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Automotive 4.

0 The Digital Revolution


Views from the Top

www.automotiveIT.com

Table of contents
automotiveIT international, Arjen Bongard 4
Evercore ISI, Arndt Ellinghorst 6
Volkswagen UK, Ian Plummer 10
H.R. Owen, Chris Harris 14
salesforce.com, Patrick Plata 18
Jaguar Land Rover, Mike Bell 24
Verizon Telematics, Kevin Link 28
Volvo Cars, Thomas Mueller 30
MHP, Oliver Kelkar 34
Qoros, Maurits Aalberse 40
GENIVI, Philippe Gicquel 44
Google, Hugh Dickerson 50
McKinsey & Company, Juergen Laartz, Dominik Wee, Matthias Kaesser 56
Nissan Group of Europe, Stephen Kneebone 62
CVTA, Scott J. McCormick 66
Lotus F1 Team, Michael Taylor 70
Dassault Systmes, Olivier Sappin 74
Continental Automotive, Otmar Schreiner 80
CE 21, Thomas R. Koehler 84
Imprint/ Contact 87

Revolution or Evolution?
It wasnt so long ago that the auto industry was all about engines
and top speeds and, maybe, a little bit of safety and comfort
thrown in for good measure. But that was yesterday. These days
were talking about electrification, car-sharing, connectivity and
autonomous driving. Those are the defining characteristics of todays - and tomorrows - personal mobility. Technically, there are
no limits to what the industry can do. But what about the practical implementations? And, more importantly, how is a traditionally conservative industry such as the car business going to adapt - and possibly even
lead - the transformation we have embarked on? Thats the question we try to answer in
this book, which is titled Automotive 4.0 The Digital Revolution.
A lot of things come together as we discuss the far-reaching changes in the personalmobility space:
Urbanization is redefining the purpose of the car
Growing air pollution drives electrification of the powertrain
Connected consumers want their personal networks to include the automobile
New IT and communication technologies help adapt business models
And 3D, simulation and the internet of things are moving manufacturing systems
to a new level of sophistication.
All these changes provide business opportunities for the auto industry, for the auto
industry and for suppliers, IT service providers and telecommunications companies.
And they open up the personal mobility market to a host of new players that previously
focused their attention elsewhere. In theory then, theres nothing but upside to the
transformation. But risks and uncertainties abound. Scenario planners at market researchers IHS Automotive have made a map of all the global crises - or potential crises
- the world faces. They include: hostilities in Ukraine, a further spreading of the Ebola
virus, the continuing conflict in the Middle East, higher interest rates in the booming US
market, economic downturns in Latin America, etc. The list is long.

In this book, we focus on the actions that are being taken to change the nature of the automotive product offering to bring it in line with the demands of todays consumers. But
we also demonstrate how car companies and their partners are making the auto industry more resilient, more flexible and better prepared for whatever challenges it will face.
In interviews and contributions, automaker, supplier and IT executives provide concrete
examples of innovation at work, actions already taken, development in progress and
opportunities being realized. Whether its about connectivity at the speed of light in
Formula 1 racing, the power of connected retail to convince reluctant car buyers, the
promise of big data or the quantum leaps in infotainment technology, the stories and
interviews are an uplifting read.
Which leaves the one big question we posed in many of the interviews in this book:
What will the car of the future look like? The answers vary, but, as the transformation of
the industry picks up speed, there is no doubt that the automobile will play a key role in
tomorrows personal mobility. And thats reassuring.

Arjen Bongard
Editor-in-chief
automotiveIT international

" In Europe, most carmakers


are losing money"

Given the structural weakness of the European market, the automotive


industry is losing money on most of the cars it is selling in the region, says
Arndt Ellinghorst , senior managing director and head of the Global Automotive Research Team at investment advisors Evercore ISI. As a result, automakers
will have to look elsewhere in the retail channel, for example to find the
savings needed to run a profitable European operation. Ellinghorst spoke to
automotiveIT on the sidelines of the automotiveIT International Congress in
London this summer.

Evercore ISI Arndt Ellinghorst

Mr Ellinghorst, please explain briefly what Evercore ISI does in the auto
industry.
We look at the automotive industry and
our clients are institutional investors who
ask us where they should invest. We answer questions such as: should I buy a
carmaker, should I buy a supplier, what
should I do now that there is an IPO coming? My job is to serve as a line of communication between the industry and the
finance community.
So, lets cut to the chase and ask you: Is
todays auto industry a good and safe
investment bet?
That depends. Europe is recovering slowly but steadily. The US is probably at the
peak of the current cycle. China just keeps
growing. The supplier industry has been
very, very successful. So I think the industry is in better shape today than it used to
be, but in Europe most of the companies
are still losing money. Its a very challenging environment and that will probably
stay so for a while.
If youre not involved with the car industry on a daily basis, you would tend
to think that automakers are rich and
make huge profits. But youre telling us
this isnt necessarily the case?
Look at the financials. People are always
shocked when I tell them 60-to-70 percent of all cars sold in Europe are sold at
a loss. Every year these carmakers are losing money in Europe. In a good year, they

probably generate a profit of 300 euros


a car. That means the freedom to spend
money in this industry is very, very limited.
The European market doesnt present a
pretty picture then?
Thats true. The Italian auto industry is
losing money in Europe. The French auto
industry is mostly operating at a loss in
Europe. General Motors Europe and Ford
Europe are losing money in Europe and so
are the majority of the Asian brands. Even
the Volkswagen brand is barely making
any money in Europe. So if you add it all
up, the industry is losing money.
The European market is not in good
shape. Do you see excessive European
Union regulation as the main cause of
the problems?
The European Commission hasnt been
helpful the last 10 years in making the industry more profitable. Politicians have
made sure that chronically ill companies
were bailed out, even though industry consolidation was and is badly needed. At the
same time Brussels came up with probably
the strictest fuel efficiency regulations on
the planet. The industry has to comply with
a fleet average of 95 grams of CO2 per kilometer by 2020. Thats roughly a 20-to-30
percent incremental improvement in fuel
efficiency from here until 2020. Thats going
to cost 1,000 euros per car. If you are making
a profit of 300 euros per car and someone
tells you to spend 1,000 euros extra just for
the powertrain and the engine, thats tough.

Arndt Ellinghorst Evercore ISI

You said that, in Europe, the industry


doesnt have a lot of money left over to
invest. How then will carmakers develop all those fuel-efficient technologies
and how will they pay for all the new
infotainment and safety features consumers expect ?
If you look at the spending priorities, the
industry first has to comply with regulations. Theres no discussion there. You cannot sell cars that dont comply, so thats
where the money has to be spent first and
foremost. Fuel efficiency, of course, provides a real benefit to consumers. If they
can spend less on fuel, that can save a lot of
money. Second, when were talking about
the IT side of the connected car, you have
to realize that everything in this area has
to be paid for by the consumer. You have
to make sure, therefore, that the innovations are of real use to the consumer. If car
buyers dont want to pay, the carmaker
will have to find the money elsewhere, for
instance in the distribution channel.

ed with iPhones or iPads or other devices.


Most young people feel that the actual car
is something from a different era.

Please talk us through some of the big


trends youre seeing in the car industry.
The first big trend is demographics. People
are getting older and older people tend to
drive less. At the same time, younger people are less interested in cars. If they are,
their focus is on new ways of mobility such
as electric cars or car sharing. Peoples mobility requirements are changing and this
has a direct impact on the business model of the carmaker. The other big trend, of
course, is that people want to be connect-

Tesla seems to be doing well, in part


because it takes more of an IT-driven
approach to the vehicle.
The Tesla brand, with its Model S electric
sports sedan is a huge success in the US.
The overnight software update means you
have new software in place when you get
into the car the next morning. That could
mean a new version of Google Maps or
something else and that is something exciting for especially younger customers.
Teslas founder and CEO, Elon Musk, has

Evercore ISI Arndt Ellinghorst

And why do they feel that way?


The consumer electronics industry is
changing every two or three years and the
lifecycle of a car is seven years. So you buy
a new car that has been developed five or
seven years ago. In many cars, its difficult
to plug in your cell phone and listen to
music.
What can be done to turn this trend
around and whats the role of IT in such
an environment?
I believe the lifecycle of the products will
shorten. If you want to sell cars that meet
the demands of a younger population,
the cars need to be updated faster. Tesla
is a good example. It can update the software of a car overnight. And not just the
driving features but also the infotainment
systems.

managed to come up with a competitive and exciting car. The big question is
whether traditional carmakers have the
mindset and the flexibility to adopt a similar approach quickly.
A final question: What kind of car do
you think youll be driving 10 or 20
years from now?
I really believe in electric mobility. I think
the combustion engine will increasingly be replaced, also because of the
driving-pleasure potential of electric motors. Mobility will be more electric in 10
or 20 years, but I hopefully will no longer
own a car then. Instead, I will pay for mobility. Imagine Im a BMW premium customer. During the week I will probably
have an electric vehicle to drive around

in the city. On weekends, Ill need a bigger car to go into the country. Evenings I
might prefer to have a driver to take me to
a concert in downtown London. Owning a
car is increasingly outdated, but paying for
mobility is something that consumers will
still be willing to do.
Interview by Martyn Warwick,
TelecomTV, for automotiveIT
www.telecomtv.com
Photos by Silvia Steinbach

Arndt Ellinghorst, head of the Global


Automotive Research Team at Evercore
ISI, is one of Europes foremost global
automotive analysts. Before joining
Evercore ISI, Ellinghorst headed European automotive research at Credit
Suisse. In earlier roles, he worked at
Dresdner Kleinwort Wasserstein and
WestLB Panmure. Early in his career he
also worked for Volkswagen and Audi.

Brussels hasnt been helpful in making the industry more profitable

Arndt Ellinghorst Evercore ISI

Photo: Volkswagen

"I think theres a real need


for change"

Ian Plummer is making major changes to the way cars are sold, as consumers
adopt a new approach to buying cars. The head of Volkswagen sales in the
UK, believes dealers will use a lot more digital technology to better explain a
host of new features that are redefining cars. And, in an interview with automotiveIT, he says he is looking forward to the day when the car will be able
to drive itself.

10 VW Ian Plummer

The world of automotive retail is undergoing big changes. As head of car


sales in a major European market, what
do you see as the big trends in the automotive industry today?
The key trend were seeing on the sales
side is that customers are behaving very
differently compared with a few years ago.
Its not a complete revolution from one
day to the next, but over the last few years
we have seen a huge shift in customer behavior. Instead of a visit to a physical dealership to touch and see a car, prospective
buyers are doing all their research virtually.
They use social media and manufacturer
and dealer web sites and tend to visit actual dealerships much less frequently. Our
web traffic has doubled while our showroom visits have halved. But we sell more
cars and are adapting to the changing
customer approach.
There are other major trends in the
industry such as big data, the connected car, autonomous driving, the internet of things, machine-to-machine
communications. How do these impact
your operation?
They add complexity and, thus, pose big
challenges when it comes to explaining
the customer benefits and getting the
customer to use the new features. The
first challenge is to get the right tools
in place online. But the key to success is
to enable the customer to seamlessly
continue his journey from a digital start
into the dealership. We dont believe the

dealership is disappearing by any stretch


and the second key differentiator has to
be the quality of the physical customer
experience with dealerships delivering
real theater to their customers. The third
element that really blends everything together is the people who have to deliver
all this with passion and warmth. Were
putting a lot of focus on helping our team
to actually get the points across and create the seamless journey. For example,
we want customers to be able to configure the car online and then find the same
configuration on the iPads we have in our
showrooms. Weve developed a warmer, more human journey from the digital
start through the ownership cycle and the
after-sales experience.
And your sales staff presumably needs
more and different training. They have
to be comfortable with the communication technology in the cars to be able
to show customers how to use it.
They do indeed. The iPad technology we
put in place at our dealerships gives sales
executives much simpler access to the
data they need to explain things. As customers already have rich knowledge of
the cars, the sales teams need to have at
least the same level of useful knowledge.
And they need to be able to use media
such as video technology to demonstrate
certain things that are easier shown that
way. Obviously touching and feeling a car
in a test drive is still important, too. We
found it critically important to show our

Ian Plummer VW

11

teams how to use the new tools. We have


digital champions on every site and they
function as change leaders, embedding
changes in the teams and showing how
things actually work.

Photo: Silvia Steinbach

It sounds like IT has taken on greater


prominence in the sales process.
Absolutely. Any key project today has a
very strong component of systems and IT
integration. Our challenge is always to link

our new ideas to legacy systems, which


is never particularly easy. But it is absolutely critical that we do that. So our key
challenge right now is to make sure that
all the new ideas we are coming up with and the digital tools that I have described
to enable them are of use to the sales
teams and to the customers. The benefits
have to be absolutely clear. And then the
challenge is to make the tools as simple to
use as possible so that they can actually

We dont believe the dealership is disappearing by any stretch

12 VW Ian Plummer

deliver on the promised benefits. The role


of IT is therefore absolutely critical in everything we do.
You have new versions of two popular
VW models, the Polo and the Passat,
on the market. How are they different
from the previous generation and how
are you selling them today?
Those are two good examples. The
face-lifted Polo is just coming out in the
UK and the new Passat will reach the market early next year. But you could also look
at the Golf, which we launched last year.
Theyre all built using modular architectures that allow them to share technology. New infotainment, safety and driving
assistance features, which all benefit the
customers, require a lot of good explanations from sales executives. Ill give you an
example how our sales staff can connect
the digital with the physical world. Sales
executives can prepare an SD card with
data relevant to a test-drive route. And
they can add music and maybe even a
video that can be shown in the car. That
makes various functions and features
easier to explain and provides a better test
drive. Also, when youre preparing to show
a potential customer the emergency braking function, its quite useful to show a
video first so he knows what to expect. Its
this combination of digital and real thats
quite critical.
Finally, a vision question: What kind of
cars will we be driving in 10, 20 or 30

years? And what will your sales operation look like then?
I cover a lot of miles each year and I fancy
the idea that in 10, 20 or 30 years the car
will drive itself and I can sit back, work, read
or sleep on the road. To sell that kind of car
I think we need to do an awful lot more of
the stuff we are doing right now. A Google executive told me recently that, if we
think the revolution we are seeing right
now is not going to affect our industry we
are frankly delusional. I think that there is a
real need for change and I think we will see
an acceleration of the digitalization of the
sales process. Well need to see a lot more
theater in the way we actually sell cars, with
the kind of things you can see, for example,
in the Audi City digital showrooms.
Interview by Martyn Warwick,
TelecomTV, for automotiveIT
www.telecomtv.com

Ian Plummer became head of Volkswagens UK sales operations at the start


of 2012. He joined VW from Renault,
where he was commercial director for
the UK. Earlier, he ran the Renault-Nissan Retail Group in the country. During
his career, Plummer has held several
international marketing and aftersales
roles at Renault. He graduated from
Loughborough University in 1991 and
in 2002, he received a MBA degree from
the Theseus International Management Institute. He lives in London.

