connected cars: data dollar$ to...2. what is a connected car? 3. new capabilities needed to play 4....

HOW TO CREATE AND ENABLE A DATA CENTRIC STRATEGY AS TECHNOLOGY TSUNAMI HITS THE AUTO INDUSTRY

ALTEN

TO

Madhu S Naidu

CONNECTED CARS:

DATA DOLLAR$001111111000000000000000111111100110011001100110000000000

A L T E N CRESTTEK

REASON FOR WRITING THIS REPORT

I have been involved in many aspects of the automotive industry for

over 20 years and I believe we are at the turning point for the industry to

begin transitioning to completely digital – and, as a result, data centric.

Connected Cars, factories, dealers, suppliers and customers will be nodes in

the network of the internet world.

Resulting in a shared economy and extensive mobility, this is the

essential next step in making society truly connected and mobile.

This report is based on our thinking, research and comprehensive

experience providing solutions to numerous customers. We hope our high

level perspective to convert data to dollars will help companies develop their

competitive advantage from Connected Car data.

If you have any questions or comments please contact me at:

Madhu S. Naidu

ALTEN-CRESTTEK @ +1-248-602-2082

January, 2018

2© 2018

A L T E N CRESTTEK

ACRONYMS

ADAS Advanced Driver Assistance Systems

AD Autonomous Driving

AI Artificial Intelligence

CAN Controller Area Network

ECU Electronic Control Unit

GPU Graphics Processing Unit

HIL Hardware in Loop

IC Integrated Circuits

LIN Local Interconnect Network

LVDS Low Voltage Differential Signaling

MOST Media Orientated Systems Transport

ML Machine Learning

MVP Minimum Viable Product

MIL Model in Loop

OEM Original Equipment Manufacturer (e.g. automakers)

PCB Printed Circuit Boards

RKE Remote Keyless Entry

SIL Software in Loop

TCU Telematics Control Unit

TI Texas Instruments

UI User Interface

UX User Experience

1G First Generation of Analog Mobile Phone Network

5G Fifth Generation of User Centric Digital Mobile Network

3© 2018

A L T E N CRESTTEK

CONTENTS

1. Introduction

2. What is a Connected Car?

3. New Capabilities Needed to Play

4. Car to Cloud Transformation

5. Smart City Ecosystem

6. Using Artificial Intelligence

7. Structured Agile Innovation Process

Take-Away: Act on your data now!

Acknowledgment

Legal Notice

About Alten Group

4© 2018

5

7

12

14

15

17

19

24

25

26

27

A L T E N CRESTTEK

1. INTRODUCTION

In July 2001, I published an article called “Telematics Evolution will

Change the Automotive Landscape” in Telematics Update Magazine when I

was with IBM. At the time we were using a 1G analog mobile network as

opposed to digital, but it still seems so relevant today. Summary verbatim

from the article…

“Wireless and pervasive computing will play a major role in changing the

culture of the automotive industry through the development of advanced

safety features, in-vehicle personal services, and an improved customer

relationship model. There will not be a single killer app emerging that causes

this landscape change.

However, the effective use of terrestrial and satellite wireless relays; advanced

microchips and sensors; software applications and middleware; and open

standards will enable OEMs and Suppliers to make dramatic new innovations.

This will lead to low cost applications and services that can be rolled out

during the entire life of a vehicle (8-10 years), creating opportunities for OEMs,

Suppliers, and Telematics Service Providers (TSP) to increase their revenue

potential long after the vehicle has been sold. The OEM/TSP that delivers a

wide variety of services that appeals to customers may emerge as the winner,

but this is easier said than done in a complex automotive industry..”

5© 2018

A L T E N CRESTTEK

We have come a long way in terms of the evolution of technology,

including wireless communication that has progressed from 1G 17 years ago,

to 5G, which we will see in the near future. However, the elusive “killer app”

has evolved for the automotive industry in the form of DATA.

Data always existed in OEM, dealer and supplier databases. The key

was creating the tools and technologies to discover, identify, manipulate and

process this data in real-time, at a low cost using modern Cloud solutions.

Now powerful catalysts like Artificial Intelligence (AI) and Machine Learning

(ML) have been made available from the likes of Google and its Tensor

Processing Units (TPU) at a really low cost. It is so affordable even a small

startup can manipulate and create killer apps using data. Couple this with the

crowd sourcing of algorithms/predictive models by tapping into the brilliant

minds of global scientific talent, and it becomes priceless for any company;

providing them the opportunity to leapfrog the competition.

