One of the biggest trends driving competition in the auto industry in recentyears is the race to offer new and better “connected-car”technologiesincluding those that enhance safety, monitor maintenancerequirements, provide Internet connectivity, and offer seamless integrationwith smartphones and wearable devices. A 2015 study of the worldwideauto industry projected that customer spending on connected-cartechnologies will exceed ?40 billion ($42 billion) in 2016; that number isexpected to more than triple to ?122 billion ($129 billion) by 2021. Tech-savvy consumers increasingly expect their cars to serve as extensions oftheir personal technology, and one company working hard to exceed thoseexpectations is German automaker Bayerische Motoren Werke AGorBMW, as it is more commonly known.BMW was founded in 1916 as a manufacturer of aircraft engines, but thecompany soon branched out into other areas. Today, the BMW Groupmanufactures motorcycles in addition to its three premium car brands(BMW, MINI, and Rolls-Royce), and it is now represented in over140 countriesincluding 30 production locations in 14 countries. Withclose to 2 million cars sold in 2014, BMW is one of the world’s most-recognized luxury car brands, with a reputation for consistently deliveringhigh-quality cars built on a foundation of advanced mechanicalengineering. To maintain its edge, BMW is now expanding its focus to findways to improve its cars through cutting-edge technological innovations.According to Dieter May, BMW’s digital business models senior vicepresident, “Our competitor is not Audi, Jaguar Land Rover or Mercedes, butthe space of consumer electronics players.” As May sees it, one of thebiggest questions facing BMWand other auto makersin the comingyears is “How do we take the connected home, personal digital assistants,and advanced sensor technology, and connect all these trends?”BMW has responded to this question by building an extensive array of newtechnologies into its latest models. Through BMW’s iDrive information andentertainment system, drivers can access ConnectedDrive, a portal offeringa wide range of location-based services, including concierge services, real-time traffic information, and access to more than 12.6 million searchable”points of interest,” ranging from gas stations to restaurants to touristattractions. Another ConnectedDrive feature, the Head-Up Display, projectsimportant driving informationsuch as current speed and warnings fromthe car’s night vision systemon the windshield, allowing the driver tokeep his or her eyes on the road. The Speed Limit Info feature uses a car-mounted camera along with data from the navigation system to keepdrivers informed of current speed limits, including those in effect due toroad construction and weather conditions. ConnectedDrive, which can becontrolled from the driver’s smartphone, also offers mobile office features,such the ability to dictate and send messages, and a ConnectedDrive Store,where users can purchase apps and services directly through the iDriveinterface. And at the high end of BMW’s model line, the 7 Series full-sizesedan, BMW’s flagship vehicle, is the first model to accept gesture-controlcommands for the iDrive display as well as a completely automated self-park feature that can be operated when the driver is outside the vehicle.BMW is also working to ensure that the car-buying experience is keepingup with customers’ expectations by encouraging its dealerships to createmore digital showrooms, with flat screen displays and virtualdemonstrations to appeal to the many customers who are accustomed tothe online shopping experience. In addition, BMW is adding “productgeniuses”like those found in Apple’s retail storesto its showrooms.The specialists have no responsibility to sell; their job is simply to spendwhatever time is necessary to explain and demonstrate each car’s varioustechnological features to potential BMW customers.To continue to develop the complex technological innovations it needs tomaintain its edge over competitors, BMW has explored possiblepartnerships with technology companies such as Apple. Currently,however, the auto maker is focused on building up its in-house expertiseand speeding up its internal software development cycles. In 2014, BMWspent over ?4.5 billion ($4.75 billion) on research and development, and itspent, on average, more than ?6,000 ($6,370) per car on connected-cartechnology. BMW is making it clear to potential customers and competitorsalike that is committed to competing and winning on the digital front.Other than selling more cars, what potential benefits do connected-car technologiesoffer auto makers such as BMW in terms of enhancing long-term customerrelationships? What responsibilities does BMW have to its customers regarding the data it capturesvia the various connected car technologies that it builds into its cars? Of the primary components of an ERP system that were identified in this chapter, whichmodules are likely to be of highest