Ian Plummer VW

13

" Email is by far the best


means of communication
with our customers"

Chris Harris, who is the marketing and customer director of H.R. Owen,
says managing customer relationships in a smarter way is the key to
success for the luxury-car dealer group. H.R. Owen sells brands that include Aston Martin, Lamborghini, Ferrari and Rolls-Royce. Customers
interested in buying these cars like to be recognized and treated professionally when they enter a dealership, Harris says. The dealer executive
spoke to automotiveIT on the sidelines of the automotiveIT International
Congress in London.

14 H.R. Owen Chris Harris

H.R. Owen specializes in luxury vehicles, but, as consumer attitudes to personal mobility change, is there still a
future for this high-premium segment?
We obviously hope so from our business
point of view. But one of the advantages
we have as a dealer group is that, from a
brand marketing point of view, our customers really like cars. They are not choosing any kind of vehicle to simply get from
A to B in the most efficient way. In fact, I
would happily admit that most of our cars
are probably not the most practical way
of driving from A to B. But thats not the
point. Its actually about the enjoyment
of the journey, its about the enjoyment
of the driving experience and I think there
will probably always be petrol heads and
people who want to drive cars that are
more engaging. And obviously, its clear
that you need a certain amount of wealth
to be able to afford the cars we sell. So lets
say wealthy petrol heads are our target
audience.
What are the biggest and most important trends you see in the car industry
today?
Ill answer the question from a retailers
point of view. For us the most important
thing is how we use current technology
to gather and organize customer data in
order to serve these customers better. Our
job as a retailer is to sell the cars and selling
cars is all about understanding customer
needs and listening to customers. That
could be in a conversation, but it could

also mean listening to them in terms of


the way they interact with us via email or
through our website or in other ways. And
then we want to use that information to
present them with interesting offers for
cars at the right time. If somebody just
received a year-end bonus it might be a
great time to talk to him about one of our
cars. If somebody was just made redundant it might be a lousy time to talk about
this. Ultimately we need to work out ways
of having those kinds of conversations at
the right time.
You obviously need a lot of data for this
to work. How do you get this data and
how do you secure it?
We spent three years working to achieve
the so-called single customer view and
weve invested a lot in this. We have eight
dealerships across 14 different sites and
any of our sales people can now access
our system and find any customer they
want. From that customer record, they can
look at when they last did a transaction
with us, what cars they own, when these
cars were last in service, how much that
service cost. So should a customer come
in to any of our dealerships, possibly even
for the first time, he will be recognized
and we can right away start dealing with
him professionally. Thats what customers
in this market segment understandably
expect. Its just as when they walk into a
five-star hotel; they expect to be recognized and treated like they have been
there before.

Chris Harris H.R. Owen

15

H.R. Owen represents luxury brands such as Lamborghini in the UK

And how did you accomplish this


exactly?
We have had to bring together lots of disparate bits of data from sales, after-sales
and even email systems. Email contained
lists of people who attended events, for
example. We brought all that together
onto one platform and we are probably
the first dealer group in the world to use
Salesforce.com for that purpose. There are
several advantages to Salesforce software.
Its a cloud-based system, so we dont
have to maintain large amounts of infrastructure. Its very flexible, so weve been
able to turn it into an automotive system
even when it wasnt designed as a car
system in the first place. From a security
point of view, its a system that has a security model that is very strong. The data
is stored in secure data centers, which is

16 H.R. Owen Chris Harris

probably safer than having it on a local


server at a dealership.
It sounds like information technology
plays a big role in making your sales
operation more efficient. Can you give
us some concrete examples of IT driven
processes that help you in this?
From the customer-service point of view,
its all about bringing together as much
information as you can in one place so
you get that single customer view. But
then you need the kind of tools to mine
that data for intelligence that you can use
to make attractive offers to customers at
the right time. For example, if you consistently send someone emails about Ferrari
and he has never once opened them, you
can reasonably assume hes probably not
interested in Ferrari. You can then make

sure that he no longer gets Ferrari-related email. You can even take Ferrari out of
intelligent emails that, for example, have
four brand options listed in them. The key
is using IT intelligently.
In the new world of social media, email
seems to be losing its relevance in
private interactions, but you seem to
say that in your business its still important.
Email may be a bit of an old-fashioned
technology, but for us it is far and away
the best means of communication with
customers. Customers tell us they like it.
More than 50 percent of our customers
open our emails, which is a rate I have
never seen in other industries I have
worked in. And less than 0.2 percent unsubscribe from our emails. We believe that
the data effort weve made helps us produce well-targeted emails. The money we
spent on writing, designing and delivering
emails well is paying off for us. Our customers are voting with their mouse clicks
in terms of opening and reading them.
Finally, we would like to ask you what
kind of car will people interested in the
top end of the market be driving in 10,
20 or 30 years?
As I mentioned, our customers are first and
foremost what I would call wealthy petrol
heads. Theyre interested in the experience of the drive, so I think they are going
to be driving cars that are fun and exciting
and involving to drive. Cars will have more

and more electronic systems that will


make them easier to drive. But you have
the option to turn these systems off and
then it will get more exciting. The brands
we represent are going in that direction.
If you take a technology like electric cars,
these are not only about city driving with
lower emissions. Look at the new La Ferrari, which is a high-performance hybrid.
The technology is deployed to propel you
from 0 to 60 mph faster than ever before.
Obviously thats because electric motors
have instant 100 percent torque. In our
segment, electrification will help build
extremely exciting cars that can also be
more efficient and produce fewer exhaust
emissions. I predict were going to drive
exciting cars with all kinds of powertrains,
including full electric and hybrid. They will
still be great to drive.
Interview by Martyn Warwick,
TelecomTV, for automotiveIT
www.telecomtv.com
Photos provided by H.R. Owen

Chris Harris became marketing and


customer director of H.R. Owen in
October, 2011. He joined the British
luxury dealership from Nokia, where
he was global marketing strategy director. Earlier, Harris worked at Vertu,
Thomas Cook and P&G, with responsibilities that took him across Europe,
the Middle East and Asia.

Chris Harris H.R. Owen

17

Building the Platform to Provide a New


Automotive Experience
By Patrick Plata,
EVP and Chief Automotive Officer,
Salesforce

Patrick Plata is responsible for leading Salesforces strategy for the


automotive industry. He joined Salesforce with 28 years of leadership experience
in the global automotive industry at Nissan and Renault, where he served as
chief operating officer.

18 salesforce Patrick Plata

This spring, Martin Winterkorn, chairman of the management board of the


Volkswagen Group, made a prophetic statement: Over the next few years, our
industry will face one of the greatest upheavals since the invention of the automobile. We are indeed in the midst of an epic transformation: energy, mobility,
connected cars, automated driving, a surge of cloud computing and of software
everywhere, workplace transformation, new ways to collaborate, new ways to
partner, newcomers in the automotive ecosystem. The upheaval is happening in
many areas and the digital revolution plays a role in all of them. But I will concentrate here on just one: the need to adapt to new customer demands and redesign
the customer automotive experience to address them.
New Customer Expectations
Auto customers behavior and expectations have fundamentally changed. They now
choose from many channels to communicate about the car they want or the one they
use: not just over the phone or through a visit to the dealer, but increasingly via mobile,
web, SMS, email and soon through the car itself. The automotive brand, for them, is expected to take care of them during any interaction, over any channel-dealer or direct.
Customers want the brand to always know them wherever and whenever they connect
with it. They want their experience to be consistent, and they want the brand actions to
always be relevant to them. They want to feel like its a one-to-one experience; they want
a fast response. They want the interaction and experience to be effortless, and, if they
need help, they want the brand to always be there to support them.
Todays Highly Diverse Customer Journeys
There are many moments of interaction with the brand during a typical automotive customer journey often more than a hundred. It starts when a prospective buyer searches
for information about a new vehicle and continues through test drive, purchase, finance,
service, buying accessories, and new purchase. The journey includes multiple channels,
both online and offline. Some interactions are handled by carmakers, some by dealers,
and some by both. All are rapidly becoming digital, even more so with connected cars.
No two customer journeys are alike. Just as automotive engineers design every detail of
the car and driving experience, carmakers need to carefully design the end-to-end experience their customers have with their brand. Whats more, key moments of truth must
be identified to surprise and delight customers.

Patrick Plata salesforce

19

The most successful carmakers will take advantage of the new channels and opportunities
to connect with their customers in a whole new way to deliver a consistent experience that
matches their needs and the brand promise. By giving them more information and more
ways to stay in touch, they can create a new type of relationship with the customer.
Engineering a New Type of Automotive Experience
To be successful, carmakers, dealers and other players in the ecosystem need to design
processes, systems, and competences to deliver a one-to-one, consistent, relevant, fast,
24x7 customer experience. It starts with a unique 360-degree view of the customer, with
real-time insight into channel contacts, social posts, time spent with specific models on a
web page, app utilization, and new information captured by the sales or service people.
It continues with rapid test and implementation of new applications made possible by
todays cloud computing platforms.
A key challenge to executing the new automotive experience lies in the numerous but
partially or totally disconnected databases and applications of today, managed by differ-

Email

Contact
Center

Web

Social

Apps

Brand
Portal

Motor
Show

Connected
Car

Dealership

360 Customer Profile


Customer Success Platform
360-degree customer profile

Legacy Systems

Carmakers need a customer success platform

20 salesforce Patrick Plata

ent functions inside the carmaker or the dealers. The hope is that the same technology
that drives the digital revolution for customers (mobile, cloud, social, apps, artifical intelligence and big data) will enable automotive companies and their dealers to deliver it.
But they need to integrate these new technologies with the legacy ones and create the
right tools to succeed.
Build A Customer Success Platform
Whats needed is a multi-channel platform that integrates technologies around the
whole customer experience, not around legacy systems or silos. At Salesforce, we call
this the Customer Success Platform. An automotive customer success platform complements most legacy systems. It is a data and application layer with APIs that sits on top of
them, and a middleware layer interfaces with appropriate APIs. For automotive applications, it delivers the following six core capabilities:
1:1 and Social Marketing: Carmakers are able to listen to and engage customers and
potential customers on social media. They can address issues and identify and nurture
leads in a personalized manner. But just as important, they can also amplify positive
messages, react quickly to address bad ones, publish content, and actively participate
in social discussions about the company and its products and services.
Dealer Sales: Whether owned or influenced, automotive retail is literally where the
rubber hits the road. With strong lead management, retailers can catch potential customers who might otherwise slip through the cracks. With a shared 360-degree view
of the customer, carmakers and dealers can sell more intelligently. Mobile tools allow
salespeople to interact and close sales in real-time, even away from the dealership.
Connected Services: Dealers, carmaker engagement centers, and social listening
teams are able to answer and serve customers anytime, anywhere, through any device including their connected car. These teams can access up-to-date customer
information so they know who the customers are, their history with the brand and its
dealer network, and even what their connected car has to say.
Owner Portal and Communities: Car owners need a single interface so they can
see and take action on the important details of their relationship with the brand, the
dealers, the service department, and finance department. In addition, a community
functionality allows owners, dealers, service personnel, and employees to share infor-

Patrick Plata salesforce

21

mation, opinions, reviews, and media in an open forum. The interface needs to be on
the web, on mobile, or on the car display.
Analytics: Car manufacturers, their suppliers, and dealers can get new insight through
the huge amount of data made available from customers, cars and legacy data.
Apps: Developers can create and deploy new app experiences at lightning speed to
take advantage of new value-added services and maintain an active relationship with
customers.

Connecting And Supporting Cars And Drivers


The connected car channel poses a difficult challenge for carmakers. The development
cycle is separate from that of smartphones, and except for Tesla, carmakers have little experience updating their cars over the air. Moreover, since customers are not accustomed
to paying carmakers for services inside their vehicles, developing a new business model
on a new generation of telematics is quite a blind bet for top management.
But connected cars are becoming a reality, and players like Apple and Google are joining
the fray. Many new connected car service providers have started to invade this space.
They are entering the automotive value chain and starting to monetize it. They sell car
data acquired through OBD2 plugged-in devices. They are selling crash data and driver
behavior data to insurance companies. They are selling vehicle maintenance programs
and in-car advertising, and they deliver free navigation and good traffic information.
What if they happen to know more about car users and car buyers than the dealers and
the carmakers? Even though carmakers need to act faster, they struggle to develop business strategies to capitalize on this opportunity. They need to integrate the connected
car with their customer experience platform.
A Company Transformation
A major upheaval is under way. Carmakers and dealers are challenged and must act
now. They need a platform with applications to redesign the customer experience and
address the new needs of todays customers. They also need to learn how to leverage
cloud computing on top of legacy systems so they can drastically cut development and
implementation time. That way they can swiftly innovate, test and scale (or stop) to continuously bring new choices to automotive customers.

22 salesforce Patrick Plata

But technology is not the only issue. Car companies need to align their organizations to
become fully customer-centric, dealing in a more holistic way with these new customer experiences. They need a much more cross-functional approach. For example, social
listening and social engagement shouldnt only be done by marketers and telematics
shouldnt only be done by engineering. Similarly, sales and service processes at dealers
need to be addressed in a very new and more holistic way by the dealers and the
different departments of carmakers.
Conclusion
Designing a best-in-class automotive customer journey and rolling it out across different
geographies is possible today. But it requires transformational thinking, the technology
tools to make it happen, and alignment of talent, organization, and processes to support
it. It requires a customer success platform. With the right leadership, an automotive customer journey will create new opportunities for carmakers and dealers to generate new
revenue and create loyal and engaged customers for life.

