By Umar Riaz, Joel A. Osman, Margo
R. Gorra-Stockman and Christopher A. Shoup
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PDF Help Telematics—the ability to wirelessly provide information to or extract
information from vehicles and industrial equipment, such as generators, pumps,
and heating and cooling systems—has been steadily evolving over the past
decade. But with advances such as improvements in voice recognition and the
emergence of wireless data services, signs now point to a rapid take-up of
telematics.
Telematics applications in the automotive industry have received the most
attention as car companies provide more in-vehicle services to their customers.
However, even the automotive industry is realizing only a fraction of the
potential benefits that telematics can offer. Until now, car companies have
focused primarily on the "push" aspects of telematics—sending information such
as directions, traffic information and "infotainment" to the car and its
occupants.
But the tremendous untapped potential of telematics revolves around the
"pull" ability of telematics. This is true not just for the automotive industry
but also for any company involved with industrial equipment—whether in
producing it, selling it or maintaining it.
Telematics Means Never Saying Good-Bye to the
Customer In the automotive and industrial equipment industry, original equipment
manufacturers (OEMs) have only sporadic contact with their customers after the
initial sale. Telematics enables OEMs to wirelessly gather a wide range of
data, from position and usage patterns to maintenance needs and performance
information. This ongoing ability to pull data from their product offers OEMs
the opportunity to stay connected with their products and customers long after
the initial sale.
Because there is so much potential for adding value through greater
customer insight and interaction, Accenture believes telematics could redefine
the automotive and industrial equipment industry's products and their value
propositions for customers. Going even further, Accenture considers telematics
to be a transformational technology across industries with the potential to
have an economy-wide impact. Accenture Technology Labs are
developing prototypes to demonstrate the depth and breadth of the impact of
telematics.
Companies having difficulty justifying the cost of providing wireless
services to their customers should evaluate both the push and pull aspects of
telematics. This could mean the difference between making telematics a
profitable undertaking and not utilizing telematics at all and being left
behind.
All in all, telematics can help companies achieve their strategic
objectives by creating much stronger relationships with their customers. With
the exception of credit-card and phone companies, which have instant access to
a wide range of data about their customers, most companies know very little
about how their customers interact with and use their products. Telematics
opens up the possibility of truly understanding customers' needs, wants and
habits. Access to this kind of information provides a direct personalized
marketing channel and can also lead to the development of new products.
Three Telematics Business Models There are three basic telematics business models:
- Business-to-consumer telematics. This is
by far the most common use of telematics today. Customers subscribe to services
such as navigation assistance, traffic information and infotainment content,
such as sports scores.
- Business-to-product telematics. In this
emerging telematics model, the company selling the machine pulls information
from the machine to track usage and offer preventive maintenance. This model
provides significant cost-reduction opportunities through early warranty
problem detection and lower recall and product liability costs. Imagine that
individual parts within a sophisticated machine could sense when something is
about to go wrong, then order parts and schedule its own maintenance, even
re-route the workload of the parts in need of repair.
Accenture Technology Labs is building a prototype of an industrial machine that can do just that.
- Business-to-business telematics. This
telematics model is only now getting serious consideration, yet it is
potentially the model with the largest revenue opportunities. Telematics can
create new revenue streams as data is collected and sold to other companies.
This means third parties can offer specialized products or services tailored to
the customer or use the data as intelligence for new product development.
Telematics Strategy Must Encompass Wide-Ranging
Implications "Car insurance by the mile" illustrates the far-ranging impact of
telematics. Who owns the data being transmitted by the car? Would it be owned
by the car manufacturer and sold to the insurance company? Or would the car
company contract with the insurance company to manage the flow of data? Would
it track just usage or also routes taken? Might consumers choose from certain
levels of data tracking?
What are the privacy issues associated with the collection of data no one
has ever collected before? Could it be used by law enforcement to monitor speed
and issue tickets?
What about other interested parties? Federal and local transportation
departments might be interested in the data to help with traffic planning.
Petroleum companies might use the data to analyze how their products perform in
different types of cars under different driving conditions.
As companies consider telematics for their products and industries, they
must ask and answer these questions as part of their overall telematics
strategy. But facing these complex and, in some cases, difficult issues will
pay off, for the beauty of telematics is its potential to enhance the value of
a multitude of mature and emerging products and services in any number of
innovative ways.
Developing a Telematics Strategy Whatever the business model and no matter how attractive telematics is to
companies and their customers, the business and technology complexities and
challenges inherent in telematics are formidable. Complete telematics solutions
include customer service, support, billing, technology infrastructure,
application integration, and data mining and management.
This usually requires revamping back-end infrastructure and establishing
alliances with technology and service providers. Choosing between the various
technologies and alliance partners requires extensive evaluation.
It is difficult, if not impossible, to implement everything required by
comprehensive telematics solutions at the same time. As a first step, companies
should develop a telematics strategy and a reasonable migration plan for
technologies and service offerings over the next one to five years. The
telematics strategy should encompass:
- A list of telematics-related customer services organized by
priority and target time frame.
- A comprehensive business case, including the expected cost
of implementing telematics, which is not only the cost of "on-board" technology
but also the cost of the back-end infrastructure and processes, such as data
mining and billing.
- A comprehensive map of the alliances and partnerships
required to implement telematics, and a perspective on what elements of the
telematics solution should be developed in-house and which should be
outsourced.
Telematics will be a transformational technology in the automotive and
industrial equipment industry. The convergence of a diverse set of
technologies, such as those for voice recognition and wireless data, coupled
with growing customer interest and compelling value proposition for OEMs will
make telematics a key strategic priority for most OEMs and their suppliers.
This growth will inevitably lead to a battle among the different players
on how to divvy up the telematics pie. OEMs must take the lead and not allow
third parties to define the telematics industry. If they do, OEMs may find that
they are no longer in the driver's seat of their relationships with customers.
Accenture mobile
solutions harness mobile technology, such as telematics, to provide
business solutions that help firms achieve positive return on investment.
Umar Riaz, partner—Accenture
Automotive industry group, is based in New York City.
Joel A.
Osman, senior manager—Accenture Technology Labs, is
based in Chicago.
Margo R. Gorra-Stockman, senior manager—Accenture
Corporate Strategy, Automotive industry
group, is based in Reston, Virginia.
Christopher A. Shoup, partner—Corporate Strategy,
Industrial Equipment
industry group, is based in Chicago.
For more information, please
contact us.
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