Many friends and colleagues working in the automotive industry outside of China have shown great interests in the Chinese automotive retail market ever since the sales/production volume in China became the world largest in 2011. In 2013, the sales volume is 21.9 million units and analysts forecast that within the next 10 years, Chinese automotive retail market will keep growing at an annual rate of 10%. Thus here I would like to take the advantage of SCN to share with my buddies, from my personal perspective, an overview of Automotive Dealer Market in China.

Let us take a look at business data from Chinese public automotive website. In 2013, automotive retail in China has contributed 26% (that is 2888B RMB or 360B EUR) of the total retail business revenue, which is also the No.1 revenue generator in all retail sub-segments such as food, express, etc. And some key characteristics of the Chinese automotive retail market are:

• Consolidation of dealer outlets intensifies and mega-dealer groups are evolving into giants with revenue size similar to top OEM in China. E.g., in 2013 the revenue of the No.1 dealer group in China amounts to 84B RMB or 10B EUR. There are 31 dealer groups whose revenue amounts to 10B RMB and among these 5 amounts to 50B RMB.
• New car sales revenue is still the key source (>80%) of revenue within the vehicle sales, service, parts business, leasing and all other business a dealer store runs.
• Vehicle service becomes profitability generator. It contributes to more than 50% of dealer’s profitability, which is more than vehicle sales contribution.
• Vehicle loan service has gain more attention from consumer. 22% of consumers will use loan service when buying a vehicle. In 2009, this number is 9%.

And observations also show that the Chinese automotive retail market is facing big transformation challenges because:

• Consumers tend to move to online business (on Nov. 11th 2014, the total online transaction volume within this single day amounts to 6B RMB via just one Chinese biggest automotive community Autohome, YoY growth rate 140%), which brings hot discussions about O2O automotive retail business and most of the brands start to investigate and invest in this new business channel with no pilot to follow or refer to in the world.
• The gross profitability of all dealers is on average 3-7% of its total revenue (according to published finance result of the dealers who are already in stock market), which also forces the traditional business to seek new business model such as O2O, e-Commerce to survive and grow.
• The group company of those dealers has limited visibilities of their daily business due to lack of support from technology and thus cannot leverage the real-time business data to derive insights and make decisions according to the fluctuating business.

Many of us believe China is a huge automotive retail market and wants to penetrate this market or become the market leader in this country and worldwide. We see the market potential, we are aware of the pains and we forecast the trends, what to do next? Execution plans?

As a key player in the software world, SAP is working hand-in-hand with leading dealer groups in China and Europe to develop, implement and continuously improve our end-to-end solution for the automotive retail business, covering business applications of planning, financial controlling, marketing, sales and aftersales service, renting, leasing, as well as business analytics, user experience, in-memory technology, big data and onPremise or Cloud deployment. And we are open to discussions and further investigations in this amazing business segment of the automotive industry.

The Connected Car Expo begins tomorrow (November 18 – 20, 2014) in Los Angeles alongside the Los Angeles International Auto Show.  The question of Car or Computer? is at the forefront of the Expo.  Over the next four blogs I will share some of the intriguing questions, concepts and thoughts from the Expo…which begins to say goodbye to the automobile as we know it.  The disruption in mobility, the technology, constant connectivity and real time analysis of massive amounts of data are unbelievable.

First, let’s talk about connecting the dots…how the future of mobility will define the future of the automotive industry¹.  Andy Gryc of CX3 Marketing says “Connectivity means so many things: V2V, V2I, communicating to a smart phone, or any other wireless network.  Today’s cars have all of these touch points  - and all of these touch points impact how cars need to be built and sold, how software is installed, how it is updated and how much input is needed from other companies.  It is a vast number of changes for the industry because connectivity means the car is not a standalone product anymore.”

Each part of the connected car community or eco-system views developments through its own unique lens and with its own unique agenda.

Governments regard autonomous driving features, as a path to increased safety.  Big cities see connected cars as a potential solution to traffic, congestion and pollution problems.

The Smart phone industry wants to be at the center of consumer’s lives by continuing their quest for a larger presence in connected cars.

Manufacturers see connected cars as a path to increased revenue and loyalty.  And even more importantly as a clear path toward improved quality, reduced costs, greater service revenue and that all important safety topic!  Rapid identification, rapid response

and rapid recalls is the mantra.

Connecting cars to the wider digital community means the automotive industry is increasingly working not only with more and significantly different suppliers, but shows that business models and product development cycles are substantially different.  Business processes and business models are no longer dictated by the OEM.  The OEM’s, their suppliers and dealers are all learning the notion of the new eco-system.  The existing eco-system was created in the late 1800’s.  It was built around roads, steel and gasoline.

Today’s eco-system is digital, built with collaboration from new players like Apple, Google and others.

The automotive industry is developing a new mindset about speed to market and market opportunity.  It has to. Consumers expect it.

^{Julie Liesse, Independent writer and communications consultant}

The Connected Car Expo begins tomorrow (November 18-20,2014) in Los Angeles alongside the Los Angeles International Auto Show.  The question of Car or Computer? is at the forefront of this expo.  In this second blog I will share some of the intriguing threats and strategies that experts see down the road for the security of complex connected cars.

There are as many as 100 million lines of code in the average high-end car's software.  We depend on that software for operation, for safety and, yes, for connectivity these days.  Does that scare anyone?  The security of the connected car is not something the manufacturer or supplier can solve by changing one or two things.

There is simply too much surface area to cover.  Consumers think of a car's technology as a house with one big, think door to enter and exit.  Today, that could not be further from the truth.  In fact, today we have lots of doors and windows into that house.  today's car, by necessity, has a lot of way to get into it.  Then once you add additional communications connecting the car and the outside world, a car is no longer a self-contained system.

Why would someone be interested in hacking into a car?

Some might want to steal personal data to make a point or to show off their skills.  Some may be competitors intent on stealing intellectual property such as manufacturer or supplier designs.  And some may be from a disruptive source...some call them terror communities, although I find little to be terrified of, seeking to shut everyone's engine off during rush hour.  But perhaps the most likely threat is to steal personal data for monetary reasons, stealing  identities or even stealing the vehicle.

In the future one can envision walking up to their vehicle and their smart phone connecting to the car, instantly sharing your information and apps.  When that happens, you call  will be connected to all your contacts, banking information, personal history...well you get the point.  It is not about "will the connected car get hacked...it is when."

When the manufacturer says it is hard to secure everything but we will take care of it...that is not very reassuring.  Partnering with top-notch providers such as IBM, Cisco and AT&T, each with a strong focus on security will ensure that the intelligent transportation system will have a secure connection to the cloud.

Experts say that companies need to review the connected vehicle architecture to identify "threat vectors and attack surfaces".  Security must be built into the entire supply chain, into every chip and board that is installed in a vehicle, throughout its lifecycle, including maintenance and repair.

John Valasek of IOActive said, “Just hoping that no one breaches security is not the way to go.  Designing systems while being security
conscious is a step in the right direction, as well as knowing when to ask third-party experts for help.”

I could not agree more!

I'll admit it...I am a traditionalist.  I grew up in the automotive industry and that industry has not changed in many years.  I am comfortable, so to speak.  To me the dealer is still the king...they take risks, they invest in real estate, facilities, people and training, tools, inventory, advertising and are the manufacturers face to the customer...the final and lasting touch point!

I get very concerned when companies such as Tesla, and others before them, tried to dis-intermediate the dealer-customer relationship by having "factory" owned sales points.  I get equally concerned when we talk about direct sales of automobiles via the internet. I see a huge risk for the buyer . Where do they turn when they have a problem...lets face it, "all" vehicles have problems from time to time. How is it possible for the manufacturer to cover the services that the dealer provides?  It is not the same scale and not their core business.  I must admit though, that I am a bit embarrassed to consider that in the US, and to some degree in other regions, the system of dealers is supported by law.  Wouldn't it be nicer if it was universally supported by the market?

But just when the fear of these shadows closes in on this traditionalist, here comes good old wisdom and initiative.  Instead of allowing others to dictate what will happen in this space, AutoNation (www.autonation.com), the largest dealership group in the United States, is changing the game by going on-line itself, AutoNation's plan to change the retail game,

Simple!  AutoNation will launch "online deals by the end of the year by introducing SmartChoice Express, a new digital storefront at 30 dealerships in south Florida.  When fully implemented in late 2015 digital storefront shoppers will be able to select a vehicle, arrange financing, and actually buy the vehicle online, electronically singing purchase and finance documents from their home.  Kind of like Apple or Amazon. The customer still has to take delivery at the dealership but they are greeted by special attention and a very short time at the dealership.

