Top 5 Trends In Automotive For 2017

William Newman

It’s always fun this time of year to look into the crystal ball and consider what the key trends for the coming year might be. After consuming key messaging over the past several months from a number of industry related briefings and research, I’m here to offer my top 5 trends in automotive for 2017. In no particular order they are:

  1. Products will become smarter, smaller, and more connected as platforms
  1. Industry disruption and confluence will continue and accelerate
  1. The talent war will become critical, even a pinch point to growth
  1. Customer engagement will continue to grow in importance
  1. New digital business models will emerge, and most haven’t been created yet

Let’s break each one of these down and discuss some of the relevant proof points on each and the industry impacts for 2017 and beyond.

1. Products will become smarter, smaller, and more connected as platforms

On the topic of product design, there are a number of factors. First, vehicles continue to be designed under emission reduction guidelines. As such, the notion of “light weighting” vehicles continues at a rapid pace. New tech companies working with composites and new alloys are popping up like Internet startups in the late 1990s and early 2000s. The ability to simulate structural impact conditions with the use of very sophisticated analysis tools (along with large, massive data calculations) makes the ability to “fast fail” before committing to physical metallurgy a reality. These are all positive indicators that automobiles will become faster, lighter, and more fuel efficient.

An interesting caveat and counter-balance trend to the progress of light-weighting is the effects the industry faces as we move from “Level 1 and 2” autonomous vehicles (requiring the use of a driver/controller) to “Level 4 and 5” (generally considered by approved for driverless operation – see this funky graphic for a simple explanation of the NHTSA and SAE levels). While vehicles will have more autonomous features, the need to add redundant systems – including the weight of the driver – will counterbalance vehicle-lightening initiatives during the transition period, until Level 4 becomes more reality and less fantasy (and is approved by regulators for general population). How automotive suppliers connect in terms of their respective digital products and platforms will also evolve (see #2).

2. Industry disruption and confluence will continue and accelerate

It’s already hard to tell how much a vehicle company is a manufacturer, retailer, bank, and marketing firm these days, and those segments will continue to muddle as the industry morphs into Transportation as a Service (TaaS) business models. As vehicles move into a TaaS-based operation environment, a funny thing happens: the rate of use skyrockets from about 20-30% of total available use (when a personal vehicle is parked or idle) to about 70-80% (when fully autonomous or fully driver/consumer engaged). Automakers are considering what this means to service and aftermarket parts, particularly when the rate of use can shift to non-owner/vehicle customers. Will the current dealer infrastructure be deep and wide enough to manage demand? What about the insurance industry? Who insures the car when it is not a personally owned asset? If the vehicle is a personally owned asset, can I as an automaker share driver information with the insurance industry as it is collected? Am I allowed to sell these assets? What does this mean in terms of micro-royalties passed to connected suppliers who provide automakers the platforms to connect this information?These elements need to be factored into tomorrow’s business models, business processes, and data analytics.

3. The talent war will become critical, even a pinch point to growth

The biggest challenge most manufacturing and engineering-related companies have today is the ability to attract and retain key technical talent. Without talent to move into the new demands of the connected and autonomous industry, products, and operations, the growth rate of companies could become constrained just like any other capital asset. At the recent OESA Annual Conference, management consulting firm Boston Consulting Group identified through its survey work that the #1 issue facing the automotive industry is management, with the top area of concern there being talent management. The big fight for talent is just getting started.

Case in point: Last year I was with a company whose entire IT architecture team was approaching mandatory retirement age. Earlier this year I was with another company that needed to maintain its engineering workforce as a key to growth as it replaced retiring skilled workers and designers and built product sales volume. In short, every company in the industry has a talent-management problem, and everyone is competing for the same skilled resources in science, technology, engineering, and math. These STEM resources are of top demand in the workforce and will command attention, compensation, and flexibility in terms of how work gets done in automotive and manufacturing companies.