If you use Private Equity (PE) and Venture Capital (VC) investments as a

proxy for what could happen in the automotive space, it is clear that

Autonomous and In-Vehicle technologies have received about $45 billion of

investments in 2016/17 according to Brookings and Crunchbase. Less than

10% of these investments are from automakers. So who knows if new startup

bets could displace any major OEM in the next decade?

6© 2018

A L T E N CRESTTEK

2. WHAT IS A CONNECTED CAR?

Cars have evolved from mere metal on four wheels to sophisticated

connected, smart and soon autonomous cars. They can now also drive

themselves using the increasing electronics content (Exhibit-1). This journey

took over 100 years and Detroit (aka Car Capital of the world) was at the

center of it all. After the great recession of 2009, Detroit is being transformed

into a connected car technology hub. In this paper we are using “Connected

Cars” as an all encompassing word that could mean Autonomous, Internet of

Things, Telematics, etc.

The increasing electronics in cars has created challenges for OEMs in

managing and integrating new and advanced electronics. As shown in

Exhibit-2, the integration challenge increases up the pyramid. OEMs now

need technology suppliers to bring new products to the market faster and at

lower costs.

7© 2018

All other

Electronics 1530 40

8570 60

2001 2012 2020

Exhibit-1. Vehicle Electronics Content Growth

100% = $24K $26K $30K

Source: IHS, JD Power, Alten Analysis

A L T E N CRESTTEK 8© 2018

OEM

SYSTEMS

COMPONENTS

PARTS

Car, Truck

TCU/ECU + Software

Sensors, Screen,

Lidar, Camera, etc.

PCB, GPU, Chips

Inte

gra

tio

n

Take, for example, an OEM using an ECU for crash safety in-car. It

would need semiconductor chips from Samsung, ICs from TI and processors

from Intel, all assembled on a PC board by Flextronics. Along with that,

Autoliv may integrate the hardware with flashed software to meet OEM

requirements with months of testing. This means the ECU has to function in

extreme weather conditions, from -40 °C to over +125 °C. If you do not

believe how difficult it is to pass this environmental test, take your smart

phone and place it inside a car on a hot summer day. I guarantee you the

smart phone will not work until it cools down to about 50 °C. These

stringent requirements are necessary for automobiles due to the harsh

environments in which they operate while maintaining customer safety.

Exhibit-2. Automotive Electronics Industry Structure

Source: Alten Analysis


What is a Connected Car? In simple terms, a Connected Car is an

automobile that is intelligent and connected to the internet – constantly

sending and receiving data just like any other smart device connected to the

internet. In the future, this could also mean using techniques like ‘fog

computing’ where processing happens closer to the edge of the network to

avoid bandwidth issues when going back and forth to the cloud. A simple

illustration of this is shown on Exhibit-3. This means the network becomes an

extension of the car, necessary for the vehicle to function efficiently and

optimally. Of course, for safety reasons the cloud is not necessary to do

manual driving.

In-Vehicle

All

Oth

er

Co

ntr

ols

ADAS

Controls

E-horizon

Provider

E-Logger

Sensor

Data

Camera

Data

Maps

OEM

Cloud

Application

Platform

Infrastructure

Remote

Driving

Traffic

Flow

ADAS

Function

Maps

Update

In-Car

Features

3rd Party

Cloud

Smart Hwy

Data

Exhibit-3. A Connected Car Architecture


Fog

Network


If you are not a car person it can be difficult to understand all the data

a car generates through its communication interfaces today, let alone a

Connected Car that could arrive in the next few years. Exhibit-4 is an

example of all the communication interfaces that are used to transmit data in

cars today. More data is also being generated by the driver/passengers’ daily

interactions with the car, its features, car dealers and other service providers.

Communication Interface

- CAN BUS

- CAN FD

- LIN

- LVDS

- FlexRay

- MOST

- Ethernet

Wireless Interface

- Bluetooth

- WiFi

- LE Bluetooth

- RKE

- LTE / 5G

Exhibit-4. Communication Interfaces in a Car

Exhibit-5 is an example of all the channels of data that are being

generated from numerous sensors in the car. This is just a sample to give you

an idea of the amount of data being generated. Now with all the

autonomous driver assistance features, data sets are growing exponentially.

