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The mobility industry is negotiating its way through rapid and dramatic changes. Innovative technologies, intensifying competition, and new regulations are compelling stakeholders to reassess their strategies. In this Movers & Shakers interview, Uli Muench, Global Vice President of the Automotive Industry Business Unit at SAP, offers an insider’s perspective on a range of hot button issues, including how SAP is leveraging cross-industry collaboration and new generation solutions to stay ahead of the curve.

Sarwant Singh (SS): What is SAP’s strategy and vision within mobility?

Uli Muench (UM):  We have a long-standing history of industry verticalisation and industry focus, with automotive being one of the 25 industries for which we develop industry solutions. We go to most market units by industry, so that has helped us a lot. Mobility is a hot topic for many of our automotive customers and also for service providers from other industries, whether they are established insurance companies for usage-based insurance, disruptive startups, or ride sharing companies. Obviously, that’s a brand new step, where all of a sudden we are looking at a cross-industry world when it comes to mobility. My automotive team has taken a lead on this – both from an overall solution/innovation perspective as well as from a go-to-market perspective.  Whether in terms of interacting with market participants, representing SAP at external events or on social media, I work closely with my counterparts across multiple industries. Travel and transportation is a very important example in this context.

When it comes to electromobility, we work closely with our colleagues here in utilities and with the energy and public sectors as it relates to smart cities. Then we go together to events to showcase our collaborative efforts. For instance, we went to Barcelona for the Smart Cities World Conference.  So, we look at it from two perspectives. The first relates to what the market needs and what we see in terms of trends. Obviously connected, autonomous, shared and electric (CASE) is not lost on us. What we ultimately ask ourselves is how we can best support our customer base.

So, on the one hand it’s the market side, market demands, the trends and the needs in the industry. It’s about what our competition is doing and translating this into requirements for our development organisation.

We have seen a fairly big shift compared to about 5 years ago. We still have our portfolio of standard, off-the-shelf software, under our Intelligent Suite umbrella. This software is progressively becoming more cloud-based but is still also on premise. So, this is one part, but then we are also seeing a strong push toward our SAP platform with its micro services, which continues to grow.  This is a new component that we did not really have a few years ago. And that’s how we try to set ourselves up to capture the market.

SS: Are there any exciting new generation solutions you are working on? The last time we spoke, you had talked about subscription services. Is there anything exciting happening there?

UM: There are most exciting things going on! One is around the concept of the neutral server which is an initiative that is also being driven by the Association of European Automotive Manufacturers.  The neutral server, we believe, could become the regulatory requirement for European automakers to provide data, or a select set of data, from collected vehicles to third parties in a standard format in an anonymous way that respects data privacy. But that’s something we’re working on with one of the big OEMs in Europe. If all goes well, we will have an announcement in 2019 about that. That’s probably #1 on my list.

SS: Would this neutral server be very confidential or specific to a particular OEM? Or would OEMs pool into a certain aggregated data and into this server and make it available to third parties?

UM: There is more information, including documents by the European Automobile Manufacturers Association, on this concept on the website CarDataFacts.eu. How this concept will really be put into practice is something that we are working on with one and half of the big European OEMs.  This is the initiative that we hope to be able to make an official announcement about.

What we believe will happen is that each of the European OEMs will be required to provide their connected vehicle data points so they all have a neutral server that normalises these data points and draws the supplier to a central instance, that is then able to share select data with third parties across OEMs. So what it means is that no matter who the manufacturer is, what brand the vehicle is, one can essentially leverage the data. An example of this is V2X scenarios.

Niranjan Manohar (NM):  While Europe has the GDPR, the US has no such compliance requirements at that level. How will companies in the US work with companies in Europe because you need to have data compliance at both ends to share the data, especially if you’re going to distribute the data to third party vendors as well.

Also, you had initially mentioned the interest around usage-based insurance as data use cases. But we are seeing other e-mobilty use cases like charge point location or in-vehicle marketplace. How do you see yourself playing a level playing field in this game with respect to compliance and in terms of your in-vehicle suite of apps? How do you work with the OEMs in keeping the anonymising aspect, and not losing the privacy. There are several business models but not one defining model set in stone. So, how do manage that?

UM:  These are interesting times. We are seeing multiple, maybe disjointed, initiatives by automotive manufacturers across the market. I believe that we will see a consolidation. For example, if the concept of the neutral server works, or proves to work for Europe, I can see the concept also being picked up by other regions. I hope and believe in best practices and standards. Out of the many initiatives that are underway right now, I hope the best will emerge as the retail standard.  Maybe this can be compared with the textbook example of the videotape where we ended up with one standard and did not have multiple devices and formats. Something similar I hope will emerge from these initiatives. In this context, we are trying to provide a solution that others will look at and say that this is what they’d like to adopt, rather than invent or reinvent something on their own.

