent of a dumb terminal to gain access to infotainment and navigation information streamed from the cloud.” A dumb terminal in the car pairing with an occupant’s smartphone for infotainment and navigation would create a serious challenge for the OEM wanting to ensure some ownership of that experience. This suggestion leads Scott to repeat his comment that some OEMs “are losing that race”.
With third parties generating data and content, the OEMs are losing out. “An OEM stands to win if it’s using data that it’s generating itself,” explains Scott. “What data does the OEM have? It has data from its cars – how its cars are performing, how far a car is being driven, and when the next service is due. By understanding when the next service is due, and connecting that with where the consumer normally gets that car serviced, the OEM can prearrange a service appointment. What happens when the red light error message appearing in the dashboard can be diagnosed, and appropriate action suggested and organised by the OEM? Wouldn’t it be nice if the customer service desk automatically made contact with the consumer with information about that red light error message just after it appears, or even better, based on predictive patterns, before the red light is even triggered?”
Turn customers into brand advocates
Some suppliers, including Arynga and Red Bend, and OEMs like Tesla, are already operating free, over-the-air software updates that can prevent such red light warnings occurring. “In other industries, particularly the aerospace industry, we’re doing some work on Big Data analytics, involving figuring out what has caused an error,” says Scott. “When an error takes place, you then analyse the events that took place prior to the error. The more errors you get, the better you can understand the importance of the events.
“The next sophisticated step of predictive maintenance is to figure out what combination of events or factors are relevant,” he continues. “Once those start to occur in sequence, you can transmit a message to the driver with a suggested relevant preventative or emergency action. This is important in terms of safety and in terms of the customer experience. Get the customer experience right and somebody will go from a customer to a loyal customer and from a loyal customer to being an advocate of the brand. And I think that’s one way the data can be used in a much more sophisticated predictive way, saving money for the consumer and giving the consumer a safer driving experience.”
And this could prevent large OEMs from issuing multi-million unit recalls. “Of course. If you know when errors are occurring, you can send an early warning back to the relevant engineering or risk department so they can assess what needs doing, and take appropriate action.”
Winners and losers
So, who does Scott think will be the winners, financially, from the connected car – OEMs, telecoms, suppliers, or some other party? “Telecoms companies will definitely claim a victory, because of the volumes of communication that will take place. Once we get into car-to-car and car-to-infrastructure communications, the levels of communication will increase further still, and the potential for revenue generation is very high. The infrastructure providers will also claim a victory. But I think those who can orchestrate everything will be the real winners.”
And that might not necessarily be a traditional automotive industry player at all. “It could well be another party entirely,” concludes Scott. “The infotainment race is not an OEM race any more. It’s a Silicon Valley race. Own the user interface and you are in pole position for the revenue streams!”