4. Customer engagement will continue to grow in importance

Driver consumers will continue to demand greater engagement in services and other delivery models with automakers, and automakers are extremely interested to accommodate these new, largely millennial drivers. A McKinsey study published earlier this year suggested an estimated $1.5 trillion in digital services would be rendered through connected vehicles by 2030. This represents by far the largest growth area for the automotive industry, with personal vehicle sales expected to grow modestly between 2% and 4% during that time (IHS, Frost & Sullivan, others). So how do automakers tap into that engagement model at a deeper, more meaningful level? My colleague Thomas Leisen from our organization and talent group suggests the answer is be purpose-driven and authentic. According to Thomas, when it comes to millennials in particular, “this generation is really sensitive as to whether a brand purpose is authentic or not. If millennials don’t buy your claimed purpose on the fly, not only are you throwing away a lot of money for all of your marketing campaigns, but they might also get the wrong impression.” Pushing that level of authenticity – with deep data accuracy and meaning – to driver consumers will require new and evolved thinking to capture this massive future wallet share.

5. New digital business models will emerge, and most haven’t been created yet

And this is just what we know. What about digital business models that haven’t even been created yetAccording to IDC, by year-end 2017, over 70% of the G500 will have dedicated digital transformation and innovation teams. In addition to those digital (DX) transformation efforts, by 2019 40% of all digital transformation initiatives – and 100% of all effective Internet of Things (IoT) efforts – will be supported by cognitive/AI capabilities. When the industry moves into AI and machine learning concepts, the role of the human is one more of oversight and control and less one of execution: intelligent machines, building intelligent vehicles, servicing intelligent machines.

Case in point: Much like many household connected items, the first interaction with a digital device is with your phone to match/pair, personalize, and engage the product. What will the phone – or some other primary device – in the future represent? How will we use that to onboard and personalize a vehicle? These are questions that automakers are considering today, even with the rapid pace of current change, to be ready for tomorrow.

So how did I do? Long shot or bull’s eye? Check out my top trends for 2016, and listen to my crystal ball 2014 predictions from SAP Radio Coffee Break with Game Changers.

This article originally appeared on LinkedIn Pulse.

Comments

William Newman

About William Newman

William Newman is a Strategic Industry Advisor, providing industry perspective, strategic solution advice, and thought leadership to support SAP automotive and discrete industry customers and their co-innovation programs. He helps build and maintain SAP's leadership position in the automotive industry and associated industry segments. He manages SAP’s annual digital aftermarket survey program and serves as the ASUG Point of Contact for the NA Automotive SIG. He is the author of two SAP Press books and a LinkedIn Editor’s Choice contributor.

How Blockchain Can Restore Trust In The Wine Industry

Eric Annino

Blockchain is one of those things that everyone talks about but no one (myself included) really understands—like bitcoin or the stock market. I do understand, however, that blockchain is all about trust, and that’s the reason it’s going to revolutionize every industry. It’s also the reason it can revolutionize wine markets.

Fine wine has traditionally been bought and sold based on large measures of trust. A seller offers a bottle for sale, most likely something rare, old, or from an iconic maker; provides a reasonably good story of origin (or provenance) to establish that the wine is authentic and has been stored correctly; and buyers line up to shell out thousands, if not tens of thousands, of dollars.

That has changed in the last decade.

In 2008, Benjamin Wallace’s true crime hit The Billionaire’s Vinegar (soon to be a movie starring Matthew McConaughey) brought to light the story of a German music manager and wine collector who allegedly duped other wealthy collectors into buying counterfeit wine (i.e., wine that has been adulterated in some way, often passed off under a more expensive brand), including several bottles he claimed belonged to Thomas Jefferson.

Wallace’s book became a New York Times bestseller and planted a significant seed of doubt in the minds of collectors everywhere.

Half a decade later, the wine world was again shaken when wine-collector-turned-wine-forger Rudy Kurniawan was sentenced to ten years in prison for defrauding high-end collectors to the tune of at least $20 million. (For the whole story, check out Peter Hellman’s new book In Vino Duplicitas.) In the wake of the “Rudy affair,” auction houses began to withdraw lots of wine of suspicious provenance. Lawsuits followed, and one prominent collector—billionaire Bill Koch, who fell victim to both Rudy and the alleged forger of Wallace’s book, Hardy Rodenstock—even began a crusade against fake wine, hiring a team of experts and spending more than $20 million of his own money to ferret out counterfeiters.