Photos provided by salesforce

Patrick Plata salesforce

23

" Digital natives do not buy the


vehicle if it lacks smartphone
compatibility"

Mike Bell, global connected car director at Jaguar Land Rover (JLR), is
responsible for managing the end-to-end connected car business service for
the British automaker. In an interview with automotiveIT, he explains how JLR
caters to clients who increasingly consider connectivity one of the key factors
in the buying decision. Bell also talks about the companys data policy and
shares his views on how cars will evolve over the next 25 years.

24 Jaguar Land Rover Mike Bell

Mr. Bell, please explain briefly what


Jaguar Land Rover is offering in the
area of car connectivity?
Our connectivity strategy covers four core
technologies. Three of them we bring
to market now: telematics, mobile devices and connected infotainment. The
telematics component includes eCall,
bCall and stolen vehicle tracking; mobile
device support includes InControl Apps
and a WiFi hotspot. With our new XE
model we also offer a new mid-range infotainment system that includes all three
components. A new highline system will
be announced soon. The fourth technology is V2X communication. Were are working on a number of collaborative research
projects but do not have a launch timing.
How important is the connected car for
Jaguar Land Rover?
Connectivity is a critical capability for our
vehicles. It is one of the top 10 reasons to
buy a vehicle today. We need to ensure we
are amongst the leaders in the premium
segment. We do so with built-in connectivity. I already mentioned the term telematics before. This includes eCall functionality
as well as stolen vehicle tracking, roadside
assistance and remote vehicle control. We
also do so with brought-in technology.
We also support what we call beamed-in
technology: to allow the control of standard iOS and Android Apps in a driver-focused manner. This system was co-developed with Bosch. We offer WiFi hotspot
capabilities together with a roof antenna

and the possibility to connect several


devices via a single connection. In some
markets we also offer special data plans,
for example in North America and China,
but not in Europe yet.
How important is connectivity for the
average Jaguar and Land Rover driver?
Thats easy: Digital natives do not buy the
vehicle if it lacks smartphone compatibility. Of course not all of our buyers are
that young. But there are differences between the local buying habits in different
parts of the world. In China people buying
the same type of vehicle are typically 1015 years younger than in the rest of the
world. In general, older people are more
interested in security features. But if you
take a look at a typical Range Rover or
Jaguar XJ customer, they are very often
on a CXO level. That brings with it a high
technology expectancy and demand,
even if the driver himself is in his late 50s
or 60s. Connectivity matters for all age
groups. Only a small number of buyers are
not interested at all.
With all cars getting connected, where
does JLR feel it has an edge?
We offer a great end-to-end experience
for our customers. That starts when they
leave the house and goes all the way to
the final destination. Customers take the
bits they want. Of course other companies
also have similar features, but we have a
joined-together experience. Our use of a
touch screen makes the experience of in-

Mike Bell Jaguar Land Rover

25

The Jaguar XE, which was unveiled in September 2014, features a new mid-range infotainment system

tegrating smartphone Apps more natural


for customers and much easier for developers.
How is the infotainment in the new JLR
vehicles received by the market?
The reaction of journalists driving the new
generation of cars has been very positive.
We received an award from Germanys
Autobild magazine for our smartphone
integration, InControl Apps.
You told us at the automotiveIT Congress in London that you hope to get
valuable new customer data from connected cars. Are you already getting this
and, if so, what are you doing with it?
Our main desire is to improve the cus-

26 Jaguar Land Rover Mike Bell

tomer experience. For example, a customer may find it useful to send vehicle
diagnostic information to their preferred
dealer. The customer can opt-in to these
features.
Every carmaker says the data belongs
to the customers, but theres still a lot
of concern over privacy. Is that not justified?
It is about our customers. So we adopted
the most stringent data protection principles, which means that we comply with
German laws - on a global scale We also
do not monitor individual customers use
of the car. The data is provided to the customer via the smartphone App, InControl
Remote.

Can you name some IT and telecommunications companies you work closely
with? And what exactly do you do with
them?
We partner with multiple mobile operators, including Vodafone, AT&T and China
Unicom. We also work with service providers like WirelessCar, AppCarousel and we
work with silicon suppliers such as Intel.
We have a joint research program with the
latter. We also work with Bosch on multiple levels for the infotainment hardware
and software (Bosch Softech), with Symphony Teleca and TCS for infotainment
systems integration and with Panasonic
for consumer technologies. There are several more partners we work with.
Theres a lot of talk about driverless
driving. Will we at some point see autonomous Jaguars and Land Rovers on
the road?
When were talking about autonomous cars
there will be an evolution of technologies
rather than a revolution. We will have more
and more sensors and functions to automate
and assist with driving. We are not setting a
time, but, of course, JLR will at some point
provide autonomous vehicles. But well also
provide a choice. Our customers - whether
they are luxury or sports car buyers - like to
drive, and it will be the customers choice. A
sports car is built specifically for the enjoyment of driving. But even in a luxury vehicle
you probably won't enjoy being stuck in a
traffic jam. So you will be able to engage autonomous functions where you choose.

A final question about the future: What


will the car look like in 2040?
In 2040, connectivity will be pervasive.
High-speed connectivity will be standard.
The coverage problems we face today will
be a thing of the past. In 2040, the view to
the outside will be via a screen. This makes
different seating layouts possible. Your vehicle will be used like a mobile office or
a living room, depending on the drivers
and the passenger's needs.

Interview by Thomas Koehler


Photos provided by Jaguar Land Rover

Mike Bell is global connected car


director at Jaguar Land Rover (JLR).
This relatively new position was created in 2012 to address customer
demand for connected car technologies. Bells role combines technical
expertise with a focus on delivering
a premium customer experience to
drive commercial value. Earlier, Bell
was chief technology officer at JLR.
He has spent more than 19 years
working as a senior strategic technology professional at several companies. His experience spans multiple
industries including utilities, manufacturing, telecoms, oil exploration,
and the public sector.

Mike Bell Jaguar Land Rover

27

5 connected car trends for 2015


By Kevin Link,
Chief Technology Officer (CTO),
Verizon Telematics

Kevin Link, chief technology officer (CTO), is responsible for the OEM vehicle technology and network architecture of Verizon Telematics. He is also
in charge of the overall technology strategy. Link is one of the co-founders of
Hughes Telematics, which later became Verizon Telematics. Prior to his involvement in the telematics industry, he spent 19 years in various engineering roles
developing products and services for the US wireless industry.

28 Verizon Kevin Link

The car is quickly becoming the coolest mobile device we own just ask the 16,000
decision makers and influencers who attended the Los Angeles auto show in November to discuss the latest technological advancements in connected cars. In 2015
more mainstream automakers will adopt connected car and other advanced technologies. Here are five auto technology trends to watch for in the new year:
1. The number of vehicles that include a telematics option will increase: There are
14 automakers that control 80 percent of the car market globally and each one of
them has a connected-car strategy. In 2015, well start to see these strategies apply to
more car models as connected features such as high-end navigation, telematics and
infotainment are included as standard options.
2. Advanced technologies will become a precursor for autonomous vehicles:
Future-forward car manufacturers will start to push the envelope on enhancing advanced technologies such as adaptive cruise control and lane departure warning
further setting the stage for autonomous vehicles.
3. Competition for off-the-shelf aftermarket solutions will intensify: Overall, adoption rates for connected cars remain relatively low. For example, 200 million cars in
the US are not connected. The coming year will usher in more competition for solutions to benefit the aftermarket.
4. 4G LTE will become the de facto standard and Wi-Fi in the car will become a reality:
Often lauded as the early adopters, high-end auto makers will set the course when
it comes to 4G LTE and Wi-Fi hotspots in their car deployments as a future-proofing
mechanism. While the amount of bandwidth that comes with 4G LTE may not be needed by all drivers, automakers do not want to be faced with a situation down the line
where they are required to migrate from 3G to 4G because their models have suddenly become antiquated. Meanwhile, demand for mobile Wi-Fi hotspots is increasing as
rear-seat entertainment in the form of tablets and mobile computers becomes a
must-have for parents of small children, limo drivers, field service workers, etc.
5. Wider integration between connected cars and the internet of things: As the
internet of things becomes more prolific, location and intent will be central to identifying drivers algorithms, thereby making the car the proxy for delivering on the
promise of the connected lifestyle. In other words, intelligent technology will continue to embed itself into peoples day-to-day lives, changing how they engage with
the world including the driving experience.
(Photo provided by Verizon)

Kevin Link Verizon

29

" New technologies let car


drivers make better use of
their time"

As vice president, electrical & electronic systems at Volvo Cars,


Thomas Mueller is in charge of a significant chunk of innovation in the new
models the Swedish carmaker is rolling out. In an interview with automotiveIT, Mueller explains how Volvo is addressing the new technology challenges
and he talks about the opportunities the auto industry has as it integrates
more sophisticated connected systems.

30 Volvo Thomas Mueller

Id like to start by asking you about the


big trends you see in the automotive
industry today. What are the transformative forces at work?
The three trends I see at the moment I
would describe as safe, green and connected. On the safe side, I would list everything safety-related thats finding its
way into the car. A lot consists of IT and
software supported systems. On the green
side I would put everything that aims to
reduce CO2 emissions. That includes
hybrids and electric vehicles. And on the
connected side you see everything that is
connecting cars to the outside world. In
other words, were talking about bringing
the car into the internet, but also bringing
the internet into the car.

to bring two worlds together. The traditional automotive industry comes from a
very mechanical world. In the past 15 to
20 years it has moved more and more into
the direction of electrical and electronic
systems and software. That was the first
challenge we had. And we could still manage this well because it was all in the car in
what was pretty much a closed environment. Now the car is getting connected
and we have to deal with data exchanges with the outside world. Were talking
about different technologies, different
lifecycles, a different way of thinking and
different possibilities for new features.

Theres a huge technology leap going


on in the auto industry. How difficult is
it for owners of cars or drivers to come
to terms with all the new stuff?
Drivers are picking up the new technology fairly easy. Thats because the consumer
electronics industry has been moving into
this space for several years. And in the premium segment of the car market, where
we operate, people are very comfortable
using all the features of their smartphones.
We havent met that many customers who
are not familiar with smartphones and
connected technologies.

Can you explain that a bit more?


Take software. In most of our cars, were
looking at highly embedded systems.
They were developed according to certain
specifications, were automotive-grade
and built in line with the automotive development cycle and the lifecycle of the
car. With IT, its a completely different
story. Hardware and software are pretty
much separate from each other. You can
exchange hardware without the customer noticing it. You can swap applications
from one day to the next. You can very
quickly apply patches, bug fixes or new
applications. These are two worlds coming together and they need to learn from
each other.

Where do the difficulties then start for


the automaker?
The challenge for the automaker is how

You mentioned the issue of different


development cycles for the automotive
and the IT industries. How do you bring

Thomas Mueller Volvo

31

these two in sync with one another?


You need to put a lot of thought into this.
You need to get the interfaces right. Were
not talking about one side adopting the
lifecycle of the other. Its all about co-existence. Were doing a lot of work on developing an architecture that starts in the car
but also goes outside of the vehicle. The
question is how we can make interfaces
that are robust enough to deal with a car,
which has a lifecycle of 10 to 15 years, and,
at the same time, make the newest applications available to customers during this
lifecycle.
Tell us a little bit, please, about the
sales and marketing approach and
how it has to change to sell what is essentially a totally new kind of vehicle.
When it comes to marketing, the key is
to explain the new features to customers. The industry is challenged by this,
because the environment is so complex
and theres so much detail behind all the
innovations. Look at all the differtent features you can get in a new Volvo. While
you operate a smartphone, you can call
a call center, bring your applications into
the car and so on. We need to explain
all these features to customers in a crisp,
transparent and logical manner. Were doing many things in this area. Were running
trailers on the internet, were investing in
our sales force, were installing demonstrators at our dealerships, just to name a few.
The internet plays an important role, too.
Just google Volvo On Call, our connect-

32 Volvo Thomas Mueller

ed smartphone app, and you see lots of


trailers explaining everything. Or log in to
our web site. With lots of smart customers
browsing the internet before they make a
purchase, you need to explain things in a
much different fashion.
How is IT and communications technology enabling your organization to
operate smarter and more efficiently?
These new technologies help broaden the
customers experience beyond owning
the car, sitting in it and driving it. Were
talking about preparation for the journey,
but also what you do after the journey and
what services you need around your car.
We can, for example, help plan your trip
in advance, send navigation information
to your system. When you enter the car,
it already knows where youre going. You
can switch on the heating or air conditioning in advance and after the trip you
can download your driving journal, which
makes sense for a business travel expenses report.
And does this new connectivity provide an opportunity to improve car
maintenance and service as well?
In the context of service, we introduced
in May our connected service booking
feature, which lets the car tell the dealership that it needs maintenance. The dealer then proposes a time, which you see
on your in-car monitor. You can respond
by either calling him up or just agreeing
through the push of a button in your

car. Its very important in the premium


segment that you offer a wider range of
convenience features for the customer.
Modern people dont have time and this
kind of feature lets them make better use
of their time. There are great opportunities
for the auto industry here.
Volvos used to have a little red light
that would come on when you needed
service. Are those days finished?
That red light will still come on, but a lot of
things happen at the same time. The information goes to the dealer and the scheduling can then take place automatically.
Interview by Martyn Warwick,
TelecomTV, for automotiveIT
www.telecomtv.com

Thomas Mueller is vice president


electrical & electronic systems at Volvo
Cars. He joined the Swedish automaker in April 2012 and has responsibilities that include E/E architecture, HMI,
infotainment and connectivity, the
electrical distribution system, body
electronics and electric propulsion.
Before joining Volvo, Mueller worked
in different management positions
at the BMW Group. He holds a PhD in
nuclear physics with a strong background in electronics and IT, complemented with studies in economics.
Early in his career, Mueller worked at
several international research centers
both in Europe and the US.