What AutoNation is doing is heading off the digital attackers and the dis-intermediators and preserving the business for themselves, placing themselves in a position to deliver the identical services they always have been entrusted to deliver but in a modern way that is even more convenient for the shopper!

And along the way, the need for deeply integrated business systems, security, digital presence, privacy, etc. are all essential, more so than ever.

It seems like  the old saw of "do unto others before they do unto you" is alive and well and benefiting digital age consumers and preserving the best way of doing automotive retail business.  Everything changes but everything remains the same...amazing!  Digital wrapper on proven business practices!

Connected Cars

Connected cars are here. Practically all new cars sold in the U.S. are equipped with built-in connectivity. By CTIA estimates, by 2017, 60 percent of all cars sold in the U.S. (about 10 million vehicles) will have built-in wireless connections.

Visionaries, practitioners and analysts of connected car technologies have broad, rich and sometimes divergent views of what constitutes “connected cars”, the ramifications of an always  connected world—often in the context of the burgeoning Internet of Things (IoT), and how soon industry and consumers will experience its benefits and possibly perils.

But there is an agreement that these benefits—as well as the perils—will be profound.

When attempting to gauge the impact of connected cars we need to recognize the four forces that are in play: technologies, automakers, consumers and regulators. And these forces are not always in harmony with each other. In a series of upcoming blog posts, I am going to address these forces and their interplay, and discuss topics that range from business models to connected car technologies, and invite you to weigh in the discussion.

Digital Disruption in the Automotive Industry

Much has been written and new content appears daily on the potential benefits of connected cars. At a high level, these tend to fall into a number of broad categories:

• Navigation: Real-time traffic information, driving directions, weather conditions, fueling locations and prices, parking information and other location based information and services reduce drive times, ease congestion and lower carbon emissions.
• Communication: Short range wireless connectivity between consumer devices and the car, and built-in wireless broadband connection offer a variety of hands-free and voice-activated communications and control options.
• Infotainment: Broadband access to live streaming of cloud-based content and services.
• Safety: Vehicle to vehicle communication and vehicle to infrastructure (traffic lights, infrastructure-embedded sensors) communication, aided by built-in active safety: lane departures and (semi)autonomous behavior prevent collisions.
• Health: Integrated biometric sensors connected to web-based health and wellness services.
• Maintenance: Wireless connectivity enables remote access to engine diagnostics, over-the-air software updates, roadside emergency services and tracking of stolen vehicles.

Autonomous Cars

Further into the future, the industry envisions an omnipresent fleet of autonomous cars, which could significantly improve traffic conditions and mobility:

• Traffic throughput would be centrally managed and continually optimized, easing congestion, shortening commute time and reducing carbon emissions.
  • Autonomous cars, aided by digital road infrastructure should reduce car crashes to near zero. A study conducted for the National Highway Transportation Safety Agency (NHTSA) showed that nearly every single car crash is a result of a driver error, with the leading causes being inattention, speed, alcohol impairment and perceptual errors.
  • Disabled, elderly, and visually impaired people could enjoy greater mobility.
    • Autonomous cars that obey traffic rules, employ active safety measures and aren’t operated by inattentive or impaired drivers could lead to reduction in law enforcement resources and lower the cost of automobile insurance.
    • Autonomous cars will need considerably fewer passive crash protection features, making them simpler and lighter and therefore less polluting and less expensive to operate. Simpler design will reduce manufacturing cost, energy and waste.

Connected Cars and the Internet of Things

The emerging world of connected vehicles is not simply one of cars with cellular communication and Internet connections. Rather, cars are becoming part of the Internet, or, in today’s parlance, they are yet another “thing” in the Internet of Things (IoT). Connected to consumer devices, digital infrastructure, and a wealth of streamed cloud-based content and services, cars are no longer self-contained independent systems but rather a constituent of a network in which much of the value comes from outside the car itself.

Connected cars are going to be part of the IoT, with high hopes and the commensurate potential risks and many unknowns. In the next blog post I’ll discusses macro industry trends and critical factors that are shaping the evolution of the connected cars ecosystem.

In a previous blog post I discussed the digital revolution the automotive industry is undergoing and how cars are transforming from self-contained independent systems to connected subsystems in the Internet of Things (IoT), where significant value to drivers and passengers come from outside the car.

While the bold vision of connected cars holds much promise, the road ahead will not be without challenges. There are obviously formidable technical challenges such reliable and safe autonomous mobility that are discussed frequently, but may become a reality only in a decade, possibly later. On the other hand, key building blocks such as active cruise control, lane departure warning, self parking and others are already entering the mainstream car market.

Nevertheless, the future of connected cars depends not only on communication systems and intelligent mobility features, but also on market adoption and broad ecosystem. In this blog post I discuss several of those issues that often elude the rose-colored glasses wearers that cover connected car industry.

Reaching a Critical Mass

Cars equipped with active safety systems, optimized navigation and routing algorithms, parking reservation applications and other advanced in-vehicle systems will undoubtedly have a positive impact on safety, fuel efficiency, the environment, and overall driver experience. But meaningful improvements in traffic conditions and overall safety require that all traffic participants: vehicles, traffic signals, traffic management systems and other systems to work in tandem as parts of a well-calibrated federated decision-making structure.

There will be a long transition period in which cars with and without vehicle-to-vehicle communication and with different levels of autonomous behavior share the roads. The availability of senor and information rich infrastructure that could potentially communicate with cars will be even slower to come. So while the technology building blocks will trickle into the mainstream, their collective impact will lag behind.

Rethinking Car Ownership

Tech savvy, always-connected Millenials seem to be a natural demographic to drive up adoption of device-rich connected cars. However, Millennials appear to place less importance on car ownership than older generations do, and are quite content using car sharing and mobility services such as ZipCar, Uber and Lyft.

In fact, this trend is not unique to Millenials. According to a recent KPMG assessment, the era of the two-car family will likely decline, especially in highly urbanized areas.

The vision of a ubiquitous fleet of public and private on-demand vehicles that can address practically most of the transportation needs of future challenges our long term view of car ownership. But in the interim, the hesitancy in car ownership, especially on the part of affluent urbanites may lengthen the time to reach a critical mass of connected cars.

Policy

As the industry is making rapid progress in the technologies that bring broadband service to the car and enable car-to-car connectivity, and the National Highway Traffic Safety Administration’s (NHTSA) announcing it will make vehicle-to-vehicle communications mandatory, some important underlying policy issues are beginning to surface.

• Data Privacy and Use Rights. To what extent should OEMs protect their driver-generated data and keep them proprietary? What are the rights of drivers and car owners? I will discuss this topic in a future blog post.
• Security. Means to secure cars and public infrastructure from data theft and malicious attacks.
• Open and Net Neutral Communication. Allocation of communication spectrum to facilitate interoperability and ensuring open and ‘neutral’ Internet, which I will discuss in a future blog post.
• Regulations. Enabling and governing new services that may run against local regulations and ordinances or simple resistance to change. Case in point: Haystack, a location-based parking app was banned in multiple cities

Open Innovation

While the automakers are assuming ownership and taking a visible role in developing safe and reliable in-vehicle electronics and infotainment, they continue to struggle in maturing connected car technologies and taking them to the market, periodically facing delays and poor quality that surprise and disappoint automakers and consumers alike.

Recognizing this challenge, OEMs are moving key research and engineering activities, especially in user experience design and advanced software and electronics, to innovation hubs in Silicon Valley, Israel, Germany and other high tech locations.

Automakers are also acknowledging that much of the drive and innovation in connected cars are coming from non-automotive technology partners like Google, Intel and Microsoft. In the same vein, new methods and standards such as AUTOSAR and Genivi are formulated not by SAE and AIAG but rather by broad consortia of diverse automotive and non-automotive constituents.

The new ecosystem and relationships with its constituents appear to disrupt some of the tried and true fundamentals in automotive R&D and manufacturing, especially in the need to move from a relatively slow forward-feeding linear product development process to agile development methodologies that take advantage of the enhanced cadence and flexibility of software development. I covered this topic in this webinar (registration required).

Supply Chain

The open innovation environment automakers are adopting, however unenthusiastically, may create another disruption, this time to the way OEMs have traditionally managed their supply chains.

Traditionally, long product development cycles of automotive systems and even longer useful life of cars necessitated a stable network of long term suppliers that could provide parts and service throughout the life of a vehicle.

A similar mindset reigned in the early days of connected cars. For example, General Motors’ OnStar telematic service was, and, in fact, still is, based on a bespoke hardware and a single wireless service provider. This approach and its slow refresh cycle hinder the ability to benefit from the rapid evolution of in vehicle electronics, wireless communication standards, and wealth of new services. Furthermore, as I will discuss in a future blog post, this strategy is counter to the expectations of the always-connected consumer.

