“Using Big Data to Gain a Competitive Edge” February, 2015

SouthEast Asia Automotive Technology Sumit 2015

Prepared by

Gilbreth BrownEnterprise Solutions Sales Manager - Asia Region

Who really wants to be in the automotive industry?

High

High

High

High

Low“If GM had kept up with technology like the computer industry has, we would all be driving $25 cars that got 1,000 MPG.”

Bill Gates

Porter’s Five Forces of Industry Attractiveness

Macro-economic forces strongly shape the industry

Source: ycharts.com

The cost of this crisis? Approximately $50 billion.

Small, nimble competitors find ways to penetrate:

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014--

5.00

10.00

15.00

20.00

25.00

30.00

BMWDaimlerFCAFordGMHondaToyotaOther

General Motors

Other: Kia, VW, Hyundai, Jaguar, Lexus, Volvo, Suzuki, Isuzu, Subaru, etc

Market Share, U.S. automobile industry, 2005 to 2014

Source: Wards Automotive, 2015

Even with market protection, this is a cut-throat industry

Proton’s market share now stands at 17%, down from an all time high of 75% in the early 1990s

Forget profits – innovate, or join the ranks of forgotten:

In fact, according to Forbes, the average lifespan of a successful S&P 500 Company was 67 years in the 1920’s. Today it is 15 years.

The automotive industry is shifting fundamentally:

Competing in a static market is difficult enough, but how about impending market shifts?

Emission Controls

Vehicle Life Span

In-vehicle electronics

/connectivity

Safety Features

Faster product development

Massive increase Innovation needed

Much longerConsumer conscience

Lightening speed

So, how do we compete in this new world order? Start by asking yourself these 3 key questions:

Truly understanding consumer demand and behavior; do we even know our own customers and market?

Clearly monitoring and measuring, at a deep level, our internal and external corporate performance relative to the market

Have we exhausted all possible sources of data that might help us to answer these questions?

Market differentiation is getting very difficult:

Quality

Perceived value (pricing)

Distribution / Retail

Customer Service

Marketing / Branding

Almost all major OEM vehicle manufacturers compete excellently in these functional areas.

These are also all areas where an OEM can LOSE money; however, are these potential game changing (e.g., steal significant market share) areas of effort?

When all other factors are equal, customers often make a purchase decision based on “salient differentiators.”

Design & Engineering

“Must Haves”

What is the role here for data driven analytics?

Salient Differentiation: “stand out!”

A salient differentiator can be a feature, service, program or ingredient. To be worthy of the term “differentiator” — to be more than just a name slapped on a feature — it must be meaningful to customers; that is, it must be both pertinent and substantial enough to matter when people are purchasing or using the product or service.

It must also be actively managed (and thus be able to justify the investment of management time) over an extended period —years or even decades — so that it does not become stagnant.”

Source: Massachusetts Institute of Technology

Examples of salient differentiation:

Co-branding Product Development Customer Service

Ok, how do I find my salient differentiator??

Here, we would like to introduce the term “Big Data.”

Big data is a collection of data from traditional and digital sources inside and outside an organisation that represents a source for ongoing discovery and analysis that will enable us to understand and predict.

Almost all of our automotive clients are now asking about analytical opportunities in “Big Data.”

Big Data – what is it?

Gartner* talks about Big Data, in terms of the 3 V’s:

“Volume” (the amount of data)“Velocity” (the speed of information generated and flowing into the enterprise)“Variety” (the kind of data available)

Others suggest 2 additional V’s:

“Veracity” and “Value.”

Big data is that data that is so big, and is so unstructured, that is defies traditional collection methods, software requirements, storage needs, and interpretive analysis.

Big Data is…

• Unstructured• Unsuitable for a database• Multiple sources/formats• May require AI to interpret• Exceeds “normal” analysis• Growing exponentially• Available - everywhere

How Big is Big Data?

Currently, the number of mobile phones in use exceeds the world population (7 billion) ; do you personally know anyone who doesn’t use one?

Facebooks generates 500 Terabytes of new data every day (1 TB = 1,000 GB)

In 1993, total Internet traffic amounted to approximately 100 TB for the year. As of June 2008, Cisco Systems estimated Internet traffic at 160 TB/s ; in other words, the amount of Internet traffic per second in 2008 exceeded all of the Internet traffic in 1993.