NM:  There’s a major pull towards in-vehicle payments with a lot of OEMs supporting it. How is this ecosystem evolving? How do you see the buy in from a PayPal and Mastercard? The Masterpass wallet didn’t really work here compared to other wallets. How do you see this integration happening and is there a real business case for in-vehicle payments?

UM:  We don’t know yet and this is what makes it so exciting. I personally believe the convenience factor is going to be the ultimate decision maker. If it is convenient for the user, and we also need to separate the commercial scenario vs the private user scenario, then the answer will be clearer. With SAP’s vehicles network solution, we have a solution in the market which basically has aggregated capacity from parking providers and from oil and gas companies from gas stations that allows a kind of direct payment option. We have enhanced this with Mastercard and other partners like Haier, for example. The key is market acceptance. For example, AT&T launched its Spark product very quietly in September with Harman Samsung hardware and two of those services are SAP powered. The key is whether it will be adopted by the end user. Ultimately if it provides convenience, it will be adopted. We are at a very early stage and I also know that some of the OEMs have their programmes. I don’t personally believe in these silos. If you have something successful, then it needs to be cross-branded and it’s the only approach that makes sense.

NM:  Everyone is talking about L4 and L5 in autonomous vehicles and about on board vs off board computing.  What is the trend you see – will there be more edge computing or quantum computing? Do you see more of the onboard processing power taken up by the vehicle vs what happens off board? You have the SAP cloud platform – do you think it is more reliant on the in vehicle processing side vs the off boarding in the context of the immediate reaction that needs to come from the vehicle, based on a real world scenario?

UM: Even with a 5G scenario, I truly believe for capabilities that are safety critical we will see onboard computing playing a role. For anything that is not of immediate concern or deals with safety where you need 100% availability, 100% connectedness will rule the edge capabilities in the vehicle. And then anything else will probably have a cloud component.  I’m not an expert in 5G but based on what I’m reading, it sounds very promising.  Nonetheless, I personally believe we will see onboard computing for safety related features.

SS: We’ve seen tech companies like Google and Intel transforming from software companies to service providers. Google has shown a similar trajectory in terms of autonomous technologies. How would you summarise SAP’s strategy and vision within the sector?

UM:  Automotive companies are becoming, or at any rate are saying that they are becoming, software companies. They are buying software companies, and are enriching their portfolios to become much more like digital enterprises looking at mobility as a service, as a revenue and profit contributor. This represents an interesting development from SAP’s perspective. This is evident when you look at our portfolio as it relates to business networks like Ariba and Concur and Fieldglass or TripIt as part of the Concur family. We are looking into how we can leverage this expertise. At the end of the day, it’s a lot about business transactions and leveraging connectivity to bring businesses together. So, we certainly have a focus on B2B scenarios.  In the context of SAP’s vehicle network, it’s more a B2B2C scenario. What we are learning here is that we are working with companies like Tantalum or Mojio and AT&T to acquire that consumer facing component. So, we really believe that our strength is in the B2B segment but also, at the same time, that we can do a better job in leveraging existing networks like Concur and Ariba. And when you look from the perspective of mobility as a service, with the underlying transactions that big rideshare companies need to integrate in Concur, then that makes a lot of sense. TripIt allows you to plan your trip, whether it’s a personal trip or a business trip. So, there are many things that we look into while leveraging synergies within the SAP family to support mobility scenarios.

SS: We have a view that mobility, travel management, and expenses management will all come together. In fact, we use Concur which combines mobility with travel management and expenses.

UM:  You said expenses management. Right now, Concur is focused on business expenses. However, when we work with companies like Mastercard, all of a sudden you can see your personal payment transactions.  So, it doesn’t have to be limited to business trips, you can manage these expenses even on your personal trips.

SS: We see car companies struggling with software as a service business models, both in-vehicle and mobility. For instance, we are seeing a shift to 50: 50 or 70:30 data sharing models with combined efforts in development being followed by the monetisation of data by both parties.  Do you see some of this happening?

UM:  It’s a new field and we will probably take a number of years to even establish the rules of engagement. At the end of the day, there are multiple categories. One is the expertise in the software itself and the ability to provide over-the-air updates to manage software entitlements as a service model. This is not as trivial as it may seem on the surface. Every software company that is doing significant business in the cloud space will confront that. Maybe 5-10% of the processes are very complex and you need to be able to cover 100%. This is a lesson that automakers are learning the hard way. I think it makes total sense for them to form alliances or buy that competence by acquiring companies. But then there’s also the issue of what is a fair share when it comes to monetising these new kinds of services. I think this depends on the value that the consumer sees in it. It needs to be a fair pricing model based on the true value for the consumer or the business user. The involved partners need to be realistic about what constitutes a fair share. That really is the beauty of a market economy as well in that it will shape out by itself.

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