OEMs and Tier One suppliers are finding it difficult to change the traditional model of working with only a handful of strategic Tier One suppliers, and be open to collaborate with a longer list of technology providers that seems to change almost daily. To complicated matters, many of these potential suppliers not only have different culture and business practices, but often do not have the quality standards, rigor, scale and business practices of traditional suppliers.

While there is a genuine interest on both sides to close those gaps, I periodically discover circumstances where cultural and procedural differences stand in the way. And I except that the dynamic of the connected car industry and in the Internet of Things in general will bring new participants, put others out of business and drive industry consolidation for years to come. OEMs will find this difficult to deal with.

Connected Cars

Connected cars are here. Practically all new cars sold in the U.S. are equipped with built-in connectivity. By CTIA estimates, by 2017, 60 percent of all cars sold in the U.S. (about 10 million vehicles) will have built-in wireless connections.

Visionaries, practitioners and analysts of connected car technologies have broad, rich and sometimes divergent views of what constitutes “connected cars”, the ramifications of an always  connected world—often in the context of the burgeoning Internet of Things (IoT), and how soon industry and consumers will experience its benefits and possibly perils.

But there is an agreement that these benefits— as well as the perils—will be profound.

When attempting to gauge the impact of connected cars we need to recognize the four forces that are in play: technologies, automakers, consumers and regulators. And these forces are not always in harmony with each other. In a series of upcoming blog posts, I am going to address these forces and their interplay, and discuss topics that range from business models to connected car technologies, and invite you to weigh in the discussion.

Digital Disruption

Much has been written and new content appears daily on the potential benefits of connected cars. At a high level, these tend to fall into a number of broad categories:

• Navigation: Real-time traffic information, driving directions, weather conditions, fueling locations and prices, parking information and other location based information and services reduce drive times, ease congestion and lower carbon emissions.
• Communication: Short range wireless connectivity between consumer devices and the car, and built-in wireless broadband connection offer a variety of hands-free and voice-activated communications and control options.
• Infotainment: Broadband access to live streaming of cloud-based content and services.
• Safety: Vehicle to vehicle communication and vehicle to infrastructure (traffic lights, infrastructure-embedded sensors) communication, aided by built-in active safety: lane departures and (semi)autonomous behavior prevent collisions.
• Health: Integrated biometric sensors connected to web-based health and wellness services.
• Maintenance: Wireless connectivity enables remote access to engine diagnostics, over-the-air software updates, roadside emergency services and tracking of stolen vehicles.

Autonomous Cars

Further into the future, the industry envisions an omnipresent fleet of autonomous cars, which could significantly improve traffic conditions and mobility:

• Traffic throughput would be centrally managed and continually optimized, easing congestion, shortening commute time and reducing carbon emissions.
  • Autonomous cars, aided by digital road infrastructure should reduce car crashes to near zero. A study conducted for the National Highway Transportation Safety Agency (NHTSA) showed that nearly every single car crash is a result of a driver error, with the leading causes being inattention, speed, alcohol impairment and perceptual errors.
  • Disabled, elderly, and visually impaired people could enjoy greater mobility.
    • Autonomous cars that obey traffic rules, employ active safety measures and aren’t operated by inattentive or impaired drivers could lead to reduction in law enforcement resources and lower the cost of automobile insurance.
    • Autonomous cars will need considerably fewer passive crash protection features, making them simpler and lighter and therefore less polluting and less expensive to operate. Simpler design will reduce manufacturing cost, energy and waste.

Connected Cars and the Internet of Things

The emerging world of connected vehicles is not simply one of cars with cellular communication and Internet connections. Rather, cars are becoming part of the Internet, or, in today’s parlance, they are yet another “thing” in the Internet of Things (IoT). Connected to consumer devices, digital infrastructure, and a wealth of streamed cloud-based content and services, cars are no longer self-contained independent systems but rather a constituent of a network in which much of the value comes from outside the car itself.

Connected cars are becoming part of the IoT, with high hopes and the commensurate potential risks and many unknowns. In the next blog post I’ll discusses macro industry trends and critical factors that are shaping the evolution of the connected cars ecosystem.

In my last blog post I discussed the digital revolution the automotive industry is undergoing and how cars are transforming from self-contained independent systems to connected subsystems in the Internet of Things (IoT), where significant value to drivers and passengers come from outside the car.

While the bold vision of connected cars holds much promise, the road ahead will not be without challenges. There are obviously formidable technical challenges such reliable and safe autonomous mobility that are discussed frequently, but may become a reality only in a decade, possibly later. On the other hand, key building blocks such as active cruise control, lane departure warning, self parking and others are already entering the mainstream car market.

Nevertheless, the future of connected cars depends not only on communication systems and intelligent mobility features, but also on market adoption and broad ecosystem. In this blog post I discuss several of those issues that often elude the rose-colored glasses wearers that cover connected car industry.

Reaching a Critical Mass

Cars equipped with active safety systems, optimized navigation and routing algorithms, parking reservation applications and other advanced in-vehicle systems will undoubtedly have a positive impact on safety, fuel efficiency, the environment, and overall driver experience. But meaningful improvements in traffic conditions and overall safety require that all traffic participants: vehicles, traffic signals, traffic management systems and other systems to work in tandem as parts of a well-calibrated federated decision-making structure.

There will be a long transition period in which cars with and without vehicle-to-vehicle communication and with different levels of autonomous behavior share the roads. The availability of senor and information rich infrastructure that could potentially communicate with cars will be even slower to come. So while the technology building blocks will trickle into the mainstream, their collective impact will lag behind.

Rethinking Car Ownership

Tech savvy, always-connected Millenials seem to be a natural demographic to drive up adoption of device-rich connected cars. However, Millennials appear to place less importance on car ownership than older generations do, and are quite content using car sharing and mobility services such as ZipCar, Uber and Lyft.

In fact, this trend is not unique to Millenials. According to a recent KPMG assessment, the era of the two-car family will likely decline, especially in highly urbanized areas.

The vision of a ubiquitous fleet of public and private on-demand vehicles that can address practically most of the transportation needs of future challenges our long term view of car ownership. But in the interim, the hesitancy in car ownership, especially on the part of affluent urbanites may lengthen the time to reach a critical mass of connected cars.

Policy

As the industry is making rapid progress in the technologies that bring broadband service to the car and enable car-to-car connectivity, and the National Highway Traffic Safety Administration’s (NHTSA) announcing it will make vehicle-to-vehicle communications mandatory, some important underlying policy issues are beginning to surface.

• Data Privacy and Use Rights. To what extent should OEMs protect their driver-generated data and keep them proprietary? What are the rights of drivers and car owners? I will discuss this topic in a future blog post.
• Security. Means to secure cars and public infrastructure from data theft and malicious attacks.
• Open and Net Neutral Communication. Allocation of communication spectrum to facilitate interoperability and ensuring open and ‘neutral’ Internet, which I will discuss in a future blog post.
• Regulations. Enabling and governing new services that may run against local regulations and ordinances or simple resistance to change. Case in point: Haystack, a location-based parking app was banned in multiple cities

Open Innovation

While the automakers are assuming ownership and taking a visible role in developing safe and reliable in-vehicle electronics and infotainment, they continue to struggle in maturing connected car technologies and taking them to the market, periodically facing delays and poor quality that surprise and disappoint automakers and consumers alike.

Recognizing this challenge, OEMs are moving key research and engineering activities, especially in user experience design and advanced software and electronics, to innovation hubs in Silicon Valley, Israel, Germany and other high tech locations.

Automakers are also acknowledging that much of the drive and innovation in connected cars are coming from non-automotive technology partners like Google, Intel and Microsoft. In the same vein, new methods and standards such as AUTOSAR and Genivi are formulated not by SAE and AIAG but rather by broad consortia of diverse automotive and non-automotive constituents.

The new ecosystem and relationships with its constituents appear to disrupt some of the tried and true fundamentals in automotive R&D and manufacturing, especially in the need to move from a relatively slow forward-feeding linear product development process to agile development methodologies that take advantage of the enhanced cadence and flexibility of software development. I covered this topic in this webinar (registration required).

Supply Chain

The open innovation environment automakers are adopting, however unenthusiastically, may create another disruption, this time to the way OEMs have traditionally managed their supply chains.

Traditionally, long product development cycles of automotive systems and even longer useful life of cars necessitated a stable network of long term suppliers that could provide parts and service throughout the life of a vehicle.

A similar mindset reigned in the early days of connected cars. For example, General Motors’ OnStar telematic service was, and, in fact, still is, based on a bespoke hardware and a single wireless service provider. This approach and its slow refresh cycle hinder the ability to benefit from the rapid evolution of in vehicle electronics, wireless communication standards, and wealth of new services. Furthermore, as I will discuss in a future blog post, this strategy is counter to the expectations of the always-connected consumer.

