Reinventing software supplier relationships for the connected car era

Original Equipment Manufacturers (OEMs) need a new approach to software supplier relationships in their bid to remain relevant and gain market share in the era of the connected car. A new report from the BearingPoint Institute reveals a new landscape in which OEMs must adopt an agile business model to meet growing consumer demand for an always-on connected automotive ecosystem.

Meeting the challenge of disruptive suppliers

55% of OEMs are still in the initial stages of connected car development,1 and combined with the evolving, disruptive role of 3rd-party software suppliers, it is clear OEMs need to adapt and implement a multifaceted approach to change management. The BearingPoint Institute’s report details five recommendations, the implementation of which can enable OEMs to stay ahead in the connected car ecosystem:

1. Overcome complexity with collaboration. This means having relationship strategies.
2. Keep tabs on industry trends and supplier strategies to exploit both. OEMs need to know where they’re going and they must align their strategies with their suppliers.
3. Build a new culture. Enterprise architecture may end up being more important than mechanical engineering in the assembly of connected cars.
4. Keep data (and customers) safe. Data privacy and vehicle security should be addressed comprehensively and in-depth to help manufacturers avoiding incidents that could ruin consumer appetite for connected cars.
5. Make choices based on suppliers’ agendas. A large part of revenues could come from services rather than products in the near future.

"It is clear that most OEMs are unprepared for a future where revenues from cars will be all about the surrounding services, and very little about what’s under the hood. If car manufacturers don’t get a move on, they will be replaced by tech companies that will be able to deliver what consumers are looking for." Sarah-Jayne Williams, Partner at BearingPoint

OEM’s need to have a hard and candid look at how their products and services fit in a value chain that is growing fast in complexity and how their home-grown contribution differentiates the product in the eyes of the customers. Mark Burnett, Senior Manager at BearingPoint and author of the paper

For more on the strategies OEMs can employ to manage their new landscape, read the paper on the BearingPoint Institute website: http://inst.be/008CCE

1 Connected car in Europe’, Pierre Audoin Consultants/Bearing Point, London, UK, PDF, 02/15 http://bit.ly/BPccinE