In recent years, data monetisation has become a hot topic. Data monetisation has become a major value driver as companies become more data-driven.
Data monetisation can be broadly divided into two categories. It involves creating new revenue streams from data or insights by making that data or data source available to customers and partners. This is often referred to as ‘external’. And it also includes indirect (optimizing your business performance using data-driven insights, improved, data-enriched service, or more generally ‘internal.
Rise and fall for the new savior
However, the field of automakers has evolved in a different way than initially expected. As soon as connected cars were on the road, automakers were the first to attempt to monetise vehicle data. Since then, they have been collecting the ever-growing data sets from individual drivers and their vehicle fleets.
OEMs aimed to use the data sets to monitor safety, maintenance, product development, and product development and sell them to outsiders who could use the data to enhance their business, gain customer insights, develop new products, or manage infrastructure. They tried to copy existing data marketplaces from other industries, such as financial, medical, and machine data. Or directly sell vehicle data through third-party providers like Otonomo or Wejo under different revenue-share models.
The expectations from the auto industry were high. New revenue streams promised to be created, but they never materialized. The returns and sometimes third-party demand was not what was expected. While some consumers and regions showed initial interest, their efforts to leverage that data have stalled over time. (Limited technical capabilities, limited real-time data need, limited impact, etc.). The model didn’t generate the expected additional revenue. The carmakers’ initial optimism waned.
After a disappointing start, many OEMs are now reconsidering their external data monetisation strategies. Some OEMs are stopping data exchange with third parties entirely. They want to harness the data’s value. They are turning their attention inward to fully utilize the connected vehicle data for new business models such as usage-based, fleet management, and other digital services.
The fact automakers, even more, accelerate this strategic shift will need to move beyond their current business model of moving metal and become holistic providers of mobility and digital services to be differentiated in the future. They will need to take a holistic transformation approach, as they need to be more focused on data and software than today. With all the new capabilities, agile processes and data operations, they will also have to implement governance, ensure quality, and democratize data and analytics throughout the enterprise.
The business potential
What are these new business models? Many OEMs have been considering offering car insurance. This would allow them to create a single-stop shop that covers all aspects of vehicle ownership, including financing and insurance. They now have the data to provide seamless customer service for certain aspects of car insurance. You could offer “pay-as-you drive” insurance that uses specific driving patterns to determine risk and optimize accident detection and management. This leverages their access to real time alerts. This could be done in either a direct or indirect data monetisation model, where the OEM works with backend providers to share costs and revenues. Research shows that usage-based insurance is the most promising, with it expected to grow from US$31bn worldwide to US$175bn in 2030 (21 percent CAGR).
Fleet management is another high-value area. This involves complex and labour-intensive processes that involve vehicle provision, continuous uptime maintenance, service optimization, customer management, and fit-to-purpose vehicle provision. The OEMs’ initial goals of achieving cost savings and new revenue generation can be realized when vehicles are able to automatically locate and predict servicing needs. B2B customers can license these digital services without having to manage them. This category is sure to be attractive with an expected increase of US$18bn to US $80bn by 2030 worldwide, and a CAGR 18%.
Tracking data value
How can you connect value and expected return of investment to individual data assets. The first step in establishing a clear digital strategy for services is to define key categories (usage-based insurance and fleet management, as well as mobility services). Depending on market preferences, regulations, coverage, etc., key regions may be required. ).
It is possible to attribute revenue and assets to data assets by aligning the business strategy with a data strategic. This involves analysing required data (and other resources needed to deliver prioritized services). Data access tools, data catalogs. Consider investments in infrastructure, data capturing and storage, processing, and people to manage the systems. These capabilities include data wrangling, analysis, and marketing and promotion. This is similar in that it connects revenue and margins to individual customers through the products or services they purchase.