Trust in fine wine markets has never been lower, but blockchain has brought hope.

Meet Everledger, a London-based blockchain technology firm and the first company to secure a wine’s provenance via blockchain. After making its mark fighting counterfeiting in the diamond industry, Everledger made the jump to wine, and has partnered with renowned wine fraud specialist Maureen Downey (who played an important role in the Rudy Kurniawan investigation) to create the Chai Wine Vault.

Using Maureen’s Chai Method, which identifies more than 90 data points on a bottle, along with high-resolution photographs and ownership and storage records, Everledger creates a permanent, digital representation of a bottle on the blockchain. This permanent record acts as a verification point as the bottle changes hands. The blockchain is updated along the way so anyone who buys or sells the bottle can rely on trustworthy provenance.

This level of supply chain security is increasingly vital to every industry. “If you can track and trace diamonds, you can track and trace anything,” says Joe Fox, SAP Ariba’s Senior VP of Business Development and Strategy.

“One of the things blockchain does is facilitate greater visibility and trust. In embedding it across our applications and network, we can enable supply chains that are smarter, faster and more transparent from sourcing all the way through settlement.”

Wine counterfeiting isn’t new—Pliny the Elder lamented the practice in first century Rome—but it’s certainly reaching new heights. Experts, Downey included, have suggested that as much as 20 percent of wine sold globally is fraudulent. An estimated 10,000 “Rudy bottles” are still in circulation, and just last week, police seized 6,000 bottles of counterfeit wine in China.

For wine markets everywhere, blockchain is a timely innovation that underscores the value of trust in any transaction.

For more on blockchain’s potential to impact business processes, see Improve User Experience With Internet Of Things, Blockchain, And Platforms.

Comments

Eric Annino

About Eric Annino

Eric Annino works for Global Corporate Affairs at SAP.

Savour The Flavour

Lucy Thorpe

Next time you pop a stick of strawberry gum, it might be worth remembering that there are dozens of different varieties of strawberry flavour, each one tailored to suit the market preferences of people from all over the globe.

Welcome to the world of flavour according to TasteTech, a family-run manufacturing business in the UK which has been making controlled-release food flavourings and ingredients for the food industry for the past 25 years. They have ambitious plans for growth, but until recently did not have the digital-first mindset necessary to get there in today’s competitive world.

As a highly specialised company, TasteTech must offer very high levels of safety, efficiency, and discretion, with many of their clients insisting on non-disclosure agreements to protect their secret recipes. They must also comply with the very strict British standards around food manufacturing. Rob Sinton, supply chain manager and owning family member says, “Food safety is at the forefront of everything that we do which in turn helps to build customer trust.” Correct labeling is vital and everything must be traceable on its journey in and out of the factory.

That is why an analogue approach no longer cuts it at TasteTech, or indeed at thousands of other growing manufacturing companies around the world. A patchwork of different server-based systems assembled on the hoof are not efficient enough in an environment in which accuracy, flexibility, and timely delivery are paramount.

Once they adopted a digital-first mindset, TasteTech were able to streamline their production and distribution processes while gaining greater transparency and end-to-end control over operations. Today, checks are faster, labeling is more accurate, and they can make changes more simply when adding products to their portfolio—all of which enhances their reputation for quality.

They now have a fully integrated ERP system based in the cloud with finance and project management capacity which can manage sales as well as manufacturing.

Theirs is a complex business, and by taking these digital next steps they have managed to increase transparency and efficiency, putting them in a great position to meet ambitious growth targets in the near future.

For more insight on digital-first strategies, see Next-Gen ERP: The Digital Foundation For Cloud-First Firms.

