It’s clear that some of the major car companies are beginning to look nervously at the prospect of consumer IT brands like Apple and Google getting between them and their customers.
But much of the heavy lifting involved in aligning automotive OEMs with the emerging world of always-connected consumers is done behind the scenes, by IT services companies with long track records and less sexy, less consumer-oriented brands. The efforts of these kinds of company may be crucial in ensuring that the big branded car companies stay relevant to their customers, and therefore profitable, into the future.
A few weeks ago I spoke to Paul Scott, a Global Automotive Executive within CSC’s manufacturing vertical. As a fifty-year old IT services company, CSC has had a long term relationship with the major automotive OEMs, including Chrysler, Ford and Honda. Of course that hasn’t mainly been about the connected car.
For years CSC helped these companies with their mainframes and their business process automation. This does mean that it has heritage of trust that it can draw on as it approaches some of the newer and more unconventional aspects of the automotive business.
Scott draws attention to the way that the OEM’s business processes have not kept pace with the ways in which their customers now expect to engage. Buying anything is now a more complex, multi-dimensional, interactive journey, involving research, social recommendation, pre-configuration and evaluation, and intensive consideration of options and choices.
The OEM’s tied dealers are not well set up to deal with this world. The car companies don’t know their customers very well – because all of their engagements with them are partitioned in siloed databases. Even the dealers are not well served – ordering either parts or models can be as difficult for them as it is for the end-customer.
So CSC’s projects for OEMs have included the ‘Find a Match’ customer-facing online configuration tools for VW in the US, and the ‘Mein Auto’ CRM portal for VW Germany. The company created a similar tool for Fiat, for Volvo Trucks in China, and extended this further for Toyota in the US by developing a platform to enable prospective buyers to configure a car together with friends.
Scott points out that, as businesses, automotive OEMs make most of their profits from spares and after-sales service; in Europe 60% of new cars are sold at a loss. In 2015 the global aftersales market will be worth USD718, but only half of this market belongs to the car manufacturers. In Germany this share is already as low as 35%, and the trend is for it to fall by 5% annually. Moreover, the OEMs lose 80% of customers within three years of the end of the warranty period.
Building better ongoing relationships with customers is therefore not just a pious sentiment but an absolute business imperative. In France CSC developed analytics for Volkswagen which collected data from workshops and predicted which drivers would respond best to promotional campaigns.
This was deployed to some 800 dealers and franchised repair shops. But this is clearly only a first step. CSC’s longer term aspiration is to build an after-sales service platform, which could gather information from multiple sources including the manufacturers themselves, the dealers, the drivers via smartphones, and data gathered directly from the vehicles.
Scott acknowledges that this is unlikely to become a straightforward, multi-tenanted, PaaS proposition. Most of the OEMs have already started with their own connected car and cloud strategies, and have already established relationships with connectivity providers. Each is therefore likely to want a customized offering that dovetails with their in-house components.
Nevertheless, the company is in discussions with some of its major customers about how this can be delivered. This highlights what CSC regards as one of its key strengths; the ability to not only host cloud solutions, but also to support deployment in customer’s own clouds, and crucially, to orchestrate across multiple public and private clouds.
Involvement with the business process aspects of automotive does not preclude CSC from the ‘cooler’ kinds of connected car developments. A pilot project with Ford to monitor the health of drivers at risk of epileptic seizures has been under way for some time, and the company has also been working with components manufacturer Delphi on closed-eye detection for driver safety, and with Mitsubishi on its e-Assist ADAS roadmap. CSC is also behind a major insurer’s Usage Based Insurance offering, hosting the deployment as well as having designed the architecture and the driving behaviour algorithms.
In the longer term Scott expects that CSC, and the auto industry, will be supporting autonomous self-driving cars. The technology is already here, he says, though it is not evenly distributed. The first deployments may be on test stretches of highways, and he expects to see platooning available within a couple of years. The real challenge, he believes, is not the technology but the legal and liability issues.