OEMs and Tier One suppliers are finding it difficult to change the traditional model of working with only a handful of strategic Tier One suppliers, and be open to collaborate with a longer list of technology providers that seems to change almost daily. To complicated matters, many of these potential suppliers not only have different culture and business practices, but often do not have the quality standards, rigor, scale and business practices of traditional suppliers.

While there is a genuine interest on both sides to close those gaps, I periodically discover circumstances where cultural and procedural differences stand in the way. And I except that the dynamic of the connected car industry and in the Internet of Things in general will bring new participants, put others out of business and drive industry consolidation for years to come. OEMs will find this difficult to deal with.

In an upcoming blog post, I’ll continue this discussion, shifting the focus from automakers and cars to the occupants: drivers and passengers.

A Brief History of Telematics and In-Vehicle Systems

Carmakers have been promoting the notion of connected cars for years. Not to debate the exact roots and history of connected cars and the history of telematics, we often think of General Motors’ OnStar, which was debuted in 1995, as one of the earliest renditions of telematic based consumer services and OnStar as one of the first telematics service providers (TSPs). Today practically all OEMs offer some level of telematic / connected car capabilities in most of their models. However, as you can see in this summary of telematic features, OEMs are taking very different approaches to implementing connected car services, from the insular OnStar and Infinity Connection systems to the very open Bluetooth centric Ford Sync.

Almost from its outset, TSPs touted the value of telematic services in remote early diagnostics and potentially valuable but seldom required services such as roadside assistance and theft recovery, all, of course, for a monthly subscription fee. But, to their chagrin, OEMs have discovered that consumers don’t care that much about remote diagnostics and promises for better dealership repair experience—and they certainly do not expect to pay for them.

Higher bandwidth cellular communication, coupled with cost-effective GPS systems and dashboard based computing and displays, have led to a wave of improvements in-vehicle navigation, satellite radio streaming and location based services. In-vehicle systems, or in-vehicle infotainment (IVI), have become today’s battleground for innovation and differentiation for auto OEMs.

But here, again, consumers did not always respond to the way OEMs had expected for the simple reason that modern consumer devices, especially smartphones, already have similar (if not better) features,  can do everything the car can offer, and do it essentially for free! The only notable difference is that a dashboard video display offers a superior user experience; I’ll get to this topic later in this post.

What Is (And Where Is) Your Digital Identity?

Consumers like using smartphones not only because they offer a wealth of fun and useful apps. Smartphones manage personal data and personalized services. In a way, a smartphone is a representation of the user’s portable digital identify. In fact, taking this notion one step further, the digital identify is stored in the user’s cloud and is represented by login credentials: same information and same experience independent of the mobile device.

Consumers want their digital identity to be always present and travel with them independent of device, location or mode of transportation.  They expect to be able to access services, infotainment and personal information the same way from a personal car, when using public transit, or deriving a rental car.

The OEM-centric view, which is based on the vehicle identification number (VIN), does not provide consumers the modality-independent continuous digital presence and seamless experience. In fact, as automakers continue to add IVI capabilities and attempt to out-innovate the competition by adding more options and features, the in-vehicle experience for drivers and passengers alike is getting more complex and requires re-learning and re-personalization—a stark difference from the smartphone industry.

A Hybrid Model

While consumers want a pervasive digital presence with similar and seamless experience, the in-vehicle experience and usage, is, by definition, different from consuming other types of information or conducting other types of transactions.

There are two categories of connected car information. One is VIN centric data that include data such as performance and efficiency, health monitoring and diagnostics, remote updates, stolen vehicle tracking, and pay as you drive insurance reporting. The other category is driver centric: navigation, traffic and weather information, streamed content and personal apps.

While some data classes may remain isolated, certain applications and services such as pay as you drive insurance associate the user digital identity and the car identify (VIN) data. And as the richness and complexity of information generated by the car, beamed-in the car cellular data link, and brought in via a consumer devices increase, so will the need and opportunity for complex hybrid applications.

Which Screen?

Popular attitude is that consumer devices, especially smartphones, are better than OEM-built IVI units: they represent the latest wireless technology, have a superior user interface, enjoy a large population of experienced users, and benefit from an open ecosystem of app developers. Consumers upgrade their mobile technology every 12 to 24 months and their technology is always several years ahead of what’s available in cars.

On the other hand, the reliability of consumer grade devices is too low to run critical automotive applications. Open systems, while encouraging participating and innovation, also instigate integration, testing challenges and concerns not only about reliability, but also about hacking and compromised safety and privacy. To a great extent, these factors contribute to the fact that IVI technologies in auto dealer showrooms lag behind the state of the art of smart device technologies.

Automakers should not insist on owning the entire in-vehicle experience of driver and passengers and convey it using the build in screen. A better approach would be to adopt a hybrid model that better accommodate consumers’ preference.

• The car’s display replicates the user’s telephone using MirrorLink (formerly known as “Terminal Mode”).
  • Based on open standards such as OpenXC and Genivi.
  • Enable sharing of select vehicle OBD II information with smartphone-based apps, which, in turn, can be replicated onto the vehicle’s main display.

Driver Distraction

No discussion on IVI and the use of phone in cars is complete without addressing the concern about driver distraction and the growing number of crashes and fatalities. According to NHTSA statistics, in 2012, an estimated 421,000 people were injured in vehicle crashes involving a distracted driver, an increase of 9% from 2011. (Just for the record, distracted driving statistics include non-IVI and cell phone usage.)

Taking control over the smartphone application and moving it to a larger and better ergonomically designed display and controls can reduce the visual, cognitive and manual attention from driver. Furthermore, the IVI system should modify the user interface flow, issue adequate warnings, and conceivably block certain activities that are deemed most distracting such as texting.

Voice commands are frequently offered as a viable solution to reduce driver distraction, but OEMs will undoubtedly argue that smartphone based voice recognition systems may be too open for malicious activities and that recognition accuracy of brought-in devices is impacted by cabin noise while traveling in the highway.

Studies conducted by AAA Foundation for Traffic Safety research show that despite the technical achievements of smartphone-based voice recognition systems like Apple’s Siri, these systems were not designed to be used while driving, and the flow and even the interaction style, and, in fact, can increase distraction rather than reduce it. The AAA research report shows that Siri-based voice interaction as well as some OEM designed system create high cognitive load that exceeds manual interaction.

In the next blog post I will continue the discussion about vehicle connectivity, this time from the perspective of the heated debate in Washington, D.C. on Net Neutrality.

Buying a new car used to be relatively straightforward. You drove to the local dealer (whom you probably knew by name), test drove a few models, negotiated a deal, and left the car lot with a new car. Afterwards, you took the vehicle back to the dealer for regular maintenance or to fix problems.  The relationship clearly was between you and the dealership. Today, the process of buying and maintaining a car can involve many more players. Information is flowing back and forth constantly between buyers, manufacturers, dealers, third-party resources, and even the vehicles. Each entity is capturing different types of data, analyzing the information and using it to make more informed decisions. And yet, we have only scratched the surface on the benefits possible when all the data being generated is standardized and shared through the automotive supply chain.

Next year, the automotive industry is projected to become the 2nd largest generator of data (McKinsey Global Institute). Not only is digital data being generated from the approximately 10,000 sensors embedded in each new vehicle, corporations and buyers also are generating constant streams of internal data (i.e. emails, service memos and consumer comments) along with external sources such as online car reports, social media posts and vehicle reviews. With all this newly available information floating around, one can’t help wondering who owns it and who decides how it can be used. To figure out the answers, it is helpful to begin by looking at who generated and controlled automotive data in the past.

As mentioned before, dealers have long held the relationship with the customer. Dealerships were where one went to purchase a vehicle and have it maintained over its lifespan. Therefore, most of the customer data including demographic information, buying preferences, purchasing history resided with the dealers. The information was, and sometimes still is, captured on paper records in countless formats. In addition to customer knowledge, local dealers often carried multiple vehicle models from a different brands. This gave them unique access to manufacturers’ data such as performance records or maintenance trends, which they used at their discretion for selling.

On the other side, OEMs traditionally held vehicle manufacturing data like when, how and what components were used in the design of their automobiles. Eventually manufacturers began establishing their own call centers and websites, allowing them to gather and collect digitalized information directly from the customer. As data began flowing from customer to manufacturer, dealers grew concerned about being left out. In fact, suspicion and mistrust between dealers and manufactures was the main reason very little information was shared along the supply chain. OEMs were concerned that dealers would use vehicle knowledge to sell other brands, while dealers didn’t want to lose the powerful position of being the primary customer interface. 

