The previous articles in this series laid out the various challenges presented by the eco-system in India, to OEMs and Tier-1s trying to implement vehicle telematics and connected services in India. We’ve taken an in-depth look at the various problems, and even described some locally optimal solutions at a design level on overcoming these. In this concluding part, we take a look at a global optima solution — a prescriptive approach when looking at the entire design to sales lifecycle of telematics solutions. The guiding philosophy behind this approach is: “Design for the Aggregate, Sell for the Specifics”
Adopting this approach would help Tier-1s and OEMs overcome the multitude of environmental and user level challenges that we discussed earlier as being unique to the Indian context. But what does “Designing for the Aggregate” and “Selling for the Specifics” mean?
Designing for the Aggregate: Platform based approach for hardware and software
The platform approach for telematics hardware was already explained by us in our preceding articles. There is a great proliferation of vehicle types and platforms (from the premium SUV to the garbage collection pick-up truck) we have a great number of data input sources (CAN, analog sensors, digital sensors, frequency based read-outs), a good number of data out channels (BT, WiFi, Zigbee, LoWPAN etc.) and quite of lot of interfaces. Different vehicles also operate in different conditions (small LCVs tend to operate in urban clusters with good connectivity; long haul trucks run out of highways across different telecom regions; tractors operate in areas of poor connectivity). We argue that connectivity hardware designers must adopt the platform approach which can accommodate for all these design factors, which tends to bring down hardware development costs and unit costs by economies of scale. Lower unit costs are absolutely vital for ensuring that vehicle connectivity proliferates across vehicle segments. Ultimately, greater the number of participating nodes, greater the chances of network effects kicking in.
Why should an OEM worry about telematics hardware design, when so many aftermarket solutions are available — is a question which has often been thrown our way. The answer is quite simple: vehicle data and connectivity is as much a feature as say airbags or power steering. Performance of vehicle connectivity hence is an OEM responsibility, as is any other sub-assembly or component that goes into a vehicle. More than reliability requirements, an OEM line fitted device which is integrated into the vehicle network has complete access to all data generated in the vehicle and can offer a richer vehicle data experience.
The platform philosophy is also essential in the web based solution — which forms the crucial second wheel of a telematics solution. The data ingestion layer in the web solution must be designed to handle various transmission protocols (MQTT, HTTPS etc.), must have the ability to scale and handle massive amounts of data. Crucially, the web platform must be able to support multiple consuming channels — web portals, mobile apps, ERP solutions, analytics clusters or even data pulls through API calls. Given the variations in data volumes and the data integration needs, cloud based deployments make more sense than hosting data on-premises. Cloud based hosting and managed services for the platform (which includes agile dev-ops) will lend a crucial competitive advantage to the OEM/Tier-1, which will be evident in the next section.
Selling for the Specific: Segmentation and targeted selling of vehicle data services
How vehicle data and connected vehicles services is marketed and sold to end users is the ultimate deciding factor for the OEM/Tier-1 on whether it makes money from telematics or not. For an OEM’s sales organization, selling data based services is a completely different proposition compared to selling vehicles. It requires a great deal of effort, training, process and business reorientation from the marketing & sales organization to engage customers for a services business. Significant part of the process is customer and end user education about vehicle connectivity — what this technology is, what it can and (more importantly) cannot do, and possible ways from which the user can gain value from vehicle data. This process is most important, as in a market such as India, usage of vehicle data isn’t self-evident and for the marketing organization this literally becomes an exercise in creating a market which doesn’t exist.
But the payoffs from investing any such efforts for transforming vehicle OEM marketing functions to sell data services are evidently tremendous. Connected vehicles services, for the first time, provides a great marketing opportunity — the ability to target specific customer segments. Consider an OEM which sells vans — which can be either used for tourist transportation, or for school/college runs, or even in urban shared mobility. From purely vehicle standpoint, the ability specifically target each of this segments by the OEM itself might be limited. But combined with data, the OEM can spin off custom end use applications for each sub-segment (a content streaming application for the tourist segment, a personnel tracking platform for the school segment and so on). Each end use application offer additional subscription revenue channels to the OEM. The end use for vehicle data are numerous — from web and mobile apps to reports to analytics services. Cloud based hosting of the web based solution combined with agile dev ops provides the OEM the ability to scale across many customers, and quickly spin off custom applications to end users.
A combination of solution design and reorientation of marketing can ensure the success of connected vehicles services for OEMs, customers and all participants of the automotive value chain. Apart from platform solution design and end user services, there are additional aspects such are platform validation strategies and government interventions for the eco-system design which are vital for creating the right customer experience. OEMs and Tier-1s which get these elements right will be uniquely positioned to create a brand new market within the automotive value chain in India, and unlock a tremendous amount of value for all stakeholders.
This article was originally published in my earlier blog.