Practical example
“Disrupt or be disrupted”
Assessment of Opportunities and Risks in the Context of the Digital Transformation of an Automotive Supplier’s Business Model
Digitalization is contributing to an ever-accelerating pace of disruption in the automotive industry. Hardware is increasingly being replaced by software and virtual solutions. Automotive suppliers that capitalize on the opportunities presented by digitalization can enhance their competitiveness and tap into new business opportunities.
To this end, the opportunities and risks of digitalization should be analyzed and evaluated in the context of the company’s own business model. A strategy can then be developed to align the company’s product portfolio accordingly.
Background
There is a great deal of uncertainty regarding the impact of digitalization on the automotive industry in general and on our client’s specific segment in particular. This has been recognized, and the goal has been set to see more clearly through the fog of this disruption and to actively help lead the way.
The key is to identify risks, but above all opportunities, for one’s own business model. This is taking place against the backdrop of a gradual shift away from hardware as the cornerstone of the business model toward software- and data-driven value creation.
SPECIFIC TASKS
One of the project's goals was to identify trends in digitalization within the automotive sector at an early stage, assess the resulting opportunities and risks, and analyze emerging possibilities.
Next, we will explore ways to flesh out the potential of this disruptive technology and illustrate it using relevant market metrics. At the same time, we will analyze the concept of a data-driven third-party business model based on data generated within the vehicle.
To assess the viability of such a market entry, it is necessary to identify opportunities, risks, as well as existing gaps and weaknesses.
Based on this, a market entry plan should be developed that also incorporates the proposed third-party business model.
KBC's Approach
To address this very broad scope of work, a megatrend analysis of the automotive industry was first conducted. It is intended to identify potential impacts on the existing business model and emerging growth opportunities.
The findings of the market analysis provided a clear picture of new digital business models. The opportunities and risks associated with the identified business models were then assessed.
In preparation for market entry, a market development analysis was conducted for the selected sector, and corresponding market sizes were determined and forecasted. This analysis explicitly identified barriers and gaps to market entry for the client and outlined potential solutions based on various scenarios. The time factor, as well as the selection of the right partners, are critical in this context.
Similarly, a concept for a third-party business model was developed that is attractive to both OEMs and third parties. Building on this, specific business cases for market entry were developed.
IMPACT ACHIEVED
Based on the preceding analyses and assessments, the relevant market parameters for potential new digital solutions were identified. Specific opportunities and risks were identified, and the challenges associated with market entry and the economic potential were quantified in well-structured business cases.
“Doing nothing” is not an option; companies must proactively disrupt their own business models to avoid being disrupted themselves. This has paved the way for a shift from hardware to software- and data-driven value creation. By utilizing and processing collected data, third-party business models generate additional, recurring revenue streams after the initial sale, similar to standard subscription models.