Today, there are no clear lines of data ownership. Information about customers, manufactures and dealers is widely available, creating a power shift from the one who initially captures the information, to the one with the knowledge and resources to use it. 

Information is power and the more you know, the greater your competitive advantage. Manufactures and dealers are beginning to realize they are stronger together than apart. In this new landscape, data is more readily exchanged up and down the supply chain. Using the latest technology platforms and software to capture, store and analyze the information, companies are using insights gained from data to improve everything from vehicle design and manufacturing, to marketing, sales and post-purchase services.

Yet in a futurist world where everyone knows everything, the ultimate winner may be the consumer. When deciding to purchase a vehicle, customers will be able to access, consolidate and compare as much information as they want. They will then use the data from vehicles, dealers and manufactures to determine which relationships are in their best interests. For example, consumer can choose where to go for a car loan, they can request vehicles designed to their specifications, and they can determine who supplies the post-purchase services. When choices are no longer restricted by geography or access to information, it puts consumers in control. Finding ways to attract and retain these data-savvy consumers may turn out to be more of a challenge for those in the automotive industry than creating and selling vehicles. In fact, it is not too far-fetched to envision a world where the consumers, and their related knowledge, is more valuable to manufactures than the physical products. Whatever changes the future may hold for the industry, it is clear that sharing data is an important next step. In the words of Henry Ford, “If everyone is moving forward together, then success takes care of itself.”

The solution for Analysis and Copying of SD Scheduling Agreements (transaction SACO) has been released as of SAP ERP 6.0, Enhancement Package 2, as part of the industry extension Discrete Industries & Mill Products (ECC-DIMP 602).  This solution is very beneficial for suppliers running their Order-to-Cash process based on scheduling agreements, a process well-established in automotive and other manufacturing industries.

The sales document flow tends to grow massively over the lifetime of a scheduling agreement, reducing performance when processing delivery documents or scheduling agreement releases. The SACO solution addresses this challenge. Specifically, when copying a scheduling agreement, all the header and item data are copied (except the header and item data copied from master data) together with the most recent scheduling agreement releases, but not the document flow entries. Thus, the new scheduling agreement starts with only a created correction delivery, ensuring the same cumulative delivered and issued quantity as for the existing scheduling agreement. For the purchasing scheduling agreements, it is required that there is no activity at the customer. 

Unfortunately, the SACO solution had been enabled only for normal scheduling agreements with releases (standard document type LZ).

For Just-in-Time (JIT) or Just-in-Sequence (JIS) processing, suppliers use JIT scheduling agreements (standard document type LZJ or LZJQ) and face a considerably faster growth of document flow entries due to more frequent shipping. Especially in JIS processing, complex products supplied can have hundreds of different components shipped together, accumulating millions of document flow entries to be considered in delivery document processing.

Report program RJITCOP001 enables the copy of JIT scheduling agreements. However, it is structured differently from SACO, where SACO provides more convenience in selecting relevant documents (e.g., by organization, by number of document flow entries), more options in parameter settings and more detailed logging. Thus, the functionality of report RJITCOP001 has been merged into transaction SACO, for simplification and optimization, allowing companies to process normal scheduling agreements with releases and JIT scheduling agreements together and in the same manner.

Based on customer feedback, a few usability and security improvements have been added to SACO:

• User Notification. Users can be informed when the copying of all selected scheduling agreements has been completed. For that purpose, a distribution list with assigned users can be specified on the entry screen. As soon as the copying process is finished, a message is sent to each recipient defined in the distribution list. Based on communication settings, a message can be sent in different ways,  such as system message accessible via the SAP Business Workplace, email or SMS.
  
• Enhanced authorization check. All selected scheduling agreements are checked for create and change authorization, and even for display authorization in foreground mode, before the copy execution starts. Documents for which the user is not authorized will be filtered out and the missing authorization message will be added to the application log.
  
• Cosmetic improvements
  

With SACO, scheduling agreements to be copied can be selected by organizational data, according to the responsibility of dedicated users, and by the size of the respective document flow.

In online / foreground mode, a list of scheduling agreement documents based on the selection and filter criteria is displayed, and the user can analyze the data before picking documents from the list and starting the copy process.

The copy process itself is done in background task, as it uses batch input to create and adapt each new scheduling agreement as well as to reject the existing ones. Depending on the number of documents to be created and changed, this may take some time. With the new user notification, the user does not need to access the application log to check progress, but will receive a message when the copy process is complete.

Configuration

Necessary configuration for SACO

• Setup of copy control for sales documents
  For any document type and item category you would like to use SACO, copy control needs to be available. 
  See SAP Customizing Implementation Guide: Sales and Distribution > Sales > Sales Documents > Maintain Copy Control for Sales Documents. 
  For the copy control of item categories, set the parameter 'Update Document Flow' to value '2' ("Create doc. flow records except for dely/goods issue/billdoc"). 

Further hints

Remarks to the parameters of SACO:

• The minimum size of the document flow on header and item level helps select only scheduling agreements with massive number of entries in the document flow that significantly reduce performance.  The value of this limit depends on the area of the runtime that is causing complaints. The maximum number of documents for an info message should give an indication to the user  to further restrict the selection to avoid extensive copy processes. It is a rough count of documents selected by the selection criteria on header level. Therefore it does not consider selection criteria on item level (e.g., material or customer material) or filter parameters (e.g., minimum size of document flow).  The user can ignore the message and continue, or accept the message and return to the entry screen to start again.
• Report parameters can be pre-set with the following user parameters:

Remarks to the SACO report log:

• SACO uses the general application log to store selection criteria, parameter settings, messages and results from analysis and copying scheduling agreements
• Each log is stored under object 'SACO'; the different log entries are separated by sub-objects, which have to be defined before using transaction SLG0, if not available (see also SAP note 2037976)
• The application log is be accessed directly from SACO and from the user notification message

References

SAP Notes

SAP Note 1896120 - IS-A-ESD : Enhancement of SACO for JIT scheduling agreements

SAP Note 1986853 - IS-A-ESD : Improvements to SACO (Scheduling Agreement Copy)

SAP Note 2033809 - SACO : No user notification when the log is complete

SAP Note 2037976 - SACO: No authorization check on Sales Organization

SAP Note 2095807 - SACO : Unable to implement note 2037976  

SAP Note 2100963 - SACO: Performance issues due to delete of JIT shared buffer

SAP Help

Application Help on Analysis and Copying of Scheduling Agreements

Automotive Innovations for ECC-DIMP 6.02 (including Analysis and Copying of Scheduling Agreements)

Net Neutrality refers to the principle that Internet service providers (ISPs) should allow equal access to all web content. Under the FCC Open Internet Order 2010, all ISPs are banned from blocking users' access to websites. While landline ISPs are not allowed to block or "unreasonably discriminate" against user applications, wireless carriers have no such anti-discrimination rules but are banned from blocking applications that compete with their own voice or video calling services.

In January, the U.S. Court of Appeals for the D.C. Circuit rejected the FCC’s 2010 version of the net neutrality rules, saying that the FCC “had failed to cite any statutory authority that would justify its order compelling a broadband provider to adhere to open network management practices” and prevents them from blocking or discriminating against content. The court did allow the FCC to classify wireless carriers differently from landline ISPs. The ruling sent the FCC back to the drawing board.

The FCC is sifting through millions comments on Net neutrality filed by the public and is hosting several roundtables to hear from stakeholders and lawmakers.

Wireless carriers are contesting stricter rules, arguing that compared with landline providers, they use limited shared spectrum and rely on distinct and dynamic technology. Specifically, wireless carriers argue, these capabilities are critical to provide data services to connected cars

Automakers and Net Neutrality

In a letter to the FCC, General Motors summed up the benefits of connected cars and the potential harms of rigid, one-size fits-all net neutrality regulation: “real-time traffic and weather data, and vehicle-to-vehicle or vehicle-to-infrastructure communications, could leverage mobile networks…to deliver road safety and efficiency improvements. This variety of data – being accessed in the most mobile of circumstances – will require a range of mobile network management techniques to successfully enable the service provided to our customers. By needlessly constraining the latitude our mobile network operator suppliers have in delivering their connectivity to owners of our vehicles, you would also constrain the innovations we are seeking to provide to our customers...” (emphasis added)

Open standards and access to information are critical to encouraging innovation and competition.  The question is whether the FCC should undo the exemptions currently in place.

GM’s letter is discouraging the FCC from promulgating net neutrality rules for wireless providers and urged the agency "retain the critical distinction" between fixed and mobile Internet traffic and said new limitations for the mobile industry may constrain innovation in connected cars.