Photos by Silvia Steinbach

These new technologies help broaden the customer experience beyond owning the car

Thomas Mueller Volvo

33

Industry 4.0 (R)EVOLUTION


By Oliver Kelkar,
Business Innovation Manager,
MHP

Oliver Kelkar is responsible for business innovation management. In


this function he is driving themes of the future for the automotive and
manufacturing industries.

34 MHP Oliver Kelkar

In recent years, business organizations have faced a number of new challenges.


The most important one is:

FLEXIBILITY
The customers growing demand for individuality, ever more volatile markets, global
competition, shortage of resources, ecological aspects and cost pressures force business
organizations to become more flexible:
Flexibility with regard to their own production and product development, but also flexibility with regard to the stronger internationalization of the lines of industry. For instance,
just look at the fact that consumer electronics has found its way into automotive vehicles.
Volatile markets with heavy fluctuations in sales have an increasingly drastic and permanent impact on manufacturing companies. After all, fluctuations of this kind prevent a
reliable forecast of the required product volumes. As a consequence, the ability to ensure
high flexibility regarding delivery periods and quantities has become very important for
business organizations, if they wish to still be able to meet customer expectations in
future. This means that, in future, manufacturing companies will find themselves in an environment in which both the correct and rapid response to changes on short notice and
absolute customer orientation while taking the best interests of the staff into account
will be of vital importance. The shortage of natural resources and space consumption in
urban areas will have an impact on the decisions and actions of business organizations.
This fourth industrial revolution is inspired, made possible and driven by the Internet of
Things and Services. The focus is on the Smart Factory. It is powered by cyber-physical
systems (CPS). It is served by smart logistics, by intelligent mobility, by smart buildings,
resource-saving power generation and supply. It produces smart products that continue
to evolve and change, even after leaving the smart factory.

With our MES projects (Machinery Execution Systems) which are frequently based on
SAP technology, we integrate the centralized business management with production
equipment. The resulting transparency yields flexibility - flexibility for job order planning,
for logistics and production. This integration constitutes a significant component in the
implementation of Industry 4.0 with its cyber-physical systems.

Oliver Kelkar MHP

35

How would you rate the importance of a close


strategic cooperation with your IT?
100%
90%

I cannot judge this


Very low

60%

High

50%

Very high

40%

hoch

sehr hoch

6%
14%
40%

35%

70%

sehr niedrig
niedrig

7%
7%

80%

kann ich nicht beurteilen

Low

12%

43%

58%
63%

30%
20%
10%
0%

n=227

60%

59%
40%

31%
19%
Forschung &

Research
&
Entwicklung
Development

Produktion

Production

Logistik

Logistics

Marketing &
Human Resources
Marketing
Human
Vertrieb &

Sales

Resources

Figure 1: The role of IT from the perspective of the business departments (MHP-Study Industry 4.0,
Nov. 2014)

Industry 4.0 is an interdisciplinary challenge that needs to be dealt with as a top management issue. The business departments expect a tight integration with IT. IT plays a central
role within the company. It orchestrates the backbone of the business.
The Internet of Things and Services is the technical vision of integrating objects of any
kind into a universal digital network. Sensor and identification technologies give various
objects a unique identity and enable their localization. Thanks to digital product memories and embedded systems things (such as cars, consumer goods or clothes) communicate both among themselves and with their environment. They can make decisions
on their own and trigger actions. As a result, the physical world of things is linked with
the virtual world of data. Cyber-physical systems constitute the core, the infrastructure,
of Industry 4.0. These are devices, buildings, transport vehicles or production plants and
logistics components that contain embedded systems and are capable of communicating via the Internet. These objects are intelligent and capable of assigning and executing
tasks on their own.
Thanks to its know-how on contact-free identification technologies, MHP helped to create an RFID-based solution for test vehicles in the Transparent Prototype project. The
assembly status is automatically documented prior to each test run and the test run data

36 MHP Oliver Kelkar

is then compared with this data. As a consequence, we obtained faster and more reliable
results which motivated us to develop a significantly enhanced, GPS-based integration
for the entire test vehicle fleet on behalf of our customer.
The necessary platform for company-wide or cross-company data storage is provided by
cloud computing solutions. The smart objects, products, machines, and internal ICT systems are linked with the cloud via communication networks. This way, data is also available to mobile applications. Using the MHP BIG DATA scenarios, we enable our customers
to create value from data, to make (partly) automated decisions and analyses in real time.
In the course of the fourth industrial revolution, our industrial production, the working
methods and probably even our entire social life will fundamentally change.
Still, how well is Germany, how well are the leading markets of the automotive and manufacturing industry prepared for the pending changes? We took a closer look at this
question and carried out the study Industry 4.0 a positioning of the German automotive and manufacturing industry (November 2014).

Industry 4.0 Perspective


Langfristig
ist
die Umsetzung
von
Industrie
InInthe
thelong
long
run,
run,the
the
implementation
implementation
ofof
Industry
Industry
4.0
4.0is4.0
is fr Ihr
Unternehmen
Unternehmen
erstrebenswert.
desireable
business.
desireablefor
foryour
your
business. erstrebenswert.

34%

Germany will be a forerunner in the implementation and


Deutschland
wird bei 4.0.
der Umsetzung und Anwendung von
application
of Industry
Industrie 4.0 eine Vorreiterrolle einnehmen.

17%

0%
I fully agree

I agree

I do not agree

52%

41%

20%

40%

I do not agree at all

12%

24%

60%

17%

80%

I cannot judge this

100%
n=227

Figure 2: Industry 4.0 as an opportunity for business organizations and Germany as a business and
investment location (MHP-Study Industry 4.0, Nov. 2014)

The findings of the study show that business organizations still need to cope with many
challenges. Certainly, this equally applies to all organizations in society, such as associations, research institutes and politics. It would be easier to get a grasp on this topic, if

Oliver Kelkar MHP

37

Starting point

Environment analysis

Corporate analysis

Assessment of Industry 4.0

Roadmap

2012 Mieschke Hofmann und Partner Gesellschaft fr Management- und IT-Beratung mbH

Figure 3: MHP Assessment - Industry 4.0 can be implemented and planned

specific, industry-related case studies were used. This is, in particular, true for mid-sized
companies. There is a large demand for concepts, paradigm shifts, technologies and
solutions in connection with Industry 4.0, although the Industry 4.0 is not an established
concept yet and the underlying understanding will have to grow. At present, there is still
a certain degree of skepticism and uncertainty. Generally, business organizations attach
a high importance to Industry 4.0, which will significantly rise in future, although only
50 % believe that Germany will be able to play the leading role. This complex topic is
definitely a task for the top management.
80 % expect that Industry 4.0 will hold a high benefit for their business. In particular, the
ability of responding to changing conditions in a highly flexible manner stands in the
foreground. Cost and resource efficiency are also driving factors. Industry 4.0 technologies
such as BIG DATA, public clouds and the Internet of Things are gaining in importance.
Naturally, the machinery and plant engineering industry is more intensively involved in
Industry 4.0 than the automotive industry, since the efficient and flexible production of
smart products and vehicles requires cross-linked, smart und versatile machines.

38 MHP Oliver Kelkar

If a business organization wishes to be among the leading suppliers, there is no other


way than dealing with this range of topics already now and creating added value by
implementing Industry 4.0. It should be kept in mind that large investments may be
required that will pay off in the long run. A strategic approach with a flexible roadmap
will have to be developed in order to avoid that the need for investments jeopardizes
Industry 4.0.
The MHP consulting product is tailored to this flexible roadmap. Based on the corporate
strategy, the impacts from the environment and the market situation, a roadmap with
specific recommendations for the implementation and actions will be developed. A catalog of 200+ actions with related criteria and weighting will help business organizations
to benefit from previous experience.
In order to make Industry 4.0 a success, all players will have to engage in a joint and
constructive discussion. Prof. Dieter Kempf, BITKOM chairman, correctly summarized the
core of the challenge presented in this paper when he made the following statement:
If we do not implement Industry 4.0, others certainly will. And if we wish to realize it, we
will have to do so quickly, since our global competitors have been dealing with this topic
(Photos provided by MHP)
for a while. So let us get going!

Oliver Kelkar MHP

39

Photo: Silvia Steinbach

" Car connectivity is the new battleground for product differentiation


in the automotive sector"

Qoros Auto was founded in 2007 as a Chinese-Israeli automotive manufacturing company headquartered in Shanghai. The first Qoros production
model, the Qoros 3, made its public appearance at the Geneva Motor Show
in March 2013 and went on sale in China in December 2013. From the start,
the car has come with the QorosQloud infotainment system as standard.
Maurits Aalberse, director of Connected Services at Qoros, spoke to automotiveIT about the brands infotainment strategy and its plans going forward.

40 Qoros Maurits Aalberse

Please update us on how Qoros as a


new carmaker is doing.
After our initial success with our first production car the Qoros 3 Sedan we
received the second 5 star EuroNCAP
crash test rating for our second model,
which debuted at the 2014 Geneva Motor Show, the Qoros 3 Hatch. We also just
recently presented our third model at the
Guangzhou auto show in November2014.
Its called the Qoros 3 City SUV. We also
debuted the second version of our
QorosQloud infotainment service there.
Can you please summarize the strategy
behind your infotainment package?
We strongly believe customers today and
tomorrow expect high-quality connectivity
options in every car. People dont line up at
car dealers any longer just to look at new
models. Car connectivity is the new battleground for product differentiation in the
automotive sector. We offer an 8-inch capacitive touchscreen standard on all Qoros
cars, which is unique to the segment we
operate in. Also, 95 percent of our cars have
access to our QorosQloud connected services. This cloud-based system offers a wide
range of services including navigation, driving control and social sharing. And its very
intuitive and easy to use.
How much of the brands initial success
in China comes from the standard infotainment package?
The infotainment package is a strong factor in the success of the Qoros brand. We

discovered that 75 percent of Qoros buyers actively use the majority of the core
services in their car and more than 90 percent would recommend QorosQloud to
friends and family. Thats a great start and
our challenge now is how we can make
this number 100 percent.
So far youre only in China. What kind
of data security concerns are you dealing with in the market and how do you
address them?
Hackers of any kind target connected
objects everywhere in the world. We are
working with world-class global partners
in the end-to-end QorosQloud architecture. That includes the car and the backend. Our partners are strongly involved
with us in this area. Partners include Microsoft, China Unicom, Harman, Wireless Car,
and Neusoft/Alpine.
Given the dominance of the mobile
phone in China, do you need an embedded system there as well?
Our onboard unit is easy to operate. It
offers local functions as well as functions
relying on cloud connectivity and hybrid
as a continuum. We see the car monitor
as one of the screens for the users mobile
journey. The idea behind this is simple.
For example, you plan your route on any
device; it does not matter if this is your
PC, your tablet or your smartphone. Your
smartphone tells you about the whole
journey including walking information.
You then use the screen in the car while

Maurits Aalberse Qoros

41

Photo provided by Qoros

Qoros unveiled a hatchback version of the Qoros 3 at the Geneva auto show in March 2014

driving. When you enter the car, one touch


of the monitor is all you need for the car
to take over from your phone. When you
park the car at or near your destination
with the help of our cloud-based dynamic parking information, the smartphone
takes over again. The screens augment
each other and each has the information
that you need at a particular time.
At the automotiveIT Congress in London this summer you said that the car
must be or must become a fully connected part of the digital lifestyle. How
far are we removed from that today or
is Qoros already there?
We are already fully connected at Qoros.

42 Qoros Maurits Aalberse

The customer-centric digital ecosystem


was pioneered in Qoros first production
car and launched in late 2013. Today, 95
percent of our cars are sold with the connected services system fitted as standard.
But we are never satisfied and keep on
innovating. We focus on ease of use and
gamification. Our customers have fun using our systems. With the use of the social
media and community elements weve
exceeded our own expectations.
Please tell us some more about QorosQloud.
We feel we offer a complete portfolio and
for a car priced at about 16,000 euros in
China we offer unique cloud-connectivity

standard. Were very happy that other carmakers also see connectivity as more and
more important. With our QorosQloud we
created a head start and we are building a
digital value chain from the ground up. It
will be relevant not only for our customers
but also for business partners. Think insurance or car dealers.
Which IT and telecommunications
companies do you work with most
closely?
We are a true first mover in China and
work with several top suppliers. Microsoft provides telematics service, we use
the dispatcher from Wireless Car on China
Unicom as telecommunications provider.
On the backend side, traffic information
is supplied by AutoNavi and enhanced by
TomTom. We get map services by AutoNavi and we also integrate server content
providers like EasyPark for Dynamic Parking services, Dianping local services that
work like Yelp in the US, and many more.
Working with partners help us to innovate
at high speed. Our cloud-based approach
allows regular incremental updates, which
makes us flexible.
But you dont outsource everything.
We rely on key functions to be provided
in-house: We have a team for the product
vision, product management and concept
as well as a design team that focuses on
user experience, interaction and graphic
design and a technical team to get it done,
with, indeed, a strong link to our partners.

We also have a business development


team that supports CRM and after-sales as
well as our dealers and works with partners
such as insurance companies. Together
we form a multi-disciplinary, multi-cultural
team, which translates in a very short time
to market of an integrated digital ecosystem and value chain. Of course, we started
with a clean sheet of paper, but this is just
a part of our success story in the connected vehicle segment.

Interview by Thomas Koehler

Maurits Aalberse is director of


Connected Services at Qoros Auto.
He joined the China-based international car company in 2012, having
gained 16 years of experience in
multiple disciplines across the automotive and technology sectors.,
At Qoros, Aalberse is responsible for
telematics and QorosQloud, a consumer-centric digital ecosystem that
offers more than 30 functions, including enhanced navigation, driving
control and social sharing accessible
via connected in-car infotainment,
a consumer web portal and mobile
device app. Earlier in his career, he
worked at IBM and TomTom, where
he was director of product management & marketing.

Maurits Aalberse Qoros

43

Answering key infotainment


questions
By Philippe Gicquel,
President, GENIVI

Philippe Gicquel is general manager for cockpit, safety and infotainment


EE modules at PSA/Peugeot-Citroen. He currently holds the presidency of the
open-source association GENIVI.