Comments

Lucy Thorpe

About Lucy Thorpe

Lucy Thorpe is a digital marketer and writer with SAP Platinum Partner In Cloud Solutions. Based in the UK, she is a former BBC journalist and presenter. Much of her work is now focused on explaining the benefits of digital enterprise resource planning (ERP) systems for small and midsize businesses.

Diving Deep Into Digital Experiences

Kai Goerlich

 

Google Cardboard VR goggles cost US$8
By 2019, immersive solutions
will be adopted in 20% of enterprise businesses
By 2025, the market for immersive hardware and software technology could be $182 billion
In 2017, Lowe’s launched
Holoroom How To VR DIY clinics

From Dipping a Toe to Fully Immersed

The first wave of virtual reality (VR) and augmented reality (AR) is here,

using smartphones, glasses, and goggles to place us in the middle of 360-degree digital environments or overlay digital artifacts on the physical world. Prototypes, pilot projects, and first movers have already emerged:

  • Guiding warehouse pickers, cargo loaders, and truck drivers with AR
  • Overlaying constantly updated blueprints, measurements, and other construction data on building sites in real time with AR
  • Building 3D machine prototypes in VR for virtual testing and maintenance planning
  • Exhibiting new appliances and fixtures in a VR mockup of the customer’s home
  • Teaching medicine with AR tools that overlay diagnostics and instructions on patients’ bodies

A Vast Sea of Possibilities

Immersive technologies leapt forward in spring 2017 with the introduction of three new products:

  • Nvidia’s Project Holodeck, which generates shared photorealistic VR environments
  • A cloud-based platform for industrial AR from Lenovo New Vision AR and Wikitude
  • A workspace and headset from Meta that lets users use their hands to interact with AR artifacts

The Truly Digital Workplace

New immersive experiences won’t simply be new tools for existing tasks. They promise to create entirely new ways of working.

VR avatars that look and sound like their owners will soon be able to meet in realistic virtual meeting spaces without requiring users to leave their desks or even their homes. With enough computing power and a smart-enough AI, we could soon let VR avatars act as our proxies while we’re doing other things—and (theoretically) do it well enough that no one can tell the difference.

We’ll need a way to signal when an avatar is being human driven in real time, when it’s on autopilot, and when it’s owned by a bot.


What Is Immersion?

A completely immersive experience that’s indistinguishable from real life is impossible given the current constraints on power, throughput, and battery life.

To make current digital experiences more convincing, we’ll need interactive sensors in objects and materials, more powerful infrastructure to create realistic images, and smarter interfaces to interpret and interact with data.

When everything around us is intelligent and interactive, every environment could have an AR overlay or VR presence, with use cases ranging from gaming to firefighting.

We could see a backlash touting the superiority of the unmediated physical world—but multisensory immersive experiences that we can navigate in 360-degree space will change what we consider “real.”


Download the executive brief Diving Deep Into Digital Experiences.


Read the full article Swimming in the Immersive Digital Experience.

Comments

Kai Goerlich

About Kai Goerlich

Kai Goerlich is the Chief Futurist at SAP Innovation Center network His specialties include Competitive Intelligence, Market Intelligence, Corporate Foresight, Trends, Futuring and ideation. Share your thoughts with Kai on Twitter @KaiGoe.heif Futu

Tags:

Jenny Dearborn: Soft Skills Will Be Essential for Future Careers

Jenny Dearborn

The Japanese culture has always shown a special reverence for its elderly. That’s why, in 1963, the government began a tradition of giving a silver dish, called a sakazuki, to each citizen who reached the age of 100 by Keiro no Hi (Respect for the Elders Day), which is celebrated on the third Monday of each September.

That first year, there were 153 recipients, according to The Japan Times. By 2016, the number had swelled to more than 65,000, and the dishes cost the already cash-strapped government more than US$2 million, Business Insider reports. Despite the country’s continued devotion to its seniors, the article continues, the government felt obliged to downgrade the finish of the dishes to silver plating to save money.