GM argues that “mobile broadband being delivered to a car moving at 75 mph down a highway – or for that matter, stuck in a massive spontaneous traffic jam – is a fundamentally different phenomenon from a wired broadband connection to a consumer’s home, and merits continued consideration under distinct rules that take this in to account. This is because the Commission can’t define exceptions for ‘reasonable network management’ for circumstances it can’t imagine.”

The important question being debated between the two sides is whether Net Neutrality will level the playing field and encourage more industry participation and open competitiveness, or, as GM argues, connected car services requires “priority lanes” that will ensure that critical data packets arrive at their destination faster and more reliably.

Although, as GM stated, a pervasive connected car environment is still over the horizon and, there will be unforeseen data management circumstances, it’s somewhat inconceivable that these systems will rely on general wireless service provider to communicate safety critical real time data. This raises the question whether there are engineering reasons to provide a “priority lane” for connected car data or are automakers and major carriers are trying to erect regulatory barriers to protect their foothold in the connected car business.

What About the Consumer?

In the early days of connected cars consumers had no say as far as the provider of wireless services. This hasn’t changed much. Depending the car you purchased you are locked into the OEM’s carrier of choice, which can change frequently as carriers negotiate new deals with the OEMs.

As I discussed in a last blog post on the consumer’s portable digital identity, consumer are likely to find this practice counterproductive and the use of the built-in wireless connection by consumers will be limited to telematic services that are tightly coupled with the vehicle identification number (VIN), and even these will survive only as long as the telematic connection is free.

When consumers rebuff the paid connectivity provided by the automaker and opt to using their own devices and data plans, OEMs will miss much of the potential they hope to get from connected cars, including the cornerstones of diagnostics, repair scheduling and remote software updates. 

Openness and competitiveness dictate that OEMs should also exercise neutrality when it comes to allowing consumers to select a wireless carrier of their choice. Similar to telephones, cars should be conceptually “SIM unlocked” by enabling tighter integration with brought-in applications and possibly even bandwidth.

While the public appears to be overwhelmingly for Net Neutrality, the answer is most likely in a baseline connectivity architecture that delivers the level of service and security automakers need. This architecture should also provide the necessary means to reduce driver distraction and provide a better and safer user experience as discussed in some detail in a previous blog post.

Beyond enabling basic secure operation, automakers should exercise net neutrality. Whatever exemptions they might get from the FCC, these exemptions should not be used to control user information and non-critical vehicle data.

By Holger Masser, Global Head of Industrial Business Unit Automotive at SAP AG

Internet connectivity and embedded sensors are connecting today’s vehicles to their drivers, to other vehicles, and to the surrounding environment. Some call this the “Internet of Cars,” with cars being the ultimate mobile device. Increasingly, people are familiar with the in-car entertainment, wireless, and GPS elements of connected cars.

But many opportunities exist when it comes to the connectivity of today’s vehicles impacting driving logistics, fleet management, product quality, warranty management, and asset management, to name a few. Consider these examples.

Insurance companies

Insurance companies could collect data transmitted from insured vehicles and available  telematics to understand driving behaviors and patterns. They could then define insurance rates accordingly.

Car manufacturers

Car manufacturers could monitor dataabout the performance of components throughout the vehicle to understand its status – regardless of how it is driven. By aggregating and analyzing data, they can predict the likelihood of a part failing and proactively recommend issue resolution to avoid a warranty claim.

On the production side, car manufacturers could monitor their factory equipment to identify problems with machines producing all the components that go into their vehicles. In this way, they can plan maintenance and adjust machine schedules to ensure their production lines are running smoothly.

Asset management

By capturing signals from devices attached to their factory and warehouse assets, manufacturers can better and more easily manage those assets. For instance, at every point in time, a factory manager could see machine schedules and operation details online, in real time, for the company’s entire inventory of factory machines and production component inventory. This eliminates the need for someone to visit the shop floor to check on inventory or machine status.

Supply chain logistics

This connectivity and embedded intelligence are even changing supply chain logistics. Companies can track containers as they enter a port, identifying whether they contain hazardous materials, require cooling, and more. They can also precisely identify the contents of each container. As a result, if a company urgently needs certain parts for its production line, the port authority can take the container out of sequence and expedite delivery. This capability enables even better yields from just-in-time and just-in-sequence production processes. 

Fleet management

Connected cars can change the way that fleets are managed by both rental car companies and large corporations. By connecting all cars in the fleet, these companies can gather insights that enable optimized management. For instance, they can track how their cars are driven, whether maintenance is required, how often the vehicles require repairs, and more. In turn, they can train drivers on the best driving behaviors and negotiate better maintenance rates with automotive aftermarket service providers.

These new capabilities can make new business models possible. Consider a commercial transport company – rather than simply transport loads from point A to point B, the carrier could better optimize its capacity and routing. Imagine a truck has the capacity to handle 80,000 pounds but has only been loaded with 70,000 pounds worth of cargo. The carrier could monitor all dispatches from a central location and see in real time that this truck will be passing another customer that needs 10,000 pounds hauled. The dispatcher could add that stop to the route, enabling it to move a truck at full capacity without disrupting the route. The carrier will generate higher revenues from the trip and conserve fuel by avoiding the need for a separate pickup and delivery.

By coming to smart conclusions about all the data signals from their assets and the surrounding environment, companies can improve their operations, offer new services, and compete more effectively. Behind all of these possibilities is a cloud platform with business intelligence tools that make it possible to access, visualize, and analyze  millions of data points in real time.

How do connected cars promise tochange your business? Please share your thoughts in the comments orsend me a tweet.

For some time I wanted to write about Marketing, Sales and Service in Automotive with a special focus on the needs of the Manufacturer (OEM) and the Retailers (dealers).  But finding the right balance between fact and fiction with the proper level of detail/granularity is not so easy.  Therefore I decided to start simple with the end customer journey. (Of course, there are also so many other journeys, corporate, fleet, B2B and many, many more)

Let me introduce you to Mr. Miller.  Mr. Miller knows that his car is nearing the end of its life.  (End of life can take several meaning…mechanically wearing out or just time for a change).  Mr. Miller is around 40, married with his wife Hanna, two kids, a dog and cat.  With this in mind he begins thinking about a worthy replacement for his good old, loved and loyal van.

His research takes him to various Automotive Manufacturer websites, third party websites, vehicle magazines and other publications and press and social media coverage.  Simply spoken he avails himself of all possible information from all available channels from print to digital media, and even visits the dealer.

Of course, the dealer knows Mr. Miller very well even before he enters the store. Due to the fact that the manufacturer shares Mr. Miller’s latest profile (generated by his recent “consumer journey”) with the preferred dealer, Mr. Miller’s expectations are known. Now Mr. Miller is happy that the dealer is perfectly prepared for his visit.

Since Mr. Miller is also very well prepared based on his research of the vast amount of information available in the digital age, he goes for a test drive with his family to decide if the vehicle of interest is indeed the one to buy.  As it meets all of his selection criteria very nicely, he orders the vehicle of his choice of options and color.

When the vehicle arrives, Mr. Miller again visits the dealer to pick up his new car.  During the delivery, Mr. Miller and his family are invited to join the OEM “Driver Community” to share experiences with the new vehicle and compare the vehicles performance, comfort and economy with other drives of similar vehicles.

Thanks to the built in connectivity of the vehicle, Mr. Miller can control the vehicle performance and other aspect of the vehicles operation and interior appearance with a mobile app.  What fun, even the kids are enthusiastic about the entertaining features of the new car!  Even Mr. Miller finds it amusing to compete with his neighbor about who is the most “sustainable” driver!

The kids are especially excited about buying and consuming videos, games and music in the OEM community store with “loyalty points”.  And naturally they relish the idea of being able to consume the content in the car or by mobile app…makes the “are we there yet?” question fade away!

And Mr. Miller is able to impress his wife Hanna with executive parking spaces, waiting for them when visiting the next sports event or shopping, again enabled by the connected car.

Even fueling is more convenient than in the past. Just drive to the gas pump and refuel. The car pays the bill and the loyalty counter is increased again.

These are just a few examples of a customer journey. And there are many, many more.

Now, what does this mean for the aftersales organization of the OEM who is responsible for Marketing, Sales and Customer Service?

The need to have insight into each and every prospect that contacts the Brand is to ensure a consistent and seamless customer experience across all channels (i.e. mobile, web, social, apps, phone, mail, chat, etc.).

Done right - the manufacturer (OEM) or dealer will win and convert the prospect into a loyal customer.  Of course, this requires processes and systems that help to engage with the prospects and customers intelligently, beyond geographical and organizational borders.

Streamlined operations and collaboration with the national sales companies, importer and distributors as well as with the important number of independent dealer groups, ensures a successful shopping, buying and owning experience.