90% of the world’s network traffic data was created in the last two years.

The number of cars connected to the Internet worldwide will grow more than fourfold to 152 million by 2020 from 36 million today

The average vehicle on the road today has more computing power than the computer that sent the first astronauts to the moon.

Big Data – what do we do with it?

• Discovery of useful, possibly unexpected, patterns in data

• Non-trivial extraction of implicit, previously unknown and potentially useful information from data

• Exploration & analysis, by automatic or semi-automatic means, of large quantities of data in order to discover meaningful patterns

What is data mining?

Less than 5% of the world’s oceans have been fully explored; what opportunities await us in the exploration of big data?

What opportunity does it hold for an auto OEM?

Ok, who is using Big Data now? General Motors

“Currently General Motors is in the middle of the IT-transformation, where instead of doing only 10% of the IT work in-house, 90% of it will be done in-house by the end of 2015. They are hiring 12,000 IT personnel and the objective is to have 10,000 of its IT personnel work on new developments by 2018.

They have also developed their own, $ 130 million, data centre that runs on Hadoop. It has almost 37,000 servers and an 8 Terabyte fibre optic data connection to their other data centres. Another $ 258 million data centre is also being built in the same area. In total, GM plans to spend $ 546 million on their new data centres, planned in Warren and Milford.

The new data centre already has 3 Petabytes of data on site, consisting of product development, procurement, logistics, quality, manufacturing, customer care, sales, marketing, finance, and other kinds of data.”

Source: Datafloq.com

Ok, who is using Big Data now? Ford Motor Company

Source: Datafloq.com

Ford recently opened a lab in Silicon Valley to improve its cars with big data. In order to progress their cars regarding fuel consumption, safety, quality and emissions, Ford gathers data from over four million cars with in-car sensors and remote application management software. All data is analyzed in real-time giving engineers valuable information to notice and solve issues in real-time, know how the car responds in different road and weather conditions and any other forces that could affect the car.

Ford is also installing numerous sensors in their cars to monitor behavior. They install over 74 sensors in cars including sonar, cameras, radar, accelerometers, temperature sensors and rain sensors. As a result, the Energi line of plug-in hybrid cars generate over 25 gigabytes of data every hour. This data is returned back to the factory for real-time analysis and returned to the driver via a mobile app. The cars in its testing facility even generate up to 250 gigabytes of data per hour from smart cameras and sensors.

Ok, who is using Big Data now? Toyota Motor Company

Source: Datafloq.com

May 23, 2013: Toyota announced today what it calls the “Big Data Traffic Information Service,” a giant mashup of data harvested from currently 3.3 million of telematics users in Japan, and 700,000 Toyota customers equipped with a Digital Communication Module (DCM), a sensor module that constantly monitors and transmits vehicle data. Combined with other telematics data, the system powers navigation and information services. Unlike other systems, Toyota’s on-line platform can also be used by local governments and businesses.

Being a Japanese system, the Big Data service is heavy on disaster management and relief functions. As long as the cellphone data network has not been wiped out, the system provides routes to and locations of evacuation sites, even the possible heights of a tsunami, should one strike. The system can communicate with on-board systems, smartphones, tablets etc. The system is relatively low-cost. An annual subscription by users costs $25. Disaster information is free of charge. Commercial users can book the platform and 100,000 transactions for $2,000 per month.

Conclusion & SummaryLet’s review where we have come from, and where we are going:

Highly competitivepressure Downward

pressure on profits Innovate,

or be forgotten Finding our

salient difference Tapping

large sources of data to find a competitive advantage

Big Data

Cloud

While its good to know why a customer bought your vehicle, its even better to know why they did not!

Pentana Solutions

Pentans Solutions is an information and technology solutions provider to the automotive industry:

40 years in the business400 + employees$110million per annum, with 10% redirect back to R&D120 countries; strong presence in Asia – Philippines, Thailand, Malaysia, Singapore

Products we offer:

Dealer management systems Distribution and importation systems Full ERP back end packages; warehouse management solutions Electronic catalogs and aftersales parts solutions Work shop systems Data compilation and distribution