How SAP Is Planning To Monetize the Connected Car Industry

The connected car industry is on the horizon and the possibilities that it brings are mind-boggling.  As manufacturers compete in the frenzy of innovation and development, the idea of auto manufacturers being able to monetize after the initial sale is still in early development. SAP, a German global software corporation is on the road to monetizing the industry through the use of connected technology.

These efforts are being spearheaded by Timo Stelzer, VP of Products & Innovation – Global technical Lead For Connected Vehicles at SAP. The plans stem from connected products that are already infiltrating connected cars. For example, entertainment is brought into the car through applications like Pandora and Facebook. In addition, sensor data from vehicles is being used to predict maintenance and provide input for improved designs on future models. Stelzer wants to take these features a step further and create a stream of cash flow in which the auto industry can tap into.

Every year, billions of dollars are spent by consumers just on fuel, fast food and parking. These 3 activities alone all involve a car. However, the automotive industry isn’t part of this market at all. SAPis currently developing a business model in which the connected car industry can participate in this market through connected services.

A Network For the Connected Car Industry

By the end of this year’s summer, SAP will launch what’s called the Connected Vehicle Business Network. The goal is to build relationships with car buyers after the sale of their cars, thus opening a flooding market for the connected car industry. The immediate micro markets include parking, fueling and food.

Currently, Volkswagen is involved in a project that will incorporate the use of parking sensors in cars to identify open parking spaces in a congested area where parking is difficult. The challenge is that they have yet to figure out how to monetize this connected service as well as who pays for the service.

In addition, SAP has some pilot programs with Volkswagen and Shell in Germany, as well as Toyota and Verifone in the United States. The program guides drivers to the nearest fueling stations and automates the payment process from their mobile phone or from the dashboard.

Simultaneously, service providers will be able to offer promotions based on the data and user profiles of the drivers. So now, the connected car industry, or the automobile industry in general, can enter into cross-selling and up-selling opportunities after the original auto purchase.

Will This Become A Trend?

Given the enormous progression of connected technology, the chances of the connected car industry being able to tap into the aftermarket whirlwind of connected products is highly predictable. With the explosion of Big Data, an explosion of connected applications will soon follow.

In addition, they won’t just be confined to fuel, fast food and parking, which they are for the time being. The hurdle lies in figuring out who to charge for the applications and how to go about doing so in a fast, convenient way that honors society’s expectations of immediate gratification.

If you have any insight you might want to share with the rest of us, then feel free to leave it in the comment section.

Philipp Kandal