Commercialization Solution for OEMs
Uncovering Big Data opportunities
The Momentum Behind Connected Car Technology Continues to Grow
Original Equipment Manufacturers (OEMs) in the automotive field have struggled for years to create revenue streams sufficient to offset the costs of implementing connected car technologies. Initial attempts to recoup these costs—primarily through subscription services—failed to meet the acid test with car buyers. Most demonstrated their indifference by dropping services after free trials ended.
With consumers indicating a strong demand for connected car services, the challenge remains for OEMs to develop a business model that works effectively and justifies the manufacturing and operating expenses. There is a growing awareness among OEMs that the data captured during vehicle use—providing insights to both the driver behavior and the vehicle statu—represents a largely untapped asset. IMS has deep expertise and proven experience with the essential technologies required to commercialize data for OEMs.
What We Can Do For OEMs
OEM Requirements for Data Commercialization
Secure Hosting – Ensuring secure data exchanges is integral to any data commercialization effort.
- Monitoring and tracking where data is being sent.
- Understanding where it originates.
- Determining whether encryption is used consistently to secure data while in transit.
Any areas in the data path that potentially allow intrusions or are vectors for abuse should be remediated to mitigate the risk.
Consent Management: Every byte of data about a vehicle and the driver operating that vehicle must be subject to full transparency and consent. The driver must be consistently informed of what data is being collected, how it will be used, how long it will be stored, who else will have access to it, and what prerogative does the driver or vehicle owner have for terminating consent given for the use of this data.
Tight Privacy Controls: Data privacy is important both for legal and regulatory measures with which the OEM and any partners must comply, in addition to the basic business principle of respecting and protecting all information that relates to their customers. Failure to pay attention to data privacy could subject the OEM to fines or loss of their stature in the industry, as well as casting a dark shadow over the way that they are perceived by customers.
No Vehicle Integration: Many different mechanisms exist for capturing and transmitting vehicle and driver data. The hardware and software supporting this effort should be factored into the plan for commercializing data. Of critical importance to any commercialization program is the capability of collecting, cleansing, normalizing, and unifying collected data so that irrespective of the OEM’s hardware decision, the vehicle and driving information is delivered to each beneficiary in a uniform, usable format.
New Revenue: Accurate, captured data is important and when Big Data analytics are applied—collected over millions of miles of vehicle operation and multitudes of driver decisions—this can open business opportunities and become a source of significant revenues. However, unless the scale of the revenues effectively offsets the costs of implementing the technology, it becomes a losing proposition for automakers.
Creating Value from OEM Data
OEMs face numerous challenges in trying to implement a profitable strategy for vehicle connectivity and commercializing vehicle data, particularly because this entire area is essentially outside their range of experience.
- Effective data commercialization requires large volumes of demographically and geographically diverse data sources.
- Ensuring high quality analytics results also requires collecting data from every generation of connected car hardware that each OEM has embedded. That data must be scrubbed and normalized to achieve the best results.
- Before the data is even collected from the wide variety of OEM-embedded devices, the privacy rules of the government agencies at the federal and local levels must be acknowledged and met to ensure compliance.
- Once the authorized data is collected, scrubbed, and normalized, it is analyzed to the specific requirements of the given application. Few companies have this level of experience in the automotive space, and this kind of operation is beyond the capabilities of most OEMs.
Best Bet for Low-Risk Data Commercialization Benefits: UBI Example
Usage-Based Insurance (UBI) has become proven and it is becoming established in the marketplace. The accumulated knowledge and experience around UBI make it a low-risk starting point for data commercialization. As demonstrated by pilot projects and emerging programs, the true value of the data, through the insurance applications alone, can exceed the OEM’s monthly connected vehicle operating costs. The value of this data to the insurance industry, as supplied by OEMs, can be divided into three categories: 1. Events, 2. Analytics Services and 3) Basic Data Applications, analytics and basic.
- Event Data tends to be random and infrequent, but it offers higher value to the insurers. Event Data includes applications such as first notice of loss, accident scene management, and enhancements to the claims process.
- Analytics Services involve the analysis of data and used by the insurer to understand the risk associated with the underwriting. These services are sometimes performed for a specific period, typically 6 to 12 months, and do not require the car to be connected for life. The value of this kind of analysis is to provide the insurer with the necessary information to make an informed and profitable underwriting decision.
- Basic Data Applications often require the continuous collection of data. The data is used to detect fraud, create new insurance products, and provide discounts to drivers based on vehicle safety features, allowing insurers to compete using many of the advanced and emerging technologies available.
- Intermediary between OEMs and third parties
- System integrator providing a single point of contact
- Hosting and enabling applications that create value for OEM data
- Provide advanced analytics to extract high value insights from OEM data
- Work with OEM to offset vehicle connectivity costs
- Work with OEMs to develop and solicit buy-in for OEM data applications
- Work to identify valuable new applications for always on, always connected vehicles
- No hardware or cellular related costs
- Reliable access to rich data
Choosing the Right Technology Partner
Key capabilities to look for in a prospective technology partner to bridge the divide between automakers and insurance carriers include:
- Proven experience in both the automotive and insurance sectors
- Expertise and a demonstrated track record working with Big Data and advanced analytics in the context of automobile travel and insurance
- A background and experience in IoT technology, sensor data, and the legal, regulatory, and management issues surrounding data exchange within an IoT environment
- An established plan for designing, developing, and deploying solutions of significant complexity for capturing and commercializing data acquired from vehicles
IMS has deep expertise and proven experience with the essential technologies required to commercialize data for OEMs. The DriveSync® connected car platform developed by IMS for this purpose has successfully ingested and transformed data from multiple sources—including the unique data sets from each OEM—providing clean, consistent feeds of insights and generating value to multiple consumers of that data.
- Partnering in the insurance sector is an excellent, low-risk way for OEMs to venture into the uses of Big Data to produce revenues. IMS is a market leader in this area with proven capabilities as a system integrator.
- Because OEMs may change connected car hardware and software over the course of a model run, IMS stays current on these changes and adapts algorithms and data format conversions that correspond to the wide variety of OEM variations.
- IMS excels at the complex operations required to extract intelligence from vehicular data, including acquiring and scrubbing data from the embedded OEM devices, normalizing the data to fit a consistent format, and applying analytics to meet the unique requirements of the insurance carrier.
Over 11 years of insurance analytics experience encompassing 13 percent US insurers, IMS has acquired deep knowledge and considerable expertise in Big Data applications. IMS has over 500,000 connected vehicle activations annually, processes 6 billion data points each day, and has captured over 75 terabytes of data to date.