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Industry Disruption: The Next Stage of Industry Evolution Facing Automotive

The automotive industry will undoubtedly undergo significant changes within the next 25 years due to disruptive technologies and services. The headlines provide a glimpse of what is to come such as “Google’s self-driving cars are coming sooner than you think,” and “Driverless buses, platoons of trucks to shape Singapore’s transport future.” Disruptive innovation can cause mature industries to undergo another stage of industry evolution known as industry disruption. In this stage, new players enter the market, and eventually a shakeout will occur overtime that reduces the total number of new and incumbent companies in the industry. To look forward, let’s take a look back.

Around 1990, my grandfather, an executive at BorgWarner, retired. Up until his retirement, his office desk had no computer, just a landline phone. He received paper reports and memos to review. The only device plugged into the wall was a shoe buffer. When he left the office building each night, no one could get a hold of him until after he arrived home from his nightly train commute. Nearly 25 years have passed since I last visited the BorgWarner Chicago, and I would bet it’s no longer my grandfather’s BorgWarner.

Since my grandfather retired nearly 25 years ago, advancements in technology have drastically changed how companies operate and subsequently the business models in place. In order to keep up with the change, it’s no longer a matter of when to digitally transform operations, but how. With the advancements in technology, machine-to-machine (M2M) technology deployments and the internet of things (IoT) strategies are now possible on a large scale. The early adopters have paved the way and have shown how implementation of M2M technologies and IoT based strategies can positively improve their business models and customer experience.

For example, Tennant, an industrial cleaning equipment manufacturer and SAP customer, decided to re-imagine its business approach with the IoT. Newly manufactured Tennant cleaning equipment is connected to the internet. The data collected provides Tennant with information about its products, which shapes research and development, marketing, sales, and field service efforts. In addition, Tennant analyzes the data and provides its customers with access to valuable insights about their cleaning operations. The insights include equipment location, usage by machine, maintenance costs, and critical alerts. Tennant’s IoT enabled fleet is a win-win for its customers and Tennant; customers are able to lower cleaning costs while Tennant can drive better after-market part sales and improve service.

We live in a truly exciting time as many of the once dreamed about capabilities are now possible through technological advancements. Now is the time for automotive suppliers to digitally transform in preparation for the industry disruption to come. This week over 50 automotive OEMs and suppliers like BorgWarner are gathering in Detroit for the Best Practices for Automotive conference on October 12-14 to explore the road to digital transformation. Learn more about this inaugural conference.

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