44 GENIVI Philippe Gicquel

In-vehicle infotainment (IVI) has been in the spotlight for several years and with
recent announcements from Apple and Google, the focus is even more on this
important area.
With the smartphone, the consumer electronics industry has created a revolution
that has totally changed consumers and their habits. Smartphones are now both
communication devices and digital extensions of their individual owners. Benefiting from this digital extension anytime and everywhere is a requirement for more
and more people, which puts the automotive industry under significant pressure
to answer a growing number of questions.
How to deliver to customers in the car their normal smartphone experience as well as an
undistracted and safe drive? How to manage the rapid evolution of consumer electronic
devices? How to manage the diversity of customer expectations resulting from the diversity of the smartphone industry? How to balance the pros and cons of smartphone
integration with the pros and cons of a pure, embedded solution? Is there a risk to lose
brand recognition in a car to the profit of the consumer electronics industry? Should cars
be connected by themselves or through smartphones? What is the value of car data and
should smartphone apps get full access? How is cyber-security managed? What level of
integration or segregation is needed between pure infotainment and car functions tied
to driving assistance? An exhaustive list of questions would fill pages.
Multiple options
Most of the open-ended questions listed have multiple possible answers. And for those
that are not open-ended, the answer may depend on a variety of factors. These include
car segment, market zone, brand strategy, who you put the question to in a company,
when you ask it, etc... For this reason one should be wary of people who pretend they
can describe the future in definite terms. Multiple options are possible and will eventually coexist in coming years. Uncertainty is the only certain assessment one should make
when talking about the future. What is clear and undisputed today is that automakers
do not wait for the answers to all questions before moving forward. They have already
joined organizations that define smartphone integration standards. After the generation
of systems allowing Bluetooth phone, including Bluetooth audio streaming, the new
trend is to allow drivers on the road to use smartphone applications through the cars
HMI equipment: large touchscreen, loudspeakers, microphone, steering wheel switches
and commands.

Philippe Gicquel GENIVI

45

This strong trend does not mean that automakers have a smartphone integration only
policy. They still have several good reasons to keep some of the features native to the

OAA
(Android Auto)
BMW

APPLE
(Carplay)

CCC
(Mirrorlink)

X
X

FIAT - CHRYSLER

FORD

GM

HONDA

HYUNDAI - KIA

JAGUAR LAND ROVER


MAZDA

MERCEDES
MITSUBISHI

PSA PEUGEOT CITROEN

X
X

RENAULT - NISSAN

SUBARU

SUZUKI

TOYOTA

VW GROUP

VOLVO

X
Info Web September 2014

embedded head-unit. First, this head-unit does not provide only CE type infotainment
but also supports specific car features such as front and rear parking cameras, on-board
computer, vehicle function configuration, climate control and other features. Second,
the smartphone market is diverse and fast moving. Covering a broad market-share of
smartphones will be challenging and no automaker can afford to leave customers without a preferred solution. Third, some car companies are unwilling to lose control of the
most important customer-facing branding opportunity, the user interface delivered by
the HMI. Fourth, data is seen by some people as the black gold of 21st century. Modern

46 GENIVI Philippe Gicquel

cars generate a huge amount of data that may be of interest to a very diverse and growing number of companies. The ability to collect and process data and then resell the
information is something that many automakers may like to keep under control.
Competitive solutions
Eventually, some other considerations may favor embedded solutions. Such may be the
case for navigation for autonomous vehicles, as it is not likely that an automaker will trust
a smartphones navigation for autonomous driving use-cases. For all these reasons, a
large majority of car companies still believes they need a competitive solution to develop embedded infotainment. That means a solution under their control, with smartphone
integration being one feature among many others.
GENIVI is working to develop one such competitive solution. Since it was launched in 2009 by
BMW and Intel together with PSA, General Motors, Wind River, Delphi, Magneti-Marelli, and Visteon, the GENIVI Alliance has grown to maturity.
Products using GENIVI deliverables have been launched; membership is stable at more
than 160 companies; and movement from a closed industry organization to an opensource development approach has been accomplished. GENIVI is now launching a more
aggressive technical and marketing strategy in order to better leverage the great assets
realized during the last five years. Consultants estimate that GENIVI-based systems market-share will reach more than 20 percent by 2018. And with member activitiy on the
rise and new automakers joining the alliance, the trend suggests growth will continue.
GENIVI well-positioned
If we look at the big picture of connected cars and the move to the Internet of Things,
GENIVI appears to be well positioned for the future. GENIVI software embedded in the
head unit is in a critical path of the growing number of services provided by the connected car. The head unit deals with infotainment and navigation, both of which use data
from the cloud. The head unit connects through Bluetooth or Wifi to customer devices
enabling communication between vehicle and cloud. On-board HMI enables interaction with connected services provided by the head unit. Through its partnership with
Autosar, which defines car ECU standards, and with W3C, which defines web standards,
GENIVI helps define software standards for sensor-to-cloud communication.

Philippe Gicquel GENIVI

47

Through its Linux-based, open source model, the alliance is facilitating a dramatic reduction in development cost and time to market. GENIVI offers the automotive industry the
agility that Android brought to smartphones, plus the fact that the development is facilitated by a non-profit organization with broad community involvement. This last aspect
is a guarantee for the members that they will keep control and can steer developments
without the liabilities incurred by unbearable commercial contracts.
HTML5 brings convergence
Three other important technology moves need to be mentioned to draw the full picture
in the area. First, HTML5 deployment brings some convergence in apps development.
Apps using this technology can be deployed on any device, including GENIVI head units.
Second, personal data storage in the cloud allows people to get their personalized environment everywhere on any device without the need to carry it with them. Finally,
telecommunications technology on the SIM card is moving quickly, especially in the European market. European carriers may allow the use of reprogrammable SIM cards, thus
allowing new business models for communication contracts. For example, a car could
become just one of the devices included in a multi-device, family contract.
Bring all these technologies together, and you can imagine a future where people do not
need to carry their digital extension with them but can access it anywhere, including in
their cars. Such a trend has been described as the pervasive step. It appears it happens
in every technology field after a while.
The future
Through wearable devices available today, the movement of diversification of formats
for a persons digital extension has started. The car as an electronic device may become
one object among others that implements and provides access to the customers digital
world, without the need of any intermediate device.
Once again, the uncertain nature of the future is the only certain assessment we can
make, so the description above is not THE future but only one hypothetical view. But one
thing is clear: GENIVI as the major organization in the in-vehicle infotainment ecosystem will play an important role in the delivery of these future trends for the automotive
industry.
(Photos provided by GENIVI)

48 GENIVI Philippe Gicquel

49

Be First to the Future


By Hugh Dickerson,
Industry Head, Automotive,
Google

Hugh Dickerson is a senior industry head at Google. He leads the team


that works in partnership with the automotive industrys largest players in developing and delivering successful digital marketing strategies.

50 Google Hugh Dickerson

The world is changing fast, being fueled by the rapid acceleration of technological
advances. As I sit writing this piece my youngest son is reading the news on his
tablet and recounting how Alan Eustace, one of my Google colleagues, has just
skydived from a height of more than 40 kilometers at speeds of over 1,300 km/h.
Alans feat is mind-blowing but so also are the technological advances that allow
the spread of this news, in both words and video, so wide and so quickly. He broke
the record previously held by the Austrian Felix Baumgartner. Felixs jump has
been watched over 40 million times on YouTube and was watched by so many
globally at the time that it used 8 percent of the worlds internet bandwidth.

Alan Eustace skydived from a height of more than 40 km at speeds of over 1,300 Km/h

This pace of change in media is incredible. The telephone took 75 years to scale to 50
million users, the radio took 38 years, the television 13 years and the internet just four
years to reach that same figure. Perhaps making the point of this acceleration most
poignantly is that the Angry Birds app took just 35 days to reach 50 million users. This
rapid acceleration is only set to continue. As you read this you are experiencing the
slowest day of technological change for the rest of your life. This pace of change can be
bewildering for many of us as our linearly wired human brains struggle to come to terms
with the exponential rates of advancements.

Hugh Dickerson Google

51

It is against this backdrop that I joined Google just over three years ago to lead a team
that works in partnership with automotive manufacturers in developing and delivering
successful digital sales and marketing strategies. This move followed twenty years of
working across the globe in various parts of the automotive industry.
During this last decade, advancements in vehicle design and performance have both
benefitted from and fueled this technological revolution. There have been major advancements in cleaner more efficient propulsion systems and there is also much development time spent on connected vehicles and driverless cars. I would contend, however, that vehicle brands are not generally at the cutting edge, compared to leading
retail businesses, in keeping pace with their consumer and grasping the opportunity
that digital offers them in forming more profitable and longer lasting relationships with
their drivers.
The capacity to change and grasp the digital opportunity is critical for manufacturers
as the consumer shifts behaviors and small agile disruptors flood into the auto space
snapping at the heels of the car giants. These disruptors are sometimes well known and
publicized such as Tesla, which is perhaps as well reknowned in the industry for challenging the distribution model as it is for its sporty electric vehicles. But more often the
disruptors take the form of smaller startups or disintermediators sensing opportunity as
auto manufacturers struggle to change gear and accelerate the adoption of digital into
their sales and marketing.
But it is still not too late to be early in the digitization of automotive commerce if they
act now. The key to success, in my belief, is switching the focus of sales and marketing
departments away from what is emerging from the factory gates to the behaviors of
existing and future customers. The car product cycle is understandably long due to the
huge amount of investment and research that goes into designing and building a new
model, but it is not this rhythm that should be dictating the pace of change in communication and retail strategies.
The role of my team is to help sales and marketing teams across the industry cast off
the shackles of the status quo to ensure automakers commercial businesses are fit for
purpose for Generation Y, who have grown up in the digital age and are forecast to make
up 75 percent of vehicle customers by 2025. We believe there are a number of key behaviors that will characterize success in automotive sales and marketing going forward
and I would like to share these thoughts.

52 Google Hugh Dickerson

The first of these behaviors is being prepared to take risks or, perhaps more importantly
in the motor industry, remove the fear of failure. At Google we think that if you are not
failing it means you are not setting ambitious enough goals. Our major projects are born
out of moonshot thinking, whereby we have identified a huge challenge and then tackled it with a radical solution together with breakthrough technology.

Take Risks
Notable examples of late include Project Loon. We have a vision that the whole world
should benefit from internet connectivity, but currently two-thirds of the worlds population does not yet have internet access. Project Loon is a network of balloons traveling on
the edge of space, designed to connect people in rural and remote areas, help fill coverage gaps, and bring people back online after disasters. More relevant to this publication
is our work in the field of driverless cars. Our goal is to help prevent traffic accidents, free
up peoples time and reduce carbon emissions by fundamentally changing car use.

Project Loon is a network of balloons designed to connect people in rural and remote areas

Today automotive marketers often find themselves constrained by the existing distribution model. The current unwillingness to risk destabilizing the fine balance between
all stakeholders leads to inaction that allows other new players to disintermediate prof-

Hugh Dickerson Google

53

itable areas of the business. Similarly, conservatively persisting with a media mix that
does not match the pattern of consumption of your audience seems more risky than
actually breaking the status quo and fully embracing digital media. Empowering teams
to be creative and take risks can be mitigated by ensuring you constantly listen closely to
the customer. They will always keep you on the right track pointing out if your program
requires iteration.

Wise up
There is lots of talk of Big Data and there is certainly no paucity of data available to auto
brands. The critical skill going forward is not only collecting all the signals your audience
is providing you but, perhaps more crucially, interpreting this data into actionable insights. As Niall FitzGerald, former Unilever CEO put it: Data makes your briefcase heavy
insight makes you rich. Listening and reacting to audience signals enables brands
to have conversations with prospects as they go through their complex multi-device,
multi-platform research journeys with a view to vehicle purchase.
Brands success at winning new customers and increasing loyalty will depend very much
on such conversations, as customers increasingly expect a more personalized digital relationship. To do this most effectively we work with car brands to work across the historically siloed after-sales, sales, finance, dealer and CRM departments. This ensures there is
one voice of the brand listening and responding with the most relevant response at the
moments that matter.
Another benefit of all the data provided by digital marketing is the ability to measure the
effectiveness of your media spending. This is clearly dependent on measuring all the KPIs
that truly measure actions that propel the customer down their route to purchase, rather
than only valuing KPIs such as brochure orders or test drive requests. Research suggests
these are no longer the core currency in lead generation.
As automakers increasingly move to programmatic digital media buying they have the
opportunity to manage real time personalized digital customer journeys. However, the
holy grail of truly understanding the conversion rates of both on and offline prospects
into actual customers by media source remains the key to ultimate success.

54 Google Hugh Dickerson

My last point brings me back to the rapid acceleration of technological change and how
this has transformed drivers into constantly connected consumers, time-poor but with
high expectations.

Move Fast
To be ultimately successful we will strive to help car brands to become quicker on their
feet and with this increased agility be able to keep one step ahead of their challengers.
Our research shows that over half of car buyers globally would contemplate buying online. With car sharing schemes and other innovative mobility solutions gathering pace,
automakers are going to have to be ahead of the pack, driving and benefitting from
these changes rather than suffering from the potentially more negative consequences
for existing business models.