What tends to get lost in discussions about automation taking over jobs and Millennials taking over the workplace is the impact of increased longevity. In the future, people will need to be in the workforce much longer than they are today. Half of the people born in Japan today, for example, are predicted to live to 107, making their ancestors seem fragile, according to Lynda Gratton and Andrew Scott, professors at the London Business School and authors of The 100-Year Life: Living and Working in an Age of Longevity.

The End of the Three-Stage Career

Assuming that advances in healthcare continue, future generations in wealthier societies could be looking at careers lasting 65 or more years, rather than at the roughly 40 years for today’s 70-year-olds, write Gratton and Scott. The three-stage model of employment that dominates the global economy today—education, work, and retirement—will be blown out of the water.

It will be replaced by a new model in which people continually learn new skills and shed old ones. Consider that today’s most in-demand occupations and specialties did not exist 10 years ago, according to The Future of Jobs, a report from the World Economic Forum.

And the pace of change is only going to accelerate. Sixty-five percent of children entering primary school today will ultimately end up working in jobs that don’t yet exist, the report notes.

Our current educational systems are not equipped to cope with this degree of change. For example, roughly half of the subject knowledge acquired during the first year of a four-year technical degree, such as computer science, is outdated by the time students graduate, the report continues.

Skills That Transcend the Job Market

Instead of treating post-secondary education as a jumping-off point for a specific career path, we may see a switch to a shorter school career that focuses more on skills that transcend a constantly shifting job market. Today, some of these skills, such as complex problem solving and critical thinking, are taught mostly in the context of broader disciplines, such as math or the humanities.

Other competencies that will become critically important in the future are currently treated as if they come naturally or over time with maturity or experience. We receive little, if any, formal training, for example, in creativity and innovation, empathy, emotional intelligence, cross-cultural awareness, persuasion, active listening, and acceptance of change. (No wonder the self-help marketplace continues to thrive!)

The three-stage model of employment that dominates the global economy today—education, work, and retirement—will be blown out of the water.

These skills, which today are heaped together under the dismissive “soft” rubric, are going to harden up to become indispensable. They will become more important, thanks to artificial intelligence and machine learning, which will usher in an era of infinite information, rendering the concept of an expert in most of today’s job disciplines a quaint relic. As our ability to know more than those around us decreases, our need to be able to collaborate well (with both humans and machines) will help define our success in the future.

Individuals and organizations alike will have to learn how to become more flexible and ready to give up set-in-stone ideas about how businesses and careers are supposed to operate. Given the rapid advances in knowledge and attendant skills that the future will bring, we must be willing to say, repeatedly, that whatever we’ve learned to that point doesn’t apply anymore.

Careers will become more like life itself: a series of unpredictable, fluid experiences rather than a tightly scripted narrative. We need to think about the way forward and be more willing to accept change at the individual and organizational levels.

Rethink Employee Training

One way that organizations can help employees manage this shift is by rethinking training. Today, overworked and overwhelmed employees devote just 1% of their workweek to learning, according to a study by consultancy Bersin by Deloitte. Meanwhile, top business leaders such as Bill Gates and Nike founder Phil Knight spend about five hours a week reading, thinking, and experimenting, according to an article in Inc. magazine.

If organizations are to avoid high turnover costs in a world where the need for new skills is shifting constantly, they must give employees more time for learning and make training courses more relevant to the future needs of organizations and individuals, not just to their current needs.

The amount of learning required will vary by role. That’s why at SAP we’re creating learning personas for specific roles in the company and determining how many hours will be required for each. We’re also dividing up training hours into distinct topics:

  • Law: 10%. This is training required by law, such as training to prevent sexual harassment in the workplace.

  • Company: 20%. Company training includes internal policies and systems.

  • Business: 30%. Employees learn skills required for their current roles in their business units.

  • Future: 40%. This is internal, external, and employee-driven training to close critical skill gaps for jobs of the future.

In the future, we will always need to learn, grow, read, seek out knowledge and truth, and better ourselves with new skills. With the support of employers and educators, we will transform our hardwired fear of change into excitement for change.

We must be able to say to ourselves, “I’m excited to learn something new that I never thought I could do or that never seemed possible before.” D!

Comments