Therefore, understanding data volume, variety and velocity is crucial.



CAN / CANFD

-Speed

-Steering angel

-Braking G

-Gear position

-Accelerator position

-Engine speed

-Torque

-Oil temp

-Oil pressure

-Turbo %

-Engine coolant T

-Exhaust T

-Brake signal

-Brake %

-Brake pressure

-Main shaft speed

-Air intake temp

-MAF temp

-Gear indicator

-Exterior temp

-MIL codes

-System codes

-TC active

-ABS sys pressure

- …

LIN

-Cabin Temp.

-Door switches

-Sunload

-Ignition status

-Battery data

-Cruise control

data

-Grill shutter status

- …

MOST / Ethernet

- Radio stations

- Driver Info

- Driver

preference

- Search history

- Voice search

- Climate setting

- Location data

- Map search

- Smartphone

usage

- Calling pattern

- Others

- …

Exhibit-5. Data Channels in a Communication BUS

LVDS

-Camera data

-Rear seat

entertainment

data

-Video data

- …

J1850

-OBD data


This is just a sample; there

are 100’s of additional data

points available in a car

A L T E N CRESTTEK

3. NEW CAPABILITIES NEEDED TO PLAY

There are many capabilities needed to be a successful automaker.

Just like any capital intensive business, these capabilities include assets and

competencies. Exhibit-6 shows the key assets and competencies that were

required to play in the automotive industry for the last 100 years. The

question is, will these capabilities be enough to propel an automaker to the

Connected Car world?

12© 2018

Key

Assets

Physical assets (equipment)

Global / regional footprint

Brand / reputation

New Features / technology intro

Dealer Network

Key

Competencies

Styling / Design

Cross-functional coordination

Mass production / lean

Cost / efficiency management

Product roadmap for market needs

+

Exhibit-6. Capabilities to Play in the Auto Industry



We believe, the necessary capabilities to play in the Connected Car

market are evolving rapidly. At a minimum, it is driven by the agility and

speed to integrate and execute technology in a Connected Car. Below we

have shown how the same set of assets and competencies need to evolve to

play in the Connected Car “sandbox”.

Key

Assets

Key

Competencies

Physical assets + Cloud + Cyber Security

Global / regional footprint + Mobile footprint

Brand / reputation + Online reputation

New Features / technology + AD+AI+DATA

Dealer Network + Direct online + Social network

Styling / Design + UI + UX

Cross-functional + Consumer products integration

Lean + Agile Software (AI, Cloud, etc.)

Cost / efficiency management + Speed to market

Technology roadmap for market needs

+

Exhibit-7. Capabilities to Play in Connected Car Market


A L T E N CRESTTEK

4. CAR TO CLOUD TRANSFORMATION

The car of the past was only connected to the world through local

radio stations for consuming music and news. The only way an automaker or

any dealer could get feedback was when the customer brought the car to the

dealership.

Now envision a future where the car is connected to the internet just

like your smartphone, and it could drive itself to your destination. While your

car drives you around, you could be productive: make video calls, social:

have a family gathering, or relax: get a motivational talk while you share the

ride with your personal advisor.

In this future scenario your car will be connected and aware of all the

devices, public information, local ecosystem and roadway issues. The cloud

will be the center of connectivity as shown below.

14© 2018

Industry

Public

Cloud Roadway

Cars

Local

Devices

Others

IoT

Exhibit-8. Data Centric Platform


A L T E N CRESTTEK

5. SMARTCITY ECOSYSTEM

Smart city is an urban or suburban area connected by sensors to

supply information used to manage the area efficiently. This includes data

collected from devices, and assets that are analyzed to manage

traffic/transportation systems, law enforcement, information systems, schools,

hospitals, and other community services. Below Exhibit-9 shows sample

ecosystems from a Connected Car perspective.

15© 2018

OEM

Dealers

Supplier Customer

Local Ecosystem

DOT

OEM Ecosystem

OTHERS

Mobile Ecosystem4G

AppsSmart

Hwy

Smart

Phone

5G WiFi

Others

Retailer

Fast

Food

ClinicAuto

Repair

Mall

Oil

Change

Tire

Center

Others

Insurer

Gym

Exhibit-9. Smart City Ecosystems

Others


A L T E N CRESTTEK

Smart city ecosystems provide huge monetization opportunities.

