The IoT is Shifting the Gears of the Automotive Industry
For over 100 years, the world of automobiles has had the road to itself — now with the digitization of everything, data is starting to rule the highways. We’re in the booming era of the Internet of Things — it’s all changing, and changing fast. IoT is touching almost everything in both the commercial and consumer worlds. And it’s repainting the lane lines of the automotive industry.
In parallel, the automotive industry is undergoing a major rebirth, in some cases kicking and screaming. Where the automakers (in their parlance, OEMs) have had over 100 years of self-centricity — and not having to deal with “ecosystems” other than their respective galaxies of suppliers and dealers — they’re now grappling with a sea change being caused by, well, the IoT.
Some are already calling it “the Internet of Moving Things” and why not? We have mavericks like Tesla and Rivian selling highly sensor-laden, over-the-air-updating machines that make older land vehicles look like luddites. Every OEM, components supplier, and others in the automotive realm, are scrambling to find not only their place in this new world, but to posit their future relevance.
This didn’t happen suddenly
Of course you can argue that the IoT in some form has existed for decades, but we’re talking about what the progression of Moore’s Law has wrought in the modern day. Moore’s Law is salient because in the majority of organizations that have an IoT business practice, division, subsidiary, product or service line, etc., the origins often came from something to do with semiconductors. This is understandable since the modern era of IoT, literally from the time the term first began floating around, started with devices, a.k.a., things. That were connected to the internet. For a long while, it’s been about getting things out there and connected.
So came the autos
In concert with the IoT showing up in non-mobile form, in environments and instances ranging from home thermostats to enormous factories, there’s been a gradual introduction of connected, microprocessor-based devices that are mobile. Cars are only one slice of this, but are the most visible the “moving thing” that you’re likely to interact with on a daily basis. Unless your job happens to include rolling in road graders, farm combines or freight trains, that is. Considering that newer cars contain up to hundreds of microprocessors, it’s getting serious. And they are (finally) becoming connected. To the internet. Yep, automobiles are blending into the IoT.
Isn’t the data flowing already?
Only within very closed ecosystems. In my day job, I speak regularly with major analytics and consulting firms, big tech companies, government agencies, you name it. Often the discussion surrounds the issues of how to get the enormous volumes of vehicle-generated data out of corporate “silos” and convey it to third parties in some useful form. Often that means performing a number of functions to get the data across sector-lines to other organizations, where it can be used for purposes that were not imagined when the sensors were installed in the first place. In other words, cross-sector data utilization. This has been done for decades with other forms of data, e.g. financial services, where Bloomberg and others solved the issues that had earlier prevented the large financial houses from making their data available for others to leverage.
Contrasted with these other realms, the long-established world of motor vehicles, and in particular the organizational structures of most OEMs are still divided along legacy lines. This is understandable, since those lines have been in place for a very long time. Generally speaking, the automotive world hasn’t embraced data in the way other industries have, from the perspective of making it fluidly available to third parties or even public agencies. Issues are often cited to do with data privacy and/or ownership, but these have been solved in other industries with the application of policies and technology to enable them. Doing this in the mobility world is a major opportunity for new competitive features and revenue generation.
Why does this matter now?
There’s a true revolution coming, and it’s looking increasingly inevitable: self-driving vehicles. And they require connectivity. A major reason for implementing 5G is to enable data streaming from, to and between things that move. Take it to the next step, where you have autonomous, electrically-powered cars and trucks running around, and it’s a big moving IoT.
The traditionally important attributes of automaking, such as having the know-how to deal with design, development, manufacturing and servicing of internal combustion engines and volatile liquid fuel, are giving way to boxes of electronics that are wirelessly connected. Automakers will begin to differentiate more on safety and ergonomic features, with onboard and external applications that are enabled through sensors, artificial intelligence software and fast connectivity.
What about the old lines along which organizations are set up?
Exactly the point. It’s hard to be agile and progressive when you’re hamstrung by archaic structures. Tesla didn’t have any such baggage. Thus, if your company or agency or university intends to have a big part in how this all goes forward, this is a good time for you to step back and take a serious look at organizational structure.
For example, one big consulting firm that I know of still has their automotive and (semiconductor-born) IoT practices set distinctly from each other. Therefore when an automaker, component supplier, or any number of other clients want to work through their own forward business and structural plans, that firm has to send representatives from multiple practice areas, or fail to truly give clients what they now need. It’s becoming clunky and inefficient. Of course this is all for legacy reasons, but it’s definitely time to give the internal, and more importantly, outward-facing, structures a strong and state-of-the-art look.
What to do next?
Combining what Netscape co-Founder and hugely successful startup investor Marc Andreessen famously said, “Software is eating the world” with another popular saying in tech, “data is the new oil” it’s obvious that everyone in virtually every industry needs to be focusing a lot of attention on datafication. This couldn’t be more true than in the automotive industry. It’s a definite shock to the system for almost everyone in the space, and they’re scrambling to deal with the changes. In fact, many of the big car companies are starting to call themselves “advanced mobility providers” instead of automakers.
Per the preceding, you can see what and why a realignment of practice areas, product lines, service offerings or whatever fits with your organization’s primary purpose, may be needed. And not just the outward representation, but how you’re structured internally. It ripples out into adjacent and supportive sectors including commercial transportation, logistics, insurance, and many more. In other words, make the IoT part of your overall planning process and structure — it’s no longer purely the dominion of the IT department — it’s fast becoming the fabric of your business. Working this through could make all the difference for your organization, down the road.