Helping automotive OEM and retail companies in differentiating with omni-channel customer experience is our mission.

SAP solutions for automotive customer centricity are not limited to SFA only. SAP offers a comprehensive solution portfolio for the complete automotive distribution value chain.

And that’s not the end of the story. Beyond that, SAP is innovating in telematics and connected car solutions enabling scenarios described above in Mr. Miller’s customer journey.

You don’t believe it? Look at these videos:

http://www.news-sap.com/shell-volkswagen-sap-co-innovation-finest/

http://www.news-sap.com/sap-toyota-itc-verifone-connected-cars/

http://www.news-sap.com/sap-develops-innovative-mobility-services-for-the-connected-car/

Want to hear more?

Feel free to contact me or visit www.sap.com/automotive

Sincerely,

Daniel Grimm

Connected Car on the Cheap

On-Board Diagnostics (OBD) II is a global standard hardware and software system required by the U.S. Environmental Protection Agency (EPA) to be installed on all light-duty vehicles and trucks, as well as heavy-duty engines. The standard governs the car’s self-diagnosis of emission related components and subsystems, and provides access for repair technicians, state inspection facilities, and car owners to certain operational and health parameters of the car.

The diagnostic data available from the car’s OBD port also includes some 300 data points, depending on the vehicle manufacturer and model, which are not governed by the EPA's OBD II standard, such as knock sensor information, fuel injectors PCM signal, ignition voltage, cylinder timing, transmission shift points and ABS braking events.

Although OEM-specific data isn’t subject to EPA’s regulation and OEMs can even use some of the J1962 standard connector signals at their discretion, aftermarket OBD diagnostic scan tools are available for a wide range of car makes and models. Furthermore, the Right to Repair movement to protect the rights of car owners to decide where and how they have their vehicles serviced, whether at a new car dealership or an independent service facility, is putting pressure on OEMs to make this information available to the independent aftermarket.

In recent years, a plethora of consumer-grade plug-in OBD modules appeared in the market from companies like Automatic, Zubie, MetroMile, Plex Devicesand Dash. In essence, you connect one of these devices, either wirelessly or via Bluetooth, to your cell phone and, voilà, a connected car.

Automotive OEMs Are Cut Out of the Loop

So where does this leave the automakers?

Since the beginning of the connected car era, arguably going back as far as the mid-80s (GM’s OnStar service business unit was formally lunched nearly 20 years ago in 1995), OEMs had a hard time converting telematics and connected car services into profitable businesses. Emergency services weren’t enough to drive up adoption, and consumers certainly did not think they ought to pay for remote diagnostics.

While OEMs were busy trying to sell telematic services through proprietary and closed business offerings, the aftermarket was much more diligent. The value of the treasure trove of data flowing from the OBD II port wasn’t lost on many, from insurance companies to app developers to do-it-yourselfers and hackers.

These companies leverage the standard physical connector and data stream to collect vehicle information, repackage it, and sell it back to the consumers, cutting the OEM out of the loop.

More Open Standards Are Needed

Not for the first time, startups are more creative and move much faster than OEMs. They are better positioned to understand and respond to a heterogeneous customer population with diverse needs that range from lowering insurance cost to facilitating an always-connected lifestyle to those for whom a car is merely a mode of transportation.

Even Tier One suppliers, some of whom are in the forefront of telematic and connected car innovation, are hamstrung by the antiquated business models and lack of open standards (beyond OBD II) that would allow them to design vehicle systems that can deliver a rich and diverse set of content and services to meet the needs of connected consumers.

This market will not wait for OEMs to get their act together, and those that don’t actively participate will lose opportunities to offer differentiating services, enhance customer loyalty, and generate additional revenue in the process. For instance, car connectivity startup Mojio is turning itself into a telematics development platform for businesses that want customized telematics services.

Predictions

In the spirit of year-end predictions, here are mine:

• Don’t let the announcements about technology collaboration with Google, Apple and Microsoft mislead you. In the near term, the status quo will persist: OEMs will resist opening up the platform and will be slow to bring outsiders into the fold, especially when it involves giving them access to critical vehicle information. Whether driven by fear of exposing critical information to competitors and regulatory bodies, relinquishing opportunities to exploit the information to deliver value-add services, or just traditional thinking, OEMs will continue to dictate the cadence.
• Highly dependent on OEMs product and market strategies, Tier One suppliers will not be as effective in getting innovation to the market as they could. Tier One suppliers such as Bosch, Continental, Delphi and Visteon are well positioned to advance the state of the art in connected cars based on common standards-based connectivity platforms. However, as one of the aforementioned suppliers mentioned during a recent conversation, the lack of a unified vehicle architecture on the vehicle side continues to be a challenge. Hopefully, initiatives such as the Genivi Alliance to adopt an in-vehicle infotainment (IVI) open-source development platform will highlight the value in adopting open standards.
• In the interim, third parties will continue to leverage cheap off-the-shelf technologies and the lack of decisiveness of conservative OEMs to offer consumers connected cars gadgets, apps and business services (many free of charge) such as gas station locations and prices, charging station locations, parking information, traffic updates, and many others.

All in all, the activity in the connected car space will continue to top of mind for OEMs and suppliers, other participants such as wireless carriers and service providers, regulatory agencies, and the general public. The heightened activity, however, will not bring significant convergence in the next several years.

OEMs are in the middle of the conversation. Those OEMs that pursue open architectures and collaborative business models, even investing in those startups and initiatives, will be in better position to both react to and influence innovation in connected car technologies and services. As a result they will be in a position to enhance their strategy and competitive position relative to OEMs that maintain an overly protective attitude.

SAP Warranty Claim creation through external systems can be done using following RFC function modules & by creating wrapper function modules from these modules to create claim, change claims , read claims & do validation checks before claim gets saved:

WTY12_CLAIM_SIMULATION_RFC- Function module to simulate the claim creation without saving the claim.

WTY12_CLAIM_READ_RFC -Read claim

BAPI_WARRANTYCLAIM_ADD_VERSION- Add version in an existing claim

BAPI_WARRANTYCLAIM_CHANGE2- BAPI of claim change

BAPI_WARRANTYCLAIM_SET_ACTION- Run action against an existing claim

DPWTY_CLAIM_RESUBMIT_RFC -Claim resubmit by creating additional version in the claim.

Regards,

Sachin Balmiki

DBM 8.0 SP03 is here – check it out!

Should you be interested – well, if you are into Automotive and in particular Distributor and Retail Business you should be.

A lot has happened to SAP DBM since release 7.0 – DBM 8.0 comes fully loaded with a lot of improvements to existing processes / functionalities and a whole suite of new exiting capabilities. Now with DBM 8.0 SP03 released November 2014 a long waited exiting functionality was released – the Vehicle Sales Assistant.

In this post I will take you through the highlights in DBM 8.0 just to show you  some of the many great new features that have incorporated in the release. I will not make a detailed description of the new features – this will happen in different posts we are planning to write. What you will get here is more of an appetizer. Below I will provide an overview of the new functionalities grouped into areas for easier orientation. At the end I will provide links for you to find more information enabling you to explore the new capabilities of particular interest on our own.

Other interesting posts on Automotive and DBM 8.0

    Vehicle Sales Assistant powered by SAP Dealer Business Management - part 1 - by Claudiu Cioroboui

    Dealer Business Management: tips and tricks for end users - by Matthias Kirtschig

    An Overview of Automotive Dealer Market in China

Where to find more information on DBM 8.0:

     SAP Solution explorer

     Dealer Business Management 8.0: Whats new  - Here you will find the next level of details

Now a days many automotive manufacturer require the recall functionality to be built in warranty system & intern flow from the dealers back & forth to manufacturer. This blog will explain how warranty recall gets integrated with SAP Dealer Business Management recall vehicle processing.

Tcode WTYRCL: Create Recall Master

Refer detail document http://scn.sap.com/docs/DOC-2109

While creating the recall master in the Objects tab, you need to define the vehicle with following inputs as shown below in the screen shot:

Object From will be generally the VIN number of the vehicle. I.e VHVIN

Then once the recall master is saved, then if you look in DBM vehicle master in the tab / set type of Recall it will show that there exist an open recall against the vehicle.

Now while creating the service order for this vehicle the system checks whether there exist an open recall at the memo pad:

Once you check the box & click on copy recall link on the memo pad, system brings all the items & updates the pricing, creates a new job & creates a warranty split in the DBM service order.

Job with the job description as the info specified in the recall master.

At the same time a warranty split gets saved:

Thus the DBM order is ready to be billed & claim to be created & submitted to OEM.