These opportunities are not just limited to cars. Of course, cars and

transportation (public, shared, multi-modal, etc.) are the focus of this report.

We have listed broad ideas below in Exhibit-10.

16© 2018

RationaleServicesCategory

Monetization Industry

Roadways

Cloud

Public

Vehicle

Smart City

Eco-Systems will

enable industry

players to monetize,

public to benefit and

government to

connect citizens.

- Safety& Security

- Intelligent Services

- Tele-diagnostics, Service alerts

- Connectivity

- Road conditions

- Traffic flow, signal info

- Others.

- Warranty

- Insurance

- Product / service offers

- Infotainment

- Replacement part monitor,

- Track service issue

- Business intelligence

- Personal data/preferences/privacy

- Consumers connect directly with

OEM & auto supplier

- Safety, Security, Service

$$$

Exhibit-10. Data Monetization Opportunities


A L T E N CRESTTEK

6. USING ARTIFICIAL INTELLIGENCE

One does not have to be a math whiz to use AI and ML. Today these

are tools at your disposal to do predictive automation in the Cloud. This is

not to minimize the advanced work companies do in these areas but to make

a point that these tools will become commonplace just like using office

spreadsheets. So in the future, you can use Intelligence as a Service.

Connected Cars and Smart Cities will be pumping out enormous

amounts of data. What do we do with the data? How do we analyze and

make sense of the data? The data could be in the form of text, binary, video,

audio, images, etc. There are numerous AI models already available as a

service to build, train and deploy, including the following:

1. Location based pricing search

2. Context matching in conversation

3. Video analysis

4. Image processing

5. Speech processing

6. Language translation

7. Predictive analysis of driver/passenger needs

In the next section we discuss how we can use these tools during the

data discovery and analysis phase, to fine tune the application deployment

rapidly during the launch of a product or service from a data platform.

17© 2018

A L T E N CRESTTEK

An important caveat to keep in mind while developing and using

learning models is that they are like a black box with quirks. Despite all the

cloud tools that are available for AI, industry/domain expertise is necessary

for fine tuning the models. Primarily to correct and fix Type-1 (false-positive)

and Type-2 (false-negative) errors.

Based on our deep industry experience in working with leading

automotive companies, our methodology uses relevant Use Cases during the

“training” phase of model development. A process flow of this methodology

is illustrated in Exhibit-11 to give a high level concept for model selection.

There are many ideas and concepts published about how to reduce bias and

improve confidence. This requires understanding of both industry and the

ability to apply the appropriate training dataset, as no model is fool-proof for

every future scenario.

18© 2018

Training

Data

Use Cases

Simulation

MIL/SIL/HIL

Results /

Performance

Learning

AlgorithmModel

Test

Data ?

Exhibit-11. Machine Learning Process Flow


A L T E N CRESTTEK

7. STRUCTURED AGILE INNOVATION PROCESS

How do we innovate and bring new ideas to the market? Every major

company asks this question but very few have been as successful as a

focused startup. The key difference is that a startup made up of a few

founders (usually 2 or 3) is an ideal number to create and launch something

fast without the typical organization inertia. This is difficult to replicate in

bigger organizations. Couple this with the technology disruption, and the

outcomes become unpredictable – especially non-linear outcomes.

Looking at a couple major ideas like “ the Google Search” and “the

iPod”, they were launched by connecting the dots using trial and error as

shown in Exhibit-12. Since it is difficult to connect the dots and force

intuition, we have developed a framework for that which has been proven in

many client situations.

19© 2018

● Altavista search ● Goto = Page Rank + Intuition = Google

● MP3 ● PortalPlayer + UI = Apple iPod

Exhibit-12. Connecting the Dots Launched New Products


A L T E N CRESTTEK

We have worked with many clients in customizing a framework for

their needs. A typical framework is made up of a combination of ideation

and lean start-up approaches. This framework is a set of tools and principles

that will help our clients discover ideas in the Connected Car market. It will

also help them implement solutions and add value to their customers that

will generate new revenue streams. This process is lean by nature – go to

market fast or fail fast. We have shown a sample framework in Exhibit-13.