We will strive to help car brands become quicker on their feet

The world is moving fast and automotive sales and marketing needs to catch up quick. I
am personally excited about the future for automotive and I am committed to ensuring
that OEMs grasp the opportunity that digital offers and use it to drive successfully to
2020 and beyond.
(Photos provided by Google)

Hugh Dickerson Google

55

Guard the control points


Rethinking OEM business models
to beat the risks of disruption

Photo: Gui Yongnian (123rf.com)

Juergen Laartz, Director, Business Technology Office, McKinsey & Company


Dominik Wee, Principal, Business Technology Office, McKinsey & Company
Matthias Kaesser, Engagement Manager, McKinsey & Company

56 McKinsey J. Laartz, D. Wee, M. Kaesser

Even with the rise of Toyotas lean production system, the automotive industry
and its business models have remained largely stable for decades. Most of todays
OEMs and tier-1 suppliers were already household names a generation ago, and
economic downturns and attempts at consolidation have had little or no effect
on the industrys basic line-up. Now, however, the automotive industry faces the
prospect of gale-force disruption. A combination of new developments has the
potential to change or even replace current OEM business models in the decade
ahead. To adapt successfully, OEMs will need to come up with strategies to guard
the most important control points the human-machine interface, car condition
data, and dynamic real-time information as they are the gateways to the redistribution of profits over the car ownership lifecycle.
Of the new developments in the automotive industry, the connected car and, to a lesser
extent, e-mobility have clear potential to severely alter todays automotive value chain.
While revenues from connectivity in all its facets might only account for a small share of
the total customer lifecycle spend, the connected car opens the door to todays digital
titans, who may be able to move in front of the OEM, directly facing the customer. Incumbent OEMs and suppliers could find themselves fighting a losing battle if they underestimate the risk and lack strategies to define, defend, or expand their competitive positions.
Assuming e-mobility continues to grow, OEMs face losing one of the most important differentiating components the internal combustion engine (ICE) developed and produced
in-house or with a tier-1 supplier. Furthermore, as a powertrain with an electric motor and
no gearbox is much less complex than an ICE, the spread of e-mobility will lower technological barriers to entry. New players as epitomized by Tesla may intensify competition
in an already fiercely contested market. What is more, they will almost certainly accelerate
the pace of change in the automotive industry. One early sign of the speed of change
potentially ahead is the large number of Tesla customers who switched from Model S to the
new and improved Model D within 24 hours of its market launch in October 2014, only two
years after the debut of Model S a pace of change so far only seen in consumer electronics.

Disruption all along the customer spend lifecycle


While the changes occurring may seem incremental so far, looking at the car lifecycle in
terms of total customer spending suggests that the base price is likely to be the biggest

J. Laartz, D. Wee, M. Kaesser McKinsey

57

driver of impact. To get a better idea of how disruptions and more evolutionary changes
could play out, we find it useful to consider their impact on customer spending pools
along the entire car ownership lifecycle (Exhibit 1).
Exhibit 1

New car (base) price. Car connectivity has the potential to shift significant market shares
between OEMs. In McKinseys 2014 Connected Car Consumer Survey, one new car buyer in five would switch brands to get better connectivity features. The emergence of
third-party connectivity solutions, such as the Open Automotive Alliance and AppleCarPlay, has the potential to level the playing field among automotive OEMs for infotainment and other software features.
Operations. Powertrain innovations will be pivotal. Not only because customers increasingly seek low-consumption vehicles, but also because it will be crucial for OEMs
to master new powertrain technologies in order to meet upcoming CO2 regulations.
E-mobility/electric powertrains currently seem to be the most viable option.

58 McKinsey J. Laartz, D. Wee, M. Kaesser

Insurance. Insurance is a potential source of additional revenues for OEMs given their
privileged access to connected driving data that supports pay-as-you-drive and pay-howyou-drive models.
Maintenance. Vehicle upkeep and repairs will remain steady as a customer spend pool,
but connected services will likely open up new or better ways for non-OEM parties to grab
a bigger piece of the revenue stream. For example, suppliers have launched apps that
not only detect maintenance needs but also suggest a maintenance service center to
the driver, which clearly opens the path to directing customers away from a given OEMs
authorized service centers.
Dealer margin. Digitization revolutionizes sales and service processes, and other industries
are leading the way in innovating their retail formats to integrate online and offline shopping. Most new car buyers still rely on traditional dealers and will continue to do so, especially in the decision phase and for the all-important test drive. As digital and cyber-physical
systems become more widespread, however, OEMs will need to transform todays dealer network into a profitable multi-format sales channel that combines offline and online strengths.
Connectivity hardware. There is also the increase from the underlying connectivity
hardware, a spend pool that is expected to grow from EUR 29 billion today to about EUR
155 billion in 2020. However, this pool will stay part of the new car price. As we expect
customers will not increase their spending over a five-year car lifecycle, overall revenue
from connectivity hardware for the OEM is not expected to increase either: higher rates
of adoption will just be offset by eroding feature prices. Furthermore, such revenue is at
risk of being reduced or taken over by consumer electronics players.
Drivers time and attention. This spend pool is enabled by the growing connectivity in
the car. We expect a fifteen-fold increase until 2020 in app- and content-related revenues
over the lifecycle, mainly through usage-based subscription payment models. However,
customers will likely be loyal to their existing app/content providers, thus limiting OEMs
ability to capture part of this revenue stream to around 50%, even in an optimistic scenario.
Infrastructure. The cost of road repairs will remain in the taxpayer domain in the medium term. However, for the connected car and autonomous driving, which we expect to
see from 2017 onwards, OEMs might need to support investments in digitized infrastructure, such as the algorithmic optimization of driving patterns. This task is too big and too
critical for city or state-level governments to orchestrate alone.

J. Laartz, D. Wee, M. Kaesser McKinsey

59

As these points suggest, we see clear risks that new attackers will force OEMs to accept
thinner margins along the value chain.

Asserting control over control points


We believe that ownership of a number of control points the pieces of hardware and
software that give drivers, passengers, or other parties access to a cars features or to the
data gathered about its operation will determine the future distribution of revenues
and profits. Industry players may regard control points as enablers, and they need to
define their ultimate distinctive sets of connectivity offerings, which can be features or
services or both. It may also be crucial to probe and experiment with innovative ideas,
possibly by cooperating with external providers as well as by setting up preferred partnerships or multi-partner ecosystems.
Connectivity has the potential to fundamentally change the way profits are distributed
in the automotive value chain. In understanding upcoming dynamics, we can derive
lessons from industries that have gone through similar disruptions already. In the mobile
phone industry, for example, the shift from feature phones to smart phones triggered
a redistribution of profits from hardware to software, with the key determining success
factors being the control of app stores and advertising platforms. We call these success
factors control points. Applying this lens to the automotive value chain, three major
control points emerge:
Human-machine interface (HMI). While lagging OEMs can make a step-change in improving their competitiveness by incorporating a third-party connectivity offering, leading OEMs will need alternative sources of differentiation in HMI, for example, even larger
screens, multiple screens, innovative interface concepts, and large-scale augmented reality experiences.
Car condition data. Controlling this data will be a key requirement for offering maintenance and insurance services. Although OEMs currently have privileged access to this
data, third-party providers could convince consumers to install OBD-II dongles to create
a superior user experience.
Dynamic real-time geo-information. Due to the effort required to maintain granular
map data, only three major players have a significant role in the market on a global scale.

60 McKinsey J. Laartz, D. Wee, M. Kaesser

Access to granular map data will also become one of the critical enablers of (semi)autonomous driving.
Other lessons that have proved valuable are to anticipate customers priorities instead of
relying on a current value proposition (i.e., Apples iPhone strategy); to manage IT as if it
were a profit center instead of a mere support function; and to foster industry-wide and
cross-industry alliances/partnerships instead of playing lone ranger.

Operating at the speed of thought


Both connectivity and e-mobility have in common that they demand a dramatic compression or flexibilization of product lifecycles, a challenge for an industry used to lifecycles of five to seven years. And the next disruption is already knocking: beyond the
industry dynamics that connectivity has already unleashed, it is also already or will soon
be unlocking the right technologies to make the fully autonomous car the signature
modern convenience of the 2020s. Autonomous driving will be the true revolution in the
way we conceive personal mobility and will have immediate and far-reaching effects in
multiple dimensions not least in increasing personal productivity by eliminating active
driving as a daily chore.
Looking ahead, twenty years out, the new arena for automotive OEMs and tier-1 suppliers will include names familiar today but in configurations so different as to be nearly
unrecognizable. Some OEMs may succeed in fast-forwarding to a permanently higher
metabolic rate. Others, particularly competitors that opt to wait and see, however, risk
being completely swept aside. It will be forward-thinking, active, adaptive, and collaborative approaches that help automotive OEMs avoid the pitfalls and learn to thrive and
drive their success in the digitized world.

J. Laartz, D. Wee, M. Kaesser McKinsey

61

"Big data plays a huge


part in delivering a better
customer journey"

Stephen Kneebone is vice president and chief information officer at Nissan


Europe. He is also in charge of business transformation at the European division
of the Japanese automaker. Kneebone spoke to automotiveIT on the sidelines
of the automotiveIT International Congress in London this year.

62 Nissan Stephen Kneebone

Lets start with a general question:


What are the major trends in the auto
industry today?
I think, first and foremost the major driver of change were seeing is the changing
customer. We are now competing in a
general retail environment. So we are not
just competing with other automakers, we
are competing with general retailers. And
if we look at todays customers, we see
that they are extremely technology-hungry and extremly well informed. They do
a lot of their research online. And they are
quite willing to share that information, the
good as well as the bad. For us that means
we need to deliver a customer experience
from the first touch on the internet all the
way to the dealer and the after-sales environment. Thats the key challenge for us.
Is that particularly difficult? Does it require a different mindset and does the
organization have to change?
All of those things. First and foremost it
meant we had to take an end-to-end view
of the customer experience and be really clear about what that means. We also
have to be clear about the touchpoints
and the experience we want the customer to have and what we want them to
come away with. Technology plays a huge
part in that. There are some organizations
that have looked at online as just another channel to market. Some of them have
failed and paid the ultimate price for that.
So for us, its absolutely key that we take
the customer experience on board, en-

sure technologies to deliver to their digital


customer journey and that we look at it in
a slightly more comprehensive way than
just another channel to market.
Lets talk about big data, which is one
of the big new trends across all industries. What role does big data play in
providing Nissans customer journey?
Its important from a number of different
perspectives. The more insight we have
into the customer, the better we will be
able to offer them the right type of services and support. So for us big data plays
a huge part in enabling a more consistent
and coherent customer journey.
So how exactly will Nissan use big data to
meet the demands of tomorrows driver?
The signature for Nissan is Innovation
that excites. And that isnt just a strapline.
It is something that we really strive to deliver. A good case in point is the Leaf, our
all-electric vehicle. This is a product that
has been on the market for some years
and weve so far sold 110,000 of them
worldwide. From the big data perspective, the Leafs onboard systems allow us
to really understand how the consumer is
using the vehicle. We get insight into their
driving patterns, their charging behavior,
how they drive in terms of performance.
And we can really make sense of all that
information. We can actually feed it back
to the product development process and
make a number of improvements, such as
the ones that are in the new Leaf.

Stephen Kneebone Nissan

63

How important is information and


communications technology in enabling Nissan to operate smarter and
more efficiently?
Its an essential component. I have a slight
advantage because I have responsibility
for IT as well as the business transformation office. Operationally, our information
systems underpin most if not everything
we do these days. Thats not just in terms
of delivering capabilities, but also with regard to delivering them more efficiently.
Over the past six years we have been on a
huge push to really drive down the costs
of running the business infrastructure and
applications. In this area we have reduced
costs by 35 percent. Thats money we can
invest in business transformation so we
can move forward. IT underpins most of
that transformation.
Final question: With connected cars
becoming a new standard and quick
upgrades a must, how do you speed
up the development cycle of todays
car, which is essential in a world where
most other industries move a lot faster?
I think first and foremost we need to integrate the telematics and the onboard systems components into the product-development lifecycle. We must recognize that
its a formal part of that process and not
an add-on; its a core part of the product
in the service proposition. The software
world and the product engineering world
are coming together and that does present us with some significant challenges.

64 Nissan Stephen Kneebone

Were not just talking about the engineering perspective but also about the support
and service we provide to the customer.
Well want to make changes to onboard
services much more frequently and take
advantage of how quickly technology advances. That remains a challenge in terms
of culture and discipline. The service we
provide needs to be more in line, perhaps,
with whats customary in consumer electronics than in the traditional automotive
realm.

Interview by Martyn Warwick,


TelecomTV, for automotiveIT
www.telecomtv.com
Photo provided by Nissan

Stephen Kneebone is CIO of Nissan


Europe and also is in charge of the
Business Transformation Office and
External and Government Affairs.
Kneebone joined the IT operations of
the Japanese carmaker in 2006. His
department supports Nissans design,
manufacture, distribution, retail and
after-sales operations in Europe, Russia, the Middle East and Africa. Kneebones background is in engineering
and business transformation. He has a
PhD from Coventry University in the UK.

Stephen Kneebone Nissan

65

" You also have to enable


connectivity on existing cars"

As president of the non-profit US Connected Vehicle Trade Association


(CVTA), Scott McCormick is at the center of one of the biggest transformations taking place in the automotive industry. McCormicks organization
wants to make travel safer and more efficient through the use of new
connected technologies. He spoke with automotiveIT about the concrete
benefits of connecting cars, the time it takes to achieve tangible results and
the different priorities of Europe, Asia and the US.

66 CVTA Scott McCormick

Mr McCormick, please describe briefly


the benefits you see in connecting cars.
There are a myriad of benefits. The primary
one is safety. Think about cars that receive
and send information on road and traffic
conditions from and to other cars on the
road. The second comes into play when
public authorities are involved. For example, the Department of Transportation will
have the ability to manage traffic flows
better and avoid congestion and traffic
jams. They can also push out better warnings if they have more data and help avoid
accidents by getting salt on the road early
where it is necessary. For now, we already
know about congestion through traffic
message services but future connected
services will tell you what the situation will
look like when you get there in real time
via the connected infrastructure. The third
benefit will be commercial services, which
provide information that is useful in the
right context.
Please provide some examples.
If I am interested in buying a camera and
there is a sale in a shop somewhere on my
route, I would appreciate knowing this. But
of course contextual services are not limited to retail. Think about parking at a sports
event or conference venue. Connected
cars can also be an enabler for new safety,
mobility and commercial services. Patient
telemetry from the ambulance is an example. Such services and other similar ones
can be provided through a connected car
infrastructure.

