Automotive industry: the quest for telematics 4.0
The number of connected devices worldwide is predicted to triple from more than 9 billion today to 25 billion by 2020. With around 12 billion of these devices being connected by mobile technology, Telematics 4.0 — the seamless integration of mobility and the web — is a source of huge opportunity.
To gain more insight into the strategic priorities facing stakeholders, EY’s Global Automotive, Telecommunications and Insurance Centers recently brought together more than 25 senior decision-makers from across the telematics ecosystem to host our 2nd Executive roundtable on telematics.
This year’s event, held in Munich, developed the theme of collaboration, as well as investigating how players can leverage (and measure) real value from telematics. During a day of far-reaching debate, we brainstormed ideas in two key areas – creating the win-win ecosystem and realizing the enterprise value of telematics.
Below we summarize the key ﬁndings from our roundtable, highlighting the opportunities and challenges that lie ahead for all players in the telematics marketplace:
Creating the win-win ecosystem
Stakeholders in the telematics ecosystem are still evolving strategies to secure access to, and ownership of, the end-customer. In the drive to build critical mass in the marketplace, a new mindset is needed with the various stakeholders coming together to form effective partnerships.
This may mean relinquishing, or at least rethinking, the entire concept of “customer ownership” — a particular challenge for OEMs. With protective business models engrained in their cultures, these organizations remain, in large part, unwilling to share their customer data.
Nowhere is this more evident than in their relationships with insurers. For the future, a number of priorities were identified:
- Remember the car is a product. Viewing the car as a portal is a mistake. It is a product for OEMs and a means of transportation for consumers. Whatever telematics services are developed, they must make sense in the context of getting from point A to B.
- OEMs need to open their gates. Instead of seeking to control their ownership of customers, OEMs need to expose more of their vehicles’ infrastructures to other service providers.
- Collaborate or regulate? Stakeholders in the telematics market agree on the need for collaboration. But the need for regulation and standards is open to debate. If introduced, would broad-based market standards help to build a more robust ecosystem, or would they stifle innovation?
The pace with which telematics grows from now on depends, in large part, on the extent to which OEMs are willing to cede control of connectivity and allow third-party developers into their infrastructures.
What does “winning” look like?
Each stakeholder has its own perception of what “winning” looks like. The priority must be to foster relationships based on mutual benefit.
The customer imperative
onsumers remain extremely price-sensitive. Looking ahead, the development of packaged solutions that correspond with consumer demand will force all players in this industry to work outside their core competency.
Building a winning ecosystem
As well as an attractive and flexible customer proposition, tomorrow’s winning telematics ecosystem will be built on effective and efficient partnerships between stakeholders. Otherwise, the way will be left open for disruptive new entrants to seize control of the market.
Although OEMs are integral to the rollout of telematics, their business models can create frustration for other market participants. Priorities include ensuring OEMs better understand how telematics can enable new ways of interacting with customers and expanding the brand experience.
A question of standards
Standardization will support growth in the telematics ecosystem. Too many formal standards could have a negative impact, and the pace of change in telematics means that these standards will need to be in constant flux. More realistic, and probably more helpful, will be the arrival of standard data structures and information sets (for maps and geolocations, for example).
Realizing the enterprise value of telematics
Wherever they sit in the telematics ecosystem, all stakeholders must overcome a common challenge: developing business models and approaches that will enable them to realize the enterprise value of these technologies.
Investments in a number of areas are critical to realizing telematics ROI. Amongst the highest priority is big data.
The measurement of success in the telematics market poses significant challenges. Few stakeholders are equipped with the revenue and cost metrics needed to quantify benefits and build a business case for further investment to their boards (who are often skeptical about telematics).
The customer pays, but how much and when?
OEMs should focus on developing stronger links with dealers, providing them with a better understanding of the benefits of these technologies for their customers, and their own businesses.
Investing for growth
The development of cogent business cases should be a priority — to provide clarity on the size of investment required, and justify the resources needed to achieve targeted ROI.
The development of meaningful revenue and cost metrics will provide stakeholders with a vital foundation on which to build their business cases for further investment and demonstrate ROI.
Bottlenecks to realizing ROI
Stakeholders must address a number of bottlenecks before they can realize the enterprise value of telematics — from technology and confusion over data ownership to clarifying their role in the new collaborative ecosystem.
Considerations for stakeholders
|Carmakers||Telecom operators||Motor insurers|
|Service offerings|| || || |
|Collaboration and partnerships|| Partner with automotive suppliers to build open and scalable technology (HMI) || Partner with carmakers to offer customer support services, such as subscription management and charging and billing services ||Collaborate with carmakers to offer UBI based on integrated connectivity solution|