In standard warranty without DBM integration we use the action A095 & A096 to apply the recall, whereas here in DBM we use the event RECALL_COPY.

However the recall master gets updated with the status as consumed only once the claim gets generated.

Hi all,

in my last post I wrote an overview of all the new stuff released with DBM 8.0.

I recieved a question concerning CRM integration with DBM 8.0, which I will touch on here.

With DBM 8.0 SP03 Vehicle Sales Assistant (VSA) was released.

As part of VSA an apporach on how to integrate with SAP CRM was also released, in the form of a consulting note

    ==> Note number:  1964300 - Integration of SAP CRM Leads with Dealer Business Management

I will here describe on a high level what the intention and approach is with this integration, you can find more details in the note.

The intention is to support a Lead to Cash scenario.

In this scenario the Lead will/can be generated in SAP CRM.

When the Lead has been sufficiently qualified it can be transferred to SAP DBM for follow-up and execution.

This means you can start with segementation and marketing planning in your SAP CRM system and use SAP CRM as a filter for your leads and only forward Leads to SAP DBM that are likely to succeed.

If you do not wish to utilize SAP CRM you can create activities (Leads) directly in DBM and follow-up on these using the standard processes in SAP DBM Vehicle Sales Assistant.

The overall process is depicted in following picture: 

Here it is important to note that we talk about a Lead object in CRM whereas the Lead is depicted in DBM as an Activity.

The status will be updated in DBM as well as CRM.

Following important set-up is described in the note:

• Integration of Business Partner:
  • The source of customer/business partner can be either CRM or DBM.
• Integration of Model:
  • The source for vehicle model is the DBM system.
  • With integration to CRM, the vehicle model created in DBM is synchronized to CRM.
• Integration of Material:
  • If the lead management is planned for spare parts selling, the spare part (Material) needs to be integrated with CRM.
  • The source of information for spare parts is DBM.
• Integration of Packages:
  • In order to use packages with lead management, packages can be integrated to CRM system. 
  • The source of package information is DBM.

In addition to the standard interfaces available in CRM middleware a few new interfaces has been created to support this scenario.

For technical details please see the note.

Other interesting links:

DBM 8.0 SP03 is here – manage your dealer business more efficient than ever before

I was asked recently by a client to provide an overview and commentary on the state of connected cars and in-vehicle infotainment (IVI) technologies, ecosystem trends, and how I anticipate these to shape over the next 12-24 months. Specifically, we did not want to focus on connectivity technologies per se, but rather explore the drivers and the inhibitors that influence and shape the business ecosystem of connected cars.

All in all, the activity in the connected car space will continue to be top of mind for OEMs and suppliers, wireless carriers and service providers, regulatory agencies, and the general public. The heightened activity, however, will not bring significant convergence in the next few years.

Here is why.

Automakers Continue to Control the Conversation

Don’t let the announcements about technology collaboration with Google, Apple and Microsoft mislead you. In the near term, the uncomfortable status quo will persist: OEMs will resist opening up the vehicle platform and will be slow to let outsiders into the fold, especially when it involves giving them access to critical vehicle data. Whether driven by fear of exposing critical information to competitors and regulatory bodies, refusal to relinquish opportunities to deliver value-add services, or just traditional thinking, OEMs will continue to dictate the trajectory and cadence of the conversation.

OEMs will respond to potentially threatening moves by industry outsiders such as Google’s autonomous car prototype. While Google’s innovation continues to capture headlines, expect OEMs, in particular Mercedes and Audi, to push the envelope with advanced active safety and autonomous driving features. Traditional OEMs will leverage their strengths in global manufacturing and supply chains to gain an advantage over outsiders such as Google and Tesla.

Misalignment with Consumer’s Mobile Digital Identity Slows Down Adoption

Since the early days of telematics, connected car technology and affiliated services such as OnStar were built into the car, and consumers were limited to those services that were offered with the car (and had to pay subscription fees the OEM thought the market will bear).

But with the ubiquitous popularity of smartphones and plethora of mobile services, many of them free, consumers find built-in vehicle-centric IVI devices technologically inferior, costly, and slow to keep up with technology advancement available on consumer products.

Consumers prefer using their smartphones not only because they offer a wealth of useful apps and information that are always up to date, but because the personal data and personalized services delivered via the user’s smartphone are the proxy for the user’s mobile digital identify. This identity offers consumers an uninterrupted modality-independent digital presence: same experience and services independent of the location and the mode of transportation being used.

Automakers will continue to offer built-in technology and vehicle-centric services. But as they continue to add options and features to out-innovate the competition, the in-vehicle experience for drivers and passengers is becoming more complex and requires re-learning and re-personalization—a stark difference from the smartphone experience.

Consumers may be willing to pay a premium for certain technologies, for example, a larger touch screen, especially if they are able to replicate the small handheld screen onto it, but they are not likely to agree to pay additional monthly fee for services they can already access through their smartphone. So while innovation in built-in IVI will continue to grab headlines and offer some brand differentiation, OEMs will have only a limited success selling new services to consumers.

Concerned Consumers Take a Wait and See Attitude

Concerns and ongoing discussions relating to connected car security and data privacy are top of mind among regulatory agencies, automotive industry insiders and the general public.

In addition to concerns about possible hacking into car electronics and disrupting vehicle to vehicle communication, there are lingering fundamental questions about car data ownership: OEMs, service and content providers and consumers see it somewhat differently, especially when it comes to sharing and using information collected and transmitted by connected cars.

The lack of consensus, adequate regulations and common standards is not going to slow down innovation and technology evolution. In fact, it’s going to be the other way around, as the playing field for the time being is open and less restrictive. However, in the short term, the open innovation space will also result systems incompatibility and market fragmentation.

Concerned consumers will take a wait and see attitude, expecting further proof that connected car technology is robust and that their personal information is not being exploited.

Alliances and Partnerships Win

While OEMs were busy trying to sell telematic services through proprietary and closed business offerings, the aftermarket was much more diligent. In recent years, a plethora of consumer-grade plug-in OBD II modules appeared in the market from companies like Automatic, Dash, MetroMile, Plex Devicesand  Zubie. These devices plug into the car’s OBD II port and connect, either wirelessly or via Bluetooth, to a consumer cell phone and, voilà, a DIY connected car.

Third parties, from mainstream insurance companies to app developers to do-it-yourselfers and hackers are exploring new service options leveraging the treasure trove of data flowing from the car’s OBD II port, cutting the OEM out of the loop. Much of this activity will come from upstarts and established companies that aren’t from the mainstream automotive business. Leveraging inexpensive off-the-shelf technologies, these companies offer consumers connected cars gadgets, apps and business services (many free of charge) such as gas station locations and prices, charging station locations, parking information, traffic updates, car data monitoring, and many others.

2015 should see the continuation and acceleration of the wave of M&As and partnerships activity in the general Internet of Things (IoT) space and in “connected mobility”. In addition to the headline grabbing acquisitions of ThingWorx and Axeda, we witnessed Kore buy RACO Wireless, and Sierra Wireless buy Wireless Maingate. Of particular interest was the new partnership formed between Jasper and Telenor Connexion. And while I was editing this document, Harman International announced the acquisition of Red Bend.

Wireless Carriers will be the Biggest Losers, Unless…

Wireless carriers are hungry to capitalize on the promise of connected cars and the always-connected consumer lifestyle. This is quite logical, considering, for example, estimates by CTIA that by 2017, 60 percent of all cars sold in the U.S. (about 10 million vehicles) will have built-in wireless connectivity.

Indeed, wireless carriers have been providing automakers with telematic connectivity services for over two decades. However, connectivity has become an interchangeable commodity, differentiated primarily by price.

Recognizing the business risk in becoming a commodity supplier, wireless carriers have been and will continue to make significant investment in developing and demonstrating not only next generation 4G LTE global wireless voice and data networks, but also in mobile and IVI technologies such as voice recognition, driver distraction reduction, and car-home integration. AT&T is probably leading the pack with AT&T Drive Connected Car Platform, which is at the center of the company’s global connected car strategy. 

But despite these efforts, wireless carriers will not be able to reach significant traction beyond the current vehicle-embedded SIM card based data services. However frustrated by the protective practices of auto OEMs, carriers will continue to compete for exclusive contracts with automakers.

Wireless carriers are torn between the old business model which is driven by data volume and average revenue per user (ARPU) and the desire to be a strategic partner but not having a sustained strategic value. Carriers need to think differently about how to leverage global connectivity infrastructure and expertise as the platform upon which to provide OEMs and consumers greater value. This value is more likely to come from partnerships and acquisitions rather than new technologies that attempt to compete with OEMs and suppliers.

[Originally posted on 2015 Connected Cars Predictions - Joe Barkai]