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24 Apr 18

The future of fleet management in the face of automotive innovation

When fleet and leasing management software company Sofico first came into existence 30 years ago, motor vehicles were manufactured with a manual choke and Petrol in many countries across Europe was less than 0.5 Euros a litre. 

A lot has changed since then, not least the number of vehicles on Europe’s roads, congestion in towns and cities, environmental concerns and the total cost of vehicle ownership. That said, Piet Maes, CTO, Sofico freely admits these are the most exciting times in which to be employed in the motor industry. Sofico will present valuable insight into the added value offered by fleet management software, now and into the future, at a Corporate Expert Session at the Global Fleet Conference 2018 on 29th May 2018 at 5pm. Here’s a taster:

You’ve been around for 30 years, how has the business of fleet management changed in that time? 

The focus has shifted from the asset (the vehicle) to the customer and driver and from offering the same products for everyone to made-to-measure solutions for individual customers. In terms of systems, we’ve gone from specialist retail finance and leasing to hybrid. 

Thirty years ago the focus was on lower operating costs and this was achieved through back office automation. Now, there’s no longer such a distinction between back, middle and front office, it’s all integrated into one value chain.

What are some of the biggest challenges your customers face in the next 30 years?

The industry is currently going through an unprecedented period of transformation. It began with the advent of the mobile phone, which lead to the rise of social media. Then the emergence of the cloud and big data and it’s snowballing today with the combined effect of different mega trends such as the sharing economy, customer/consumer centricity, urbanisation, environmental awareness and exponential technological breakthroughs like Artificial Intelligence (AI), robotics, Internet of Things (IoT), Virtual Reality/Augmented Reality, energy storage and blockchain, not to mention quantum computing, nanotechnology, biotechnology and materials science. 

Everything seems to be fused with everything else and increased adoption or advancement of one accelerates the proliferation of others. Every step taken lays the ground for an even bigger next step. 

The future of automotive is shaped by shared, connected, autonomous, electrified vehicles. Car sharing is the quintessential example of the sharing economy. Connected cars are the “things” in the Internet of Things.

Electric cars are ideally suited for sharing because of their low operating vs acquisition cost. The more they are used the bigger the advantage. A self-driving car is essentially a robot acquiring the ability to drive itself through machine learning. And when cars become autonomous from their drivers it makes no sense not to share them.

Today’s norm is radical customer and consumer centricity (over product centricity and business-driven models). In this digitally enhanced, always on and increasingly transparent world, the balance of power has swung back toward customers. Businesses realize they need to differentiate and compete on the customer journey, by providing the ultimate customer experience.
What we are seeing now is a shift away from vehicle ownership to user-ship, implying many drivers using many vehicles for shorter periods. It’s no longer about the vehicle (the asset), but about the driver (the user). Digital technology has provided the necessary means for instant access to shared vehicles.
In response, car manufacturers are reinventing themselves as mobility service providers and fleet & leasing operators seek to manage the usage of the vehicles in their fleet with greater granularity: from minutes to years. This is reflected in the emergence of new mobility and connected car services like (peer-to-peer) car & ride sharing, (ultra) short term rental and digital concierge services. 
Trends and phenomena like electrification, environmental awareness, traffic congestion and tax pressure prove to be additional stimuli for sharing cars. But at the same time, they drive changes in the mobility mix towards multi-modal.

We also see a shift in business models from B2B to B2C/B2B2E. In the (automotive) financial services industry, we see evidence of this through the convergence of retail (B2C) and fleet (B2B), like in private lease and with loan products being offered with value-added services.

Customer journeys start and end online and consumers expect empowering/powerful, self-servicing tools, requiring a very strong focus on UX (mobile first of course, yet cross-channel). This means that boundaries are blurring between back, middle and front office. They are no longer separate (systems or layers) but rather different use cases in the business ecosystem. 

As a general conclusion, you can say that all sorts of convergences are taking place: between short and long term, automotive and multi-modal, retail and fleet, funded and managed and back and front office.

From a software provider’s perspective, what we see is a clear demand for hybrid solution capabilities. Platforms and systems that can cover the full spectrum of contracted vehicle usage: financing, leasing, renting as well as sharing. A need for solutions that can bridge contracted vehicle usage (the FS perspective) with driver-centric, value-added mobility and connected car services (the OEM perspective) and can orchestrate/aggregate a broader supply chain of multi-modal mobility.