And are you happy with the progress


made to date? Things, to us, still seem
to be moving quite slowly.
Weve now been working in this space for
15 years and its a long path. We started in
2000 with all the automakers with a central question: How to connect? In 2004, we
started development of DSRC (Dedicated
Short Range Communications). It is a long
process to harmonize and socialize standards globally. We need proper testing
of the kind of communications hundreds
of different cars are engaged in. It is also
a long path for automated driving, which
has to rely on connected-car services. Cars
can have this technology on board by
2017 or 2018.
What are the biggest barriers that still
need to be overcome before cars can
talk to each other and can talk to the
environment?
You have to take care of the security of
the system, as you will open the gateway
into the vehicle. You can compare it with
a computer operating system. If you open
it for external connections you have to secure it. Very good firewalls inside the cars
are needed, as there is a risk of people trying to do malicious things with connected cars. Another major challenge is data
ownership and privacy. There is no comprehensive privacy law in the US. But one
has also to ask what knowledge can be
derived from connected car data such as
origin and destination of travel. We already
give up that information via our cellphone

Scott McCormick CVTA

67

and other communication devices we carry with us all the time. Another obstacle
on the road to car connectivity is the pace
of deployment. It will take eight years to
replace just half of the cars on US roads
today, so if you supply every new car with
connectivity this wont be enough. You
have to enable the functionality also on
existing cars by adding a device or offer
smartphone-based services.
Is connectivity an area where carmakers are more inclined to work together than on other issues?
The car manufacturers have to work together. There is no space for three competitive consortiums. Also no automaker has
the resources to do everything by itself. Of
course they can and will differentiate their
services. The look and feel will be different
from maker to maker. We currently have
the Connected Car Symposium and AUTOSAR and the VII (Vehicle Infrastructure
Integration) Consortium. The VII Consortium should be in the lead.
Who is driving the connected-car revolution: automakers, IT companies, consumers?
The IT companies are late to the party.
Data analytics companies are participating in the development of the connected
car rather than driving it. The car is not a
cell phone accessory. The user interface
is different and the focus has to be on
easy-to-use controls. In the two seconds
you spend looking at something on your

68 CVTA Scott McCormick

smartphone the car travels a distance of


170 feet. Connected car is not an app on
your smartphone; it is about automating
functions in the vehicle.
Is the situation in the US different from
Europe and Asia?
Yes, the US is focusing on vehicle-to-vehicle (V2V) because there is a recognizable
benefit. Vehicle-to-infrastructure (V2I) is
much more expensive. Europe is more
focused on V2I. Think about densely populated areas in Europe and parts of Asia
versus the vastness of the US Midwest.
Geography changes the equation. Of
course we also have other differences, for
example with local warnings of extreme
weather conditions. Think about tornadoes versus snow or even sand storms in
other parts of the world.

Interview by Thomas Koehler


Photo provided by CVTA

Scott McCormick is president of


the US Connected Vehicle Trade Association (CVTA), a non-profit business
league established to facilitate the
interaction and advance the interests
of the entities involved in the vehicle
communication environment. He has
degrees in mechanical and aerospace
engineering, an MBA and he did doctoral research in artificial intelligence.

Scott McCormick CVTA

69

"Our cars have been sending


streams of telemetry data
for many, many years"

In Formula 1 racing, having large amounts of data on a race cars performance is


key. But whats even more important is to have the data available immediately.
Michael Taylor, IT/IS director of the Lotus F1 Team, explains how he manages
this side of the business.

70 Lotus F1 Team Michael Taylor

Lets start with a general question:


What are the big trends that you see
in the automotive industry and on the
racing side in particular?
In Formula 1 racing the biggest trend
were focusing on this year is the major
engine-related regulation we faced. Pre
2014, a Formula 1 race car was deemed
to be a very large beast with a non-turbo-charged large V8, 2.4 liter normally
aspirated engine. These engines would
have a small element of energy recovery
built in, but overall, they werent relevant
to the consumer car industry. For the 2014
season we had to make some significant
changes. We now run a hybrid power
unit with a very small 1,600 cc V6 internal
combustion engine, complemented by a
a large turbocharger and equipped with
energy recovery systems both from a
heat and a kinetic perspective. Formula
1 cars are hybrids, which are much more
relevant to the mainstream industry. We
obviously work very closely with the consumer side of the industry.
Is it correct to say that some of the science and technology applied in Formula 1 crosses over into mainstream cars?
Yes absolutely. We talk about Formula 1 being a hotbed of innovation and over many,
many years there have been innovations
that began life in Formula 1 and now feed
down into the consumer space. For example: traction control, anti-lock braking systems, semi-automatic gear boxes, launch
control. All of those very, very clever things

are innovations that had been around for


a long, long time. When you talk about
connectivity, Formula 1 is very much a
data-centric sport. Our cars have been
sending streams of telemetry data for
many, many years. Our car now has more
than 150 sensors on board. When its on
the track, we generate in excess of 25mb
of data per lap of acute information. Our
engineering groups use that data in real
time to make business-critical decisions
about the running and optimization of
the car. So the connected car really is not a
new thing for us and theres probably a lot
of telematics experience that we can feed
into the consumer space. The same is true
for our experience with the power units,
which we are optimizing. Were making
sure that all this is relevant for the entire
industry.
You are the IT and IS director of the
Lotus F1 Team. What do you actually
do on daily basis?
My role is very simple. I lead the group that
looks after the technology and hopefully
some of the technology innovation we
develop for the team. It goes across the
entire business. We focus on two key areas: One is the factory systems we use
for the design, simulation and manufacturing of the car. The other is the trackside, where we actually run the car. Here
we provide traditional service support:
capacity, availability, traditional networking, data centers, storage, those types of
things. The other half of my group focus-

Michael Taylor Lotus F1 Team

71

es on being creative and innovative. This


is where we create applications and these
are key. This is where the value is. We want
to provide applications to our engineering
group, so that it can make those sub-second decisions that are key in giving us the
competitive advantage were looking for.
Our remit extends across the factory and
track-side environments.
Can you explain a bit more where your
IT operation fits into the company as a
whole?
Id really like to say that IT is on the forefront of the technological innovation that
we see in the car, but we are very much
seen as a support or enabling service.
Were definitely moving away from a pure
support organization and are becoming
more of a business-enabler. Technology
plays a key part in everything we do. My
groups responsibilty is to ensure that our
engineers and designers and back-office

72 Lotus F1 Team Michael Taylor

support staff have the right tools at the


right time to make the right business decisions. And of course the whole focus is to
make the car go faster.
We talked about the connected car,
we talked about sensors and we talked about telemetry, but what kind of a
role do new big-data analysis technologies play in making a Formula 1 team
successful? Big data must be a big deal
for you.
Absolutely. Data is king for us. We are
collecting data now on all aspects of our
business and not just on the car while its
on the track. Take simulation, for example.
Its very important that we can simulate
the performance of the car. Another area
is the manufacturing space, where you
have rapid prototyping, 3D printing and
improvements in material science. All
these provide the ability to very quickly
and easily build solutions and parts.

How do IT and communications technologies help shape the Formula 1 car


of tomorrow?
This, again, is all about the data. The role
of IT and communications is really to enable and make it much easier to make informed business decisions. That requires
richer information that you have available
as quickly as possible. One of the things
thats important is to be able to correlate
the different data sets. Thats very challenging. Its similar to what you see in
the consumer space, where people really
want to understand their customer. Our
customer, for all intents and purposes, is
the race team. So were talking about understanding how the team wants to use
the product, and how to maximize and
optimize the use of the product. We support the team by refining designs, improving the car and improving connectivity so
the team can make those well-informed
sub-second decisions that are crucial in
Formula 1 racing.
During the season, there is a Grand
Prix every second week in a different
part of the world. You obviously need
the same technology available everywhere, but doesnt the quality of networks and availability of bandwidth
vary from one place to the next?
It absolutely depends on where we are.
There are challenges in particular in some
of the newer Grand Prix venues and tracks
that are far away from a city, for example.
Even with the cost of bandwidth dropping

significantly, there can still be an issue of


how much bandwidth we have available
to us. We look at the risk-reward scenarios
and always have to strike a balance between what we spend on bandwidth and
how much we use it.

Interview by Martyn Warwick,


TelecomTV, for automotiveIT
www.telecomtv.com
Photos provided by Lotus F1 Team

Michael Taylor is the IT/IS director of


the Lotus F1 Team. He has been part
of the team for the past 11 years and,
during that time, has developed a
detailed business-based understanding of all the F1 Teams IT needs.
Taylor oversees all information systems that help make the Lotus F1
race car successful. His responsibilities range from determining strategic
direction within the teams technology infrastructure, to managing existing IT-related partnerships and, when
appropriate, developing new ones.

Michael Taylor Lotus F1 Team

73

The Experiential Path to Automotive


Innovation
By Olivier Sappin,
VP Transportation & Mobility,
Dassault Systmes

Olivier Sappin, VP Transportation & Mobility Industry, has been working at


Dassault Systmes since 1995. He started as an application engineer for design and styling solutions, taking responsibility of the automotive unit in 2003.
Since 2011, his organization delivers Industry Solution Experiences for vehicle
manufacturers (Cars, Trucks, Buses, Trains, Motorcycles, Racing Cars) and suppliers.

74 Dassault Systmes Olivier Sappin

The best way to predict the future is to create it, US President Abraham Lincoln
once said. So, as we enter Industry 4.0, a new era of cyber-physical systems, the
internet of things and connected processes, what is the future that we will create
in the automotive space over the next 10 to 15 years?
Given the evolution of mobility, history teaches us to think boldly about its future. Just
three generations ago, who would have predicted that we would be able to travel anywhere, anytime and with minimal effort? Rail travel opened up a whole new world of
connectedness in the mid-1800s, only to be superseded little less than half a century later by the automobile for the masses. Societies accustomed to traveling by buggy, bicycle
or foot had to reimagine their worlds.
As we envision the mobility of the future, will we be able to both create and produce
our own custom car? Can we go beyond a zero-emission vehicle to a mode of transport
that actively supports environmental health and balance? What about vehicles that are
so smart they literally cannot be crashed and that can even contribute to personal and
urban safety?
What if the main producers of mobility end up as governing bodies that abolish sound,
smells or other factors deemed detrimental to their community, similar to non-smoking laws? Or, as one futurist predicts, will we nearly do away with the need to travel as
nano-bots implanted in our brain deliver full-immersion virtual reality environments?
One thing is for certain, with the immense societal and emotional impact of mobility and
with the increasing rate of technological change, the automotive industry will evolve at a
pace like never before. At Dassault Systmes we are conscious of our role in this change
and we have architected our offering with the purpose of building a future open to
choice and backed by security. And, we make it available in a way that opens the path to
the future now, regardless of where the customer currently stands. Our contribution to
the industry is based on three fundamental assumptions for achieving the possibilities
we can imagine in Automotive 4.0
Place the customer experience in the center of innovation
As we enter the age of experience across the economy, the automotive industry, or
more aptly the mobility providers, will also broaden their scope. It will no longer be
about producing and marketing a product or a brand. It will be about creating mobility
experiences around how consumers use and interact with the vehicle.

Olivier Sappin Dassault Systmes

75

With autonomous vehicles anticipated to be available to the public as soon as 2020,


the opportunity to create unprecedented driving experiences grows tremendously. Passengers can watch movies, eat dinner or work with other people among multiple other choices. This requires a comprehensive understanding of consumer capabilities and
needs beyond driving, making mobility providers forge new business and technology
partnerships while developing new industry and technology standards.

AKKA Link&Go Ergonomics Simulation

To lower the risk of innovation in this new world of mobility experience, customers will
be strongly involved in the creation process up front via lifelike 3D virtual experiences.
The ability to run dynamic and immersive clinics in a virtual environment at the design
stage will offer new ways for understanding and validating consumer desires around
mobility. Furthermore, leveraging massive amounts of unstructured information (Big
Data) will catalyze the creation of customized mobility experiences. In-vehicle sensors
alone, expected to reach 200 per vehicle by 2020, provide new levels of real-time feedback so that technical and business people will be able to interpret customer behavior.
All of this information, meshed with external data from online social networks, will be
used to continually improve driving performance and provide the desired experience.
Visteon has already leveraged a 3D-enabled social innovation platform to eliminate formal organizational barriers and gather insight in the creation of its e-Bee concept vehicle.
This reduces development time while leveraging both internal and external communities to drive a company culture of innovation and knowledge-sharing.

76 Dassault Systmes Olivier Sappin

To understand the full impact of innovation, manufacturers will extend beyond the physical and technological aspects of the vehicle to simulating functional and behavioral
aspects. Furthermore - the vehicle, which is now a smart system, will be simulated within
the scope of larger systems such as traffic, energy and even community- and homegrids. All of our automotive customers have started to build their innovation on systems engineering. AKKA Technologies concept car Link&Go is proof of how innovators
in the automotive supply chain can marry advanced systems engineering know-how
with social innovation to deliver impressive new perspectives for self-driving mobility on
urban roads.
Become agile by managing the increasing complexity
This may sound contradictory. But in the era of Automotive 4.0, automakers will be able
to master the immense backend complexity of the development and manufacturing
processes while simplifying the user experience across the enterprise. The first method
to achieve this is integration and in todays IT environments, where many isolated applications have grown over decades, the opportunities are numerous. Integrating design
and engineering to preserve design intent. Integrating engineering and simulation for
cost-performance tradeoffs and for product compliance. Integrating mechanical, software and E/E development for an
optimized development architecture. Integrating test and validation
with marketing and sales to meet
requirements. Every part of the organization will benefit from intense
integration, connecting people, information and processes in a single,
intuitive and collaborative environment.
AKKA Link&Go simulation of its u-turn function
The next key to managing complexity is modularization, ideally by implementing a
modularization strategy again requiring integration of various disciplines from requirements over systems design, detailed engineering, and testing to manufacturing.
The integration will comprise the virtual and physical world: Integrated hardware and
software testing, integrated manufacturing planning and operation, etc. whereby smart,
modular objects will implement the behavior of complex systems. The base technology
and concepts are available today, and what will follow is solutions in support of concepts
like the Resilient Factory or Adaptive Logistics. Dassault Systmes recent acquisitions of

Olivier Sappin Dassault Systmes

77

APRISO and QUINTIQ are providing the capability to build flexible shop floor and logistics
processes, leveraging the complex information systems with which they integrate. The
next step implementing intelligent, self-adaptive systems in manufacturing and logistics will only be limited by how far the integration and modularization strategies will
reach. If 3D printers are able to handle a portion of the spare parts production, what will
be the impact on product design, packaging and commercial aspects?

