Connected services and data monetization have long been viewed as a significant opportunity for automakers facing an uncertain future.
FREMONT, CA: Connected cars offer a differentiated customer experience while also delivering cost and revenue benefits to mobility companies such as original equipment manufacturers (OEMs), suppliers, dealers, insurers, fleets, and technology companies. To date, however, most players have overlooked opportunities to monetize data generated by these vehicles—a significant oversight, given how aggressively companies in other industries generate value from data. Indeed, seven of the world's ten most valuable companies already earn billions of dollars from data-driven services. These businesses include new attackers as well as technology firms. Traditional industry players are increasingly following suit and shifting their focus away from hardware and software-as-a-service (SaaS) and subscription businesses.
The following are the six critical steps that automotive must take to ensure a successful data monetization program:
Maintaining a client-centered mindset: It is essential to think about use cases in terms of the value they provide to the customer to build long-term brand loyalty (and thus revenue) and maximize the amount of positive consumer interaction possible. Any additional revenue generated in the short term should be viewed as a perk.
Taking a seat at the apex of the food chain: A successful data monetization program requires executive representation to ensure the organization’s budgets, resources, and priorities are maintained. A chief development officer (CDO) leads the most successful programs or a similar executive position. Without this representation, the program will almost certainly be evaluated based on short-term revenue trends, which can be challenging to establish. A longer-term perspective is required to overcome technical obstacles and establish relationships with third parties.
Optimizing the quality and quantity of data: Each time a third party integrates with an OEM data platform, they must rationally judge the likely returns on investment compared to the integration effort. Data consumers will want to ensure that the data's value justifies the integration costs. The OEM's program should provide a more significant number of connected vehicles than other OEM programs. The data catalog for each car should be substantial, providing the data consumer with unique, high-quality data sets.
Establishing a target and define success: The automotive data monetization industry is still in its infancy, with new opportunities emerging at a breakneck pace. A disorganized or hasty approach to data monetization will result in the proliferation of failed products and services. Establishing a goal and developing a strategy to achieve it allows regular progress monitoring to ensure the program does not veer off course.
Legislation is monitored and managed: Infractions of the law can result in excessive fines. Legislative activities should be closely monitored to ensure that an OEM's monetization program complies with pending legislation. Additionally, OEMs should collaborate to lobby relevant governments to ensure the protection of critical program rights.
Ascertaining the interoperability and scalability of the system: While it may require additional resources upfront, developing an open, scalable data monetization back-end will ensure future integrations are simple and allow for compatibility with a diverse set of third parties. As examples, PSA and BMW have developed open APIs for their monetization platforms, allowing any third party to integrate, test, and scale the platform quickly and easily without additional effort from the OEM.