The shift to shared car usage may well decrease the overall number of cars on the road but it will lead to bigger fleet sizes (with large institutional owners) - on the one hand in combination with privately owned cars that are (peer-2-peer) shared - on the other hand. Bigger fleets will generate more data as more customers generate more, smaller-grained transactions, not to mention the social and telematics data generated.

Now and in the future, vehicles will still have to be managed throughout their life cycle. This will remain a core capability (of systems and providers). But to be successful in this transformed marketplace will require hybrid, adaptable and scalable systems that can manage the high volume of diverse lower-value transactions profitably.

How will technology, connectivity and mobility impact the future of fleet management and software related to it?

Think of who will own cars in the future. Self-driving is so 2016. Cars will own themselves when AI matures. They will collect and save their fares, self-charge, repair, develop and update their software, in the spirit of blockchain and open source, cars will have an account on GitHub.

What are the key drivers for a successful fleet management software that can be used on an international level?

With its Miles Core ERP system, complemented with the new cloud micro-services platform Miles.next, Sofico can support market trends and challenges; bridge contracted vehicle usage (the FS perspective) with driver-centric, value-added mobility and connected car services (the OEM perspective). 

We cover the full spectrum of contracted vehicle usage: financing, leasing, renting and sharing. We can also orchestrate and aggregate a broader supply chain of multi-modal mobility; integrate seamlessly (through APIs in the cloud); provide high-available web and mobile front ends; connect 3rd party apps / services / platforms (e.g. mobility service providers, telematics services, smart contracts). It also means we can deploy new features and upgrade more easily, reducing time-to-market and impact. This will allow fit-for-purpose technology choices; satisfy big data requirements and turn data into insight.

How will data privacy/GDPR legislation influence your business and that of your customers?

This regulation will have an impact on our business and how we process personal data gathered by our customers. As part of our preparations to demonstrate compliance with the EU GDPR, we are working with our customers who are reviewing their processes and systems that collect, transact and retain customer data, including Miles.

We’ve enhanced the product to ensure compliance with a new structure for registering consent (opt-in/opt-out) at person level. We have configurable metadata to identify fields containing personal data and specify their protection strategy (how to anonymise when data needs to be removed). We’ve included configurable data retention periods and command to identify and remove obsolete data. There is now a two-stage process in terms of data retention, removing data from operational use while holding on to mapping with restricted access for a longer period in view of legal data retention periods. We also have data source and web service to facilitate your response to GDPR Art. 15.

How do we see ourselves up against new technology companies, both smaller, emerging ones in the mobility space and mega corporations like Google, Apple, Amazon and Facebook?

We don’t see ourselves as a legacy company. We have a sustained focus on innovation and strive to keep ahead of trends from both business and technology perspective.

Most new tech-savvy mobility companies have a strong orientation towards the user journey and less on vehicle/fleet lifecycle management. Therefore, we believe we perfectly complement each other and with Miles.next we feel we have the ideal integration platform.

As for mega corporations, they potentially threaten any other company, no matter whether in the tech sector or in the fleet/mobility or automotive industry. Google and Apple (not to mention Chinese giants like TenCent) have engaged in automotive endeavours while car companies are making huge investments and/or doing acquisitions in the tech space. Tesla is probably more a tech than a car company.

How about the likeliness of a unified, all-in-one mobile app channelling access to all modes of transportation, anytime/anywhere?

I believe the push to own the customer/user relationship will prove to be stronger than the incentive for a unified solution. Although at some point there might be a central platform that aggregates mobility services and modes of transportation (or perhaps only a data standard). Mobility companies (automakers in particular) will probably still want to own (and brand) the channel for accessing the platform. That channel may be a mobile app (bundled with brand-specific features) or perhaps even the vehicles infotainment system. Having said that, we might see the role of the smartphone (as our interface to technology) gradually being taken over by a multitude of digital experiences through the IoT, artificial intelligence, mixed reality and so on. Just think of virtual assistants like Amazon Alexa and Google Assistant.

Technology is a great enabler but it never stays still. During its 30-year existence, Sofico has primed itself for a future in which core fleet management plays a central role, supporting a host of innovations, new products, mobility services and technology but we know the next 30 years will be a rollercoaster ride of unimaginable change that will be as challenging as it is thrilling. 

If you want to attend the Global Fleet Conference 2018 in Rome (from 28 to 30 May) and participate in Sofico’s Corporate Expert Session on 29 May, please visit the event website.  

Images: Piet Maes, CTO, Sofico

Authored by: Steven Schoefs