Finding the telematics business case

Finding the telematics business case

I’ve seen a lot of really cool automotive electrical and electronics technology that hasn’t yet reached the market, not because the technology won’t work but because automakers have not yet articulated a sufficient business case.

What’s the problem? I asked Ralf Hug specifically about the business case for telematics, where he has a lot of experience on both the OEM and supplier side. He asks himself the same question and then suggests one possible answer.

“OEMs can sell a telematics control unit, either as a standard feature or an option, and top of that is the revenue from selling content and services,” Hug says. “The ultimate objective, of course, is to use telematics as a unique selling proposition and achieve more vehicle sales – or halt declining sales.” He cites Ford as a good example of that, since Ford claims increased sales due to SYNC.

Then there is the ability to retrieve diagnostics data, which should interest managers responsible for warranty repairs and overall vehicle quality and production. And consider the potential for updating electronic control units remotely in much the same way the Microsoft updates Windows.

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“Building better relationships with car owners through vehicle health reports and dealer integration not only increases the likelihood of maintaining customer loyalty but also improves parts and service revenues and profitability of the OEM and dealership and keeps customers loyal within the OEM dealer network,” says Hug.

The problem, as he sees it, is that there are many “businesses” within a car company, each with its own priorities if not its own P&L. “Sometimes all of the internal businesses’ objectives come into alignment, but more often there are conflicts among them,” he says. “When I worked for a luxury car maker I had to re-open the business case for telematics about every three months because someone thought the ‘telematics’ line item could be deleted to lower the cost of the vehicle. My team and I had to deal with each objection by explaining the value that telematics creates despite having a program in place for many years.”

What’s needed, Hug suggests, is someone high enough up in the organization to be able to sort through conflicting priorities. “Someone has to have the vision and the clout to negotiate the rather complex ecosystem and make something happen at a senior management level and be able to work across various functions within a car company.” But telematics has not gained sufficient mindshare at a high enough level because the people running car companies today are, for the most part, car people who think a lot more about mechanics than they do about electronics.

“A change in organizational structure is needed to overcome these barriers for a holistic business case,” Hug says. And electrical/electronics engineering is likely to become a more viable career path.

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