Xapix @ WEF 2018 4 key challenges slowing digital automotive innovation

Driven by developments like the Internet of Things and the shift towards software as a service models, the automotive industry is undergoing a significant shift, switching from traditional manufacturing to providing mobility services. This implies a variety of challenges for automotive companies—in this blog post, we’ll discuss the key challenges slowing digital innovation.

This blog post is part of our presence at the World Economic Forum 2018: This week, Xapix CEO Christian Umbach is attending WEF 2018 in Davos, Switzerland, to connect with business leaders from across the globe and to discuss this topic, the future of mobility.

Many automotive companies are not ready for the future of mobility

Car manufacturers are experts when it comes to innovating in the product space, but they lack abilities with regards to service innovation. What is more, they are very inexperienced in internet-based software technologies and the development of sustainable platform models in the context of integrated service offerings. However, the future of value creation within the automotive industry can be found in the making of mobility service offerings. Check out our recent blog post for more information on this topic.

At Xapix, we have conducted original research in collaboration with researchers from Harvard Business School to find out more about what challenges automotive businesses face in the new context of the industry, which is heavily influenced and shaped by a shift in consumer demand as well as novel competitors like Uber, Lyft, and others (be sure to check out the full automotive white paper featuring a comprehensive overview of current automotive trends and their implications).

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The challenges of moving from product- to service-focused innovation

Conducting our study, we have interviewed a variety of automotive experts. These in-depth interviews provide insights into the core challenges that automotive companies face when it comes to the development of signature mobility service offerings. Consumer demand is growing for digital experiences and connectivity inside cars. Customers expecting to use their smartphones for in-car applications seamlessly is one of the more simple demands towards car automotive companies. And even here a lot of companies fail: They struggle to integrate the vast variety of partners that are required to deliver state-of-the-art digital services, not only in-car, but also around smart, integrated components.

Vehicle manufacturers overall have limited digital capabilities, because historically they are manufacturing companies. Admittedly, the radically shifted context of their business forces them to become more and more digital, not only in how they work, but also with regard to what products and services they release. These days, a lot of businesses outsource this part of service (or software) development to external companies, leaving them with little control over the whole process.

Another challenge is that the pace of design cycles has to increase drastically. Today’s automotive customers expect to always use the latest products and services, because they measure improvements in updates and upgrades rather than in product life cycles. Most certainly the biggest challenge, however, is that new data streams from in-vehicle digital capabilities are not being used in an optimal way—or sometimes not at all. This development is linked to the three previously described and has major implications on the value creation of automotive companies. Everything a customer does with or in a car and every function the thousands of different components perform creates a vast amount of data. Data that can be used to improve existing services or even create completely new offerings. However, a lot of companies fall short of using their data for value creation.

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How automotive companies can leverage API technology to create novel services

APIs (external data sources) is something every automotive company needs to be familiar with, for they can be regarded one of the driving forces helping the automotive industry shift from thinking like manufacturers to acting like mobility service providers. At Xapix, we build software so that automotive businesses can create smart connectors bridging the gap between existing and new IT systems, helping them create new products and services as well as improving existing ones.

Data sourced from internal sensors on the vehicles or externally from partner services have to speak the same language to make connected car services possible. However, integrating such a vast amount of different data sources can take months and cost a large amount of money. Using Xapix, automotive companies can drastically reduce time to market of new products and services and save resources, because the integration of new partners is significantly facilitated. At the same time, companies have full control over the integration process that is powered by seamless, consistent smart connectors. This way, our product directly contributes to innovations in the automotive sector, by enabling companies to build smarter products, faster.

Learn more about this topic

Read our full featured article on the challenges automotive companies are currently facing on Agenda, the official blog of the World Economic Forum.

For access to the full automotive white paper, including our comprehensive research findings, please visit the following link: xapix.io/automotive-whitepaper

To learn more about Xapix, click here.