This is not a stand-alone framework, this will be combined with our ideation

funnel in Exhibit-14 to drive the ideas through a fast validation process.

20© 2018

Differentiation MonetizationThink

IdeateLean

Start-Up

Exhibit-13. Framework For Agile Innovation

Source: PCUBED, Alten


Exhibit-14. Framework Driven Innovation Process Flow

Hardware

Embedded

Systems

Software

In-Car

Network

Sensors

Shared

Mobility

Wireless

Network

Battery

Big DataCan you

Predict

Future

Outcomes?

In

2020

2025

2040

Exhibit-15. Technology Roadmap to Connect the Dots to Outcomes

Furthermore, we use a technology roadmap to look for non-linear

outcomes as in Exhibit-15. When we combine multiple disruptive technologies

the outcomes become difficult to predict without an agile innovation process.

IDEATE

Funnel

ReviewMVP




Below is our data discovery process (Exhibit-16). This is broad-based

and part of our agile framework to rapidly ideate and deploy revenue

generating ideas.

Time used

Work engagement

Texts

Mails

Messages

Contact Records

System/Chat Logs

Agents

Telemetry

Web service apps

IoT

Failures

Successes

Alerts

Events

Warnings

Clients

Dealers

Partners

IngestAnalyze Validate Deploy

Data

Discovery

Exhibit-16. Data Discovery-Deployment Process



Strategic “Focus Area”?

► Do we understand Data?

► Do we need a strategic review of

Data?

► What is the volume, variety and

velocity of data?

What?

► What data do we have/create?

► What new data should we create?

► What is the value of the data?

How?

► How do we harvest the data? Is it

easy? Is it secure?

► Are we harvesting it ourselves or

with partners?

► How do we analyze the data?

► What tools do we have or use?

A non-exhaustive sample of a “focus area” analysis list is shown below

that has been used successfully in the past.

Customer Value Proposition?

► Who is going to benefit?

► What is the value for them

(B2C/B2B)?

► Will they pay for this?

► What is the competitive

landscape or substitutes?

Cost – Benefit?

► What is our competitive

advantage?

► How long to launch and test?

► Degree of difficulty to execute?

► What is the cost?. ROI?


The beauty about car data is that any player in the supply chain can

access it, with varying levels of difficulty. The natural owner, the OEM, has

absolute control of data and is in the best position to take advantage of

converting this data into dollars. However, this strategic advantage could be

squandered if OEMs are unable to deliver value-adding data-to-dollars

products and services in a timely manner. Many players are already starting

to access that data through smartphones and aftermarket products/services

by providing valuable services directly to the vehicle owners and their local

ecosystem.

It is our hope that this high level perspective on converting data to

dollars, and our proven framework for launching products and services faster

with less risk, will help your company develop a competitive advantage using

Connected Car data.

TAKE-AWAY: ACT ON YOUR DATA NOW!

A L T E N CRESTTEK

ACKNOWLEDGEMENT

I feel lucky to be part of the automotive industry and

witness the digital transformation of the automobile. I would

not be here without my customers and their trust in me to be

part of hundreds of technology, engineering and strategic

engagements.

Today I am part of Alten group – a global technology

and engineering services company – which acquired Cresttek,

a company I cofounded.

I thank our VP of Digital Transformation, Tom De Winne,

for providing valuable feedback on this report.

25© 2018

A L T E N CRESTTEK

LEGAL NOTICE

Opinions and estimates constitute judgment as of the date

of this material and are subject to change without notice. This is

not an investment advice. Any interpretations derived from this

document are the sole responsibility of the reader.

© 2018 ALTEN CRESTTEK. All rights reserved.

No reproduction is permitted in whole or part without written

permission.

Disclaimer: This content is for general purposes only, and should

not be used as a substitute for consultation with professional

advisors.

26© 2018

A L T E N CRESTTEK

ABOUT ALTEN

27© 2018

ALTEN is a global technology and engineering services

company that the world’s automakers come to for solutions.

Why us?

We sell solutions and not projects. We are more than an engineering

service provider. We bring answers to your difficult questions using our

extensive engineering, project management and technology solutions

experience.

For more information visit:

www.alten.com

www.cresttek.com

connected cars: data dollar$ to...2. what is a connected car? 3. new capabilities needed to play 4....

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