There is a global trend toward sharing things, collaborative consumption. Home sharing through AirBnB is now a $2.5 billion business. There are pleasure boat sharing businesses, co-working office spaces, and of course vehicle sharing services. Consumers are driving the variety and velocity of these changes and putting added pressure on companies to improve their speed-to-market. Enterprise teams need to collaborate more effectively and coordinate their activities more seamlessly for companies to ride these trends successfully.
Take the automotive industry, which arguably is going through its biggest changes since the introduction of the assembly line.
Changes coming to the automotive industry.
We tend to take the status of private cars as a given, but technology is unleashing important changes in the automotive marketplace. Product-service hybrids like mobility-as-a-service are about to appear on the streets. According to the Boston Consulting Group, in five years, 35 million people globally will be using ride-sharing services, up from 5.8 million now. That means 550,000 fewer cars sold each year than normal. (Portland Press Herald, May 16, 2016)
On the positive side, the accelerating push of the auto market toward mobility-as-a-service is predicted to create up to $1.5 trillion worth of new auto industry revenue in that same time frame, from on-demand mobility and data driven services. Though vehicle sales may take a hit, actual car usage will increase because people who don’t own cars will begin using them as an extension of the rapid transit system. Not surprisingly, OEMs are beginning to compensate for vehicle sales losses by investing in car share businesses. This kind of investment can bring new car designs that improve car share operations, fuel consumption, and emissions reduction.
So Daimler has MyTaxi. Toyota has a strategic arrangement with Uber. General Motors is working with Lyft. Tesla is not to be outdone with their vision of a fleet of fully autonomous MaaS cars all over the globe that can be summoned by a smartphone application.
Another big change is the car-sharing model. The Ford Motor Company is currently testing a car sharing program that helps people rent out cars they purchased from the automaker to prescreened customers, as a way of defraying the cost of vehicle maintenance. The trial is inviting 14,000 new car purchasers in the U.S. and 12,000 in London to sign up for the Peer-2-Peers Car Sharing option in the U.S. or the easyCar Club in London to rent their new vehicles to pre-screened drivers for short-term use.
Ford CEO, Mark Fields, says the financial case for investing in the mobility space is too compelling to ignore. He points out that global revenue at traditional automakers totals $2.3 trillion a year, while the transportation business, including taxis, buses and car-sharing, is worth $5.4 trillion.” This is why Fields says, “We want to transform, fundamentally, the relationship between an automaker and a customer.” (Portand Press Herald, May 16, 2016)
A study by McKinsey & Company last year predicted major changes in the design of cars to begin soon. Software competence is increasingly becoming one of the most important differentiating factors in the industry, for domain areas including active safety, connectivity, and infotainment. Adding that as vehicles are further integrated into the “connected world,” OEMs will be forced to participate in the new mobility ecosystems that emerge as a result of technology and consumer trends.
OEMS are also getting more concerned about the overall customer experience they deliver, from the sales process, to the vehicle experience, to customer service, and so on. They are eager to stay engaged with the customer over the long term. For instance, the aim of the FordPass mobility program, launched this past April, is to keep contact with the customer by helping with his ongoing mobility needs. A vehicle sale isn’t the immediate goal, but it may be down the road, no pun intended. “We are investing in future-proofing,” says Elana Ford, who is the great-great-granddaughter of Henry Ford and who led the development of FordPass. (Portland Press Herald, May 16, 2016) As Ford says, “People spend about 4.5 hours per year in a dealership, but they spend 900 hours per year being mobile. So how can we have an ongoing dialogue?”
What are the implications?
The marketplace is moving very fast. OEMs are not accustomed to having to move that quickly. They are not nimble technology start-ups like Uber. They operate on medium to long term cycles (e.g., 5+ years to bring on a new car model). But now to succeed they have to be more agile and efficient. Their customers are not patient, but will flock to the company that can fulfill their needs the fastest.
So OEMs need to learn how to prototype rapidly and to collaborate across functions to get their products to market quickly. This requires coordination, which is often hard for them. They also need to comply with company and industry standards, institute faster testing cycles, and incorporate customer feedback into their product strategies. They need software to streamline and improve workflow processes. With the right technical tools, they will not only survive these momentous shifts, but be the ultimate winners.
To learn more about how Jama provides better, faster product definition, change management and functional safety verification for automotive providers, please visit http://www.jamasoftware.com/solutions/automotive/.