8 Success Factors for Getting the Connected Car Experience Right

Published On: August 15th, 20227 min read

Today’s automotive manufacturers know all too well the global disruptions that put their traditional growth strategies at risk. To name a few

It’s clear that the pandemic accelerated digitalization in the automotive sector; it also reshaped consumer demands for last mile-delivery, Transportation as a Service, connected cars, and remote handover, with an increased desire for creating experiences.

Shortages of semiconductor chips are also forcing OEMs, Tier 1’s, and other suppliers to think differently and leverage alternative options.

Regional players incentivized by their governments, coupled with the projected reduction of ICS vehicle sales around 2025/26, mean that Tesla, Chinese EV companies, and others have the potential to grab significant EV market shares globally.

These disruptions (and more) are being faced by a sector that – let’s be real – is very traditional in its nature and not the most experienced at change.

However, the situation for traditional OEMs is not as dire as it may at first seem.  Automotive manufacturers still have time to get the connected car experience right. Doing so requires enterprise-grade changes in both processes and organizational structure to support a continuous strategy and innovation mindset.

DMI believes that OEMs’ success depends not just on connecting people to their cars but on connecting and converging our outside worlds. That simple shift in perspective drives our solutions and guides our vision to redefine the in-car experience by making it safer, more personalized, smarter, more natural, and more convenient. 

Critical Connected Car Insights from DMI’s Automotive Team

From seeing and listening to what our clients, prospects, and partners are saying, the Automotive Team, led by Jenny Heinze, SVP Automotive and Connected Solutions at DMI, has identified the following eight success criteria:

1. OEMs need to adopt CX approaches and design thinking to truly understand the needs of their customers. All OEMs talk about the importance of “focusing on the consumer experience” and “putting the customer’s needs first or in the middle of the ecosystem.” 

However, inventing new software features without following proper CX approach, and design thinking is – more often than not – going to lead to dead ends and wasted opportunities. OEM behavior needs to shift, implementing CX best practices and true design thinking. The traditional mindset has been centered around the product.

2. OEMs need to adopt a methodical approach to embracing software centricity. OEMs understand the Tesla model: That is, (1) build the car around the software and (2) detach software cycles from the hardware build. OEMs also understand the need to transform their organizations into agile, team-empowered software product teams, continuously developing and deploying software to their cars. 

But taking these steps without a broad strategy – and a methodical approach to the transition – will produce limited, underwhelming results. Simply hiring software skill sets, bringing in Agile scrum masters, and retraining existing employees are not – alone – enough to position an OEM for future success.

3. OEMs should focus more on the organizational change management needed for successful transformations. Our team is seeing multiple cycles of reorgs, generating a lot of paralyses and negative impacts on the people in the teams who are now expected to be software-centric. What we do not see enough of is an embrace of actual organizational change management. 

This is despite the fact that OCM applied leads to six times the success and adoption of the change you are trying to accomplish. Bonus insight: The behavior and leadership culture to drive success also needs to evolve in an organization over time.

4. OEMs must change the way they attract, retain, reskill, and retire workers. As we know, the classical skillsets of automotive companies, which were heavily engineering-driven, are changing. OEMs will soon require software skills across the entire automotive value chain. 

Currently, talent on the market has amazing opportunities – they can pick and choose their employer. But unless OEMs adapt their internal culture, organization, and processes to model that of the software industry, this talent will join and then leave in short order. The sad truth: This is already happening.

5. OEMs need a well-defined partner strategy if they want to build a long-lasting, stable software partner ecosystem. Yes, all OEMs have engaged in strategic partnerships with key technology players in the market. Some are – in fact – already in their second or third cycle of changing those partnerships.

But without a well-defined partner strategy and without a clear definition of partner value in the broader context of end-to-end transformation, such partnerships will be tenuous at best – and they will likely underperform. A much bigger emphasis needs to be placed on integrating partners more deeply into the SDV architecture.

6. OEMs need to focus on how vehicle identities can be integrated with consumer use case identities. The industry is approaching a nightmare identity management situation for consumers if this integration of vehicle and consumer identities isn’t solved across the ecosystem. We are seeing MOBI accelerate strategies around blockchain as leaders in this space, as they define how distributed technology and immutable records can be the solution to safe interactions across the ecosystem.

OEMs can contribute by creating digital vehicle identities as they leave the assembly lines. These identities would embed all relevant records – quality, supply chain info, vehicle history, visuals, and much more – as the vehicles start their journey of interactions in the connected mobility ecosystem.

7. OEMs need to recognize the need for a connected ecosystem that integrates both open-source software components and cooperation with the public sector. The mobility and connected ecosystem won’t happen unless we collectively – across public and private sectors – work better together to make it happen. From governance and standards to defining interactions of things and people, a lot of OEMs still have the mentality of “we want to own all of our IP.”

Because everyone is building their own software stacks, it will become very challenging to get these individual software stacks to communicate well with each other – and across the ecosystem. We need more thought leaders coming together – in organizations like Eclipse – to jointly define and develop open-source software components that will benefit the entire ecosystem.

8. OEMs and Tier 1s need to reinvent themselves when it comes to revenue streams – including exploring new business models. We hear OEMs talk about this shift and how they will be creating new revenue streams with subscription models as well as data as a service, selling data to interested third parties. Currently, though, the reality we are seeing is that a lot of them are still struggling to figure out what that means – how these new models can be defined and established (such as what data can be used for what use cases, how to engage with a broad ecosystem of interested third parties, etc.) 

This one is key to overcoming the projected “valley of death” related to reduced ICE vehicle sales and the slow ramp of EV sales. We are seeing a struggle to best define a data distribution strategy and to create a speed-to-revenue model enabling interaction with the third-party ecosystem. Enabling seamless payment experiences within the vehicle will be key. Unfortunately, we are not always seeing the right approaches for this critical feature.

DMI & the Future of Automobility

For automakers to survive these revolutionary pressures, they must become software companies and collaborators, with a focus on Transportation as a Service (TaaS), subscription and shared mobility models, and the user experience (MobileX). The robust “Connected Vehicle” ecosystem of the future consists of many pillars, all of which are rooted in a core of transformative business mindset, built-in intelligence, data strategy, data monetization, customer experience, and change management.  

Global change requires enterprise-grade changes in both processes and organizational structure to support continuous strategy and innovation. At DMI, our Minimum Viable Transformation (MVT) approach allows companies to integrate with 3rd party partners to enable everything from smart cities, smart grids, self-driving, and the connected user experience. Our MVT model sets the stage for growth across all pillars of this ever-changing industry, allowing entry into the future of Automobility.

Connect with us to learn more.