AKKAs Technologys cloud-based 3DEXPERIENCE user interface

Lastly, the management of complexity has another dimension. Just as mobility users will
gain the ability to personalize their experience, the mobility creators will also (need to)
benefit from a workbench that is more flexible, attractive, intuitive and customizable to
the individual needs. High levels of data security, technical precision and performance of
the product development tools and applications will be the foundation of a more inspiring work environment that attracts any generation of innovators. Cloud solutions lead
the way, as they enable the organization of agile, scalable IT environments that bring the
world-best capabilities to anyone, whether a single expert or globally operating corporations with tens of thousands of users.
Assume greater responsibility
Companies are accustomed to acting as responsible corporate citizens, but these responsibilities will grow with the capabilities of tomorrows technologies. Environmental

78 Dassault Systmes Olivier Sappin

aspects have long been part of the automotive industry concerns and todays drivers
expect delivery of fuel-efficient, eco-friendly vehicles without sacrifice to performance.
With varying compliance mandates across the globe, mobility providers will use a platform that manages compliance complexity and enables modeling and behavior simulation that shows the energy balance and potential impact of the vehicle design on the
environment.
Increasing passenger and pedestrian security will continue to be a driving element for
future innovation and we see how this focus is growing rapidly. This is why Target-Zero-Defect approaches are (and will continue to be) so high on the industry agenda today. They address faultless and incident-free operation around corporate processes and
data. And what about the leveraging of customer and customer-use data? With the array
of in-vehicle and exterior sensorics available, the industry may be expected to actually
contribute to a persons social well-being and health. These requirements could begin by
recording a passengers state of health and - according to the situation - emit calming
scents into the vehicle, start a massage that prevents backache or blood clots, or immediately connect to a medical specialist in case of emergency. Generating and processing
the respective personal data will at least in data-sensitive countries require passengers to feel a great amount of confidence. Mobility providers brand promise and associated dimension of trust will have to reflect business models that will take the pleasure
of driving and advantage through technology to a new level.
Looking forward
We are not clairvoyants who can predict the future of mobility. However, we are certain
that integration and the impact of social innovation will be fundamental enablers for
further time-to-market and productivity gains by mastering the exponentially increasing
complexity of mobility innovation. More connectedness within vehicles and between
vehicles and their environments, as well as continuing demand for individualized mobility will provide new opportunities for automotive innovators to create differentiated
customer experiences. Virtual work environments that are realistic, collaborative, intelligent and intuitive will be the innovation labs for creating these experiences. Todays
technologies although constantly evolving already build a bridge to provide the level
of collaboration required for operating tomorrows Automotive 4.0. We have architected
our inclusive and open 3DEXPERIENCE platform and our Industry Solution Experiences
to connect imagination with action, enabling innovation both today and tomorrow. We
look forward to creating the future of the automotive industry with you.
(Photos provided by Dassault Systmes)

Olivier Sappin Dassault Systmes

79

" Collaboration with other


industries is a big trend;
we cannot invent
everything ourselves"

Continentals Otmar Schreiner discussed the changing face of the car


industry with automotiveIT on the sidelines of the automotiveIT International Congress in London. In the interview, Schreiner, director R&D Interior
Electronics Solutions at the German supplier group, also talks about the new
technologies the company is developing. And he makes some predictions
about tomorrows cars.

80 Continental Otmar Schreiner

Mr. Schreiner, briefly describe the big


trends in the auto industry from your
perspective.
Tomorrows cars will be more comfortable,
safer and, of course, more efficient. Those
are the three main trends and at Continental our target is to develop new technologies to improve in all these areas.
Can you explain what the focus of
activity is in your Interior Electronics
Solutions division?
Within Continental, we have of course
the rubber group, which makes tires. And
we have the automotive group, which includes chassis and safety systems, powertrain, ContiTech and Interior. Within the interiors unit, IES takes care of electronics in
the car. That includes head units, navigation systems, radios, instrument clusters,
head-up displays and the like. Im responsible for the pre-development systems, so
the new products that will come out.
Electronics and software are redefining
the car. Where is this big trend going?
Just about all of the automotive innovations of recent years have been electronic.
Now, theyre increasingly software-based.
Electronics in the car are getting more
and more intelligent. So we keep getting
smarter cars. With external sensors built
into cars such as radar and cameras - you
can look outside and create a model of the
cars surroundings. The next step is to use
cameras and sensors to build a model of
the driver, so we can really build a smart-

er car. And after that, the next step is to


add information from back-end servers to
complete the picture.
So connectivity has many facets?
Exactly. At the moment, a luxury car has
up to 90 electronic control units and the
first order of business is to network all the
electronics in the car. The next step is to
connect to the environment of the car and
to the backend and to establish car-to-car
and car-to-infrastructure communication.
Theres a lot of talk about connected
cars, autonomous vehicles, machine to
machine communication and, above
all, big data. How does all this play out
at Continental and whats your role and
the role of IES in the development of
these new technologies?
Our goal is to develop new, smarter functions in the car to make it more comfortable and safe. We also want to make use
of the data available. We believe that with
this data, we can enrich the functionality
of in-car systems. For example, todays
navigation systems are not always up to
date because many of them are running
on a dvd inside the car. Once you have
permanent connectivity, you can easily update the systems and get real-time
traffic information. In the future, we will
also have more accurate data to improve
safety systems. Todays radar looks maybe
200 meters in front of the car, but it cannot
look around the corner. With fresh data
from other cars and from the infrastruc-

Otmar Schreiner Continental

81

ture coming through a backend server, we


can really improve these systems.
How is Continental itself adapting to
the transformation of the auto industry?
As a tier 1 automotive supplier we traditionally listen to our customers, the car-

makers. Of course, given the big trends


today, we are also more and more looking
at consumer electronics and the end-consumers. Weve established so-called trend
antennas in Germany, Europe, Asia and
the US. These units look at upcoming
trends in local markets. Open innovation

Schreiner: With more data, we can enrich the functionality of in-car systems

82 Continental Otmar Schreiner

or collaboration with other industries such


as the IT industry is a big trend. We cannot invent everything ourselves and need
to work with other technology suppliers,
which includes startups. How to integrate
the right stuff from various industries is a
big opportunity and a big challenge.
Can you tell us something about the
role of IT in making Continental smarter and more efficient?
Thats a big topic. We have more than
180.000 employees in more than 40 countries, so a good IT infrastructure is crucial.
For logistics and production we obviously require a strong IT infrastructure. But a
big new development is also that we have
started an internal social network that allows all employees to contribute. Thats a
cultural change within the company. Were
moving from a top-down to a bottom-up
approach to internal information. Such a
network approach, I think, is the only way
you can manage such a huge and complex organization in the future.
Finally, please look ahead 20 or 30
years and tell us what kind of cars we
will be driving then.
Connectivity will play a big role. The car
will be part of a global network. We may be
calling it a digital companion and the car
will be just one part of your digital lifestyle.
Cars will be safer and automated driving
will play a big role in this respect. I believe
you will be able to select your drive mode.
When youre stuck in traffic on a highway,

you can decide its time for the car to


take over the controls. But if you want to
drive yourself, you can take over and set
the vehicle to, for example, a sporty profile. Adaptive technologies, which let you
adopt different driving modes, are one big
trend for the coming years.

Interview by Martyn Warwick,


TelecomTV, for automotiveIT
www.telecomtv.com
Photos by Silvia Steinbach

Otmar Schreiner, director R&D Interior Electronics Solutions at Continental, is responsible for new system
solutions and programs within the
interior division of the German automotive supplier group. Since 2012, he
has also headed the Interior Electronics Solutions division in France, with
a focus on hightech low-cost components and systems. Schreiner has
a degree in mechanical engineering
and business administration. He studied at Darmstadt Technology University in Germany and UC Berkeley,
California. He joined Continental in
2005.

Otmar Schreiner Continental

83

Customer privacy and


the connected car

Photo: Natallia Khlapushyna (123rf.com)

By Thomas R. Koehler

In May 2011 a newspaper in the Netherlands revealed that TomTom, the


manufacturer of aftermarket navigation devices and traffic services, had sold
data to public authorities in the Netherlands. The police subsequently optimized the locations of their speed traps based on this information. There was
a major uproar in public opinion and TomToms PR department had to work
hard on its damage control.
This incident was the first to put the spotlight on a topic heavily discussed
today: the use of consumer data generated by connected cars. Especially in
Europe people are more and more concerned about giving away their personal data to corporations. The Germans lead the way here, but there is much
more to it than typical German Angst. Most Silicon Valley companies have
focused on analyzing customer data as a business model, but mostly they
dont bother to tell the users. Instead, they kept playing down the issue for
years and in consequence have already suffered a major backlash in customer confidence even in the United States.

84 CE21 Thomas R. Koehler

In November, 2014, the worlds major automakers decided to address the privacy issue
proactively. Nineteen automotive companies from the US, UK, Japan, Germany and Sweden agreed on common principles for collecting, analyzing and sharing of consumer
and driving data. These principles were agreed upon by the members of the Alliance of
Automobile Manufacturers and the Association of Global Automakers. They are listed on
the www.autoalliance.org web site as follows:
Transparency: Participating members commit to providing owners and registered
users with ready access to clear, meaningful notices about the participating members
collection, use, and sharing of covered information.
Choice: Participating members commit to offering owners and registered users with
certain choices regarding the collection, use, and sharing of covered information.
Respect for Context: Participating members commit to using and sharing covered information in ways that are consistent with the context in which the covered information
was collected, taking account of the likely impact on owners and registered users.
Data Minimization, De-Identification & Retention: Participating members commit
to collecting covered information only as needed for legitimate business purposes.
Participating members commit to retaining covered information no longer than they
determine necessary for legitimate business purposes.
Data Security: Participating members commit to implementing reasonable measures to protect covered information against loss and unauthorized access or use.
Integrity & Access: Participating members commit to implementing reasonable
measures to maintain the accuracy of covered information and commit to giving
owners and registered users reasonable means to review and correct personal subscription information.
Accountability: Participating members commit to taking reasonable steps to ensure
that they and other entities that receive covered information adhere to the principles.
These principles are an important first step for the protection of consumer privacy rights.
They also give automakers sufficient flexibility to address their needs and wishes in the
ever growing field of consumer data collection and usage. From an outside perspective

Thomas R. Koehler CE21

85

the principles outlined here cover much more than one would expect from a tech company. The European influence can be seen throughout the whole agreement.
However, from a customers point of view, the agreed-upon rules leave a lot to be desired. For example, just think about data minimization and data retention for legitimate
business purposes. Most likely, this will open the door for companies to store data on
driving habits even when the customer may not want this information captured at all.
Of course, all carmakers have to abide by the law and have to hand over data if forced
to do so by a public warrant. Customers and automakers both would, in such an event,
be better off having stored no data at all in the first place. After all, the driver could get
a speeding ticket on the basis of connected-car data. And the automaker may incur
sizable administrative expenses as government agencies request more and more access
to connected-car data.
Consumer fears of total surveillance are growing and automakers need to be sensitive to
this. That means adopting a proactive approach to privacy that goes beyond the common principles outlined here. When consumers have to deal with questions of sharing
data with governmental agencies, insurance providers or other companies, automakers
need to be their allies. With cars only now getting connected, this is the proper time to
lay the proper groundwork. The acceptance of all connected car services is at stake. It will
be crucial for long-term success to get the approach right from the start.

Thomas R. Koehler is the author of numerous


books on internet and technology topics. In his
2014 book The digital transformation of the
automobile, (http://www.automotiveit.eu/digital-transformation) he identifies and covers the
megatrends that will be game changers for the
automobile industry: connected car, internet of
things, big data, cloud computing and autonomous driving. Koehler also is the founder of CE21
(http://www.ce21.de), a Munich-based strategy
consultancy that advises companies building
data-driven business models.

86 CE21 Thomas R. Koehler

Imprint/ Contact

Book title

Contributions from

Automotive 4.0 The Digital Revolution

automotiveIT international, Arjen Bongard

Views from the Top

Continental Automotive GmbH, Otmar Schreiner

Volume 1/ 2014

CVTA, Scott J. McCormick


CE 21, Thomas R. Koehler

Publishing house

Dassault Systmes, Olivier Sappin

Media-Manufaktur International GmbH

Evercore ISI, Arndt Ellinghorst

Schmiedgasse 11

GENIVI, Philippe Gicquel

82335 Berg

Google, Hugh Dickerson

Germany

H.R. Owen, Chris Harris

www.automotiveIT.com

Jaguar Land Rover, Mike Bell

online@automotiveIT.com

Lotus F1 Team, Michael Taylor


McKinsey & Company, J. Laartz, D. Wee, M. Kaesser

Publisher

MHP, Oliver Kelkar

Christiane Nina Sauer

Nissan Group of Europe, Stephen Kneebone

sauer@media-manufaktur.com

Qoros, Maurits Aalberse


salesforce.com, Patrick Plata

Editor-in-chief

Verizon Telematics, Kevin Link

Arjen Bongard

Volkswagen UK, Ian Plummer

abongard@automotiveIT.com

Volvo Cars, Thomas Mueller

Art Direction

Interviews

Henrik Schramm

automotiveIT international, Arjen Bongard

www.enjoy-design.de

TelecomTV, Martyn Warwick


CE 21, Thomas R. Koehler

Printer/ E-Paper
BWH GmbH - Die Publishing Company
Beckstrae 10
30457 Hanover

Single copy price: 22,90

Germany
www.bw-h.de

ISBN: 978-3-9817013-0-2

87

Personal mobility is changing and the auto industry is adapting to a new era
of connected consumers living in an increasingly urban environment. The
subject of this book is how the industry is in the midst of developing a totally
new business model to build on its successful 125-year history. In a series of
exclusive interviews, automotive executives explain how they are drafting
and executing this blueprint for a new era of personal mobility. Their insights are complemented by the views of the automotive IT partners that are
instrumental in making the changes happen. The transformation has many
sides and all of them get ample attention in these pages. The focus, however, is on the big issues: Connected vehicles, big data, car sharing, electric
propulsion, digital retail, Industry 4.0, autonomous driving and data security.

Single copy price:


22,90
ISBN:
978-3-9817013-0-2

www.automotiveIT.com