Industry urged to abandon ‘silo’ mindset
- 4 March 2020
- Posted by: Alan Feldberg
- Category: News
OEMs, leasing and finance companies face being left behind by new entrants to the market if they fail to stop operating in silos.
This is according to new specialist automotive consultancy, Elevenci.
It believes mistakes of duplicated work and wasted investment in the dot com boom in the early 2000s must be avoided as the industry adapts to new technologies, artificial intelligence, electrification and the retail-fleet convergence in subscription and mobility product development.
Elevenci managing consultant Mike Walters believes some companies in the industry face being left behind by new entrants if business models are not fundamentally rebuilt.
He said: “Fleet, retail, subscriptions and mobility are increasingly converging, and organisations, often riddled with overlap and duplication, need to seize the opportunities that this brings.
“However, some established OEMs, leasing and automotive finance companies are continuing to have significant overlap across operating models, IT platforms and innovation initiatives. Formerly agile companies have become increasingly complex and cumbersome.
“Too many automotive businesses are struggling along with the same old legacy models, yet there’s very little open discussion about the subject. This duplication can’t continue in a world that is forcing manufacturers to consolidate in order to gain economies of scale efficiencies.”
Walters gave the example of fragmented mobility as a service (MaaS) strategies across OEMs and their captive finance and fleet organisations. With different platforms, teams and goals, this can lead to sub-optimal investment and outcomes.
Elevenci’s analysis shows that automotive organisations can save up to 40% on costs by converging investment on modern, hybrid IT platforms that can flexibly support the rapidly evolving subscription and mobility ecosystem.
This kind of saving is significant, not only because budgets for IT projects can run into millions, but there are also significant efficiencies to be made from reductions in duplicated roles and functions as part of wider optimisation opportunities. But it is not just a case of reducing headcount.
The benefits would mean huge opportunities for efficiencies and performance improvement. Dealer groups, customers and fleet managers should also see a much more harmonised experience by having far fewer touch points and a less complex IT landscape.
Walters said: “Historically automotive finance companies and leasing/fleet companies have worked to different models. However, the rise of personal leasing, mobility, subscription services, challenges to point of sale (POS) finance and the demise of the traditional company car, all add up to significant convergence and blurring of the lines between fleet and retail, consumers and employees.
“Does it make sense, therefore, to maintain them as separate organisations often operating on different IT platforms?”
Walters said new entrants are taking a much more holistic approach to the way they are developing products and services, but as they are new brands, they have the added benefit of not being held back by legacy systems or structures.
Tech giants like Apple and Google are already competing with established players to offer connectivity and autonomous technology and it’s possible they will also look to take market share with their own mobility offerings. These companies are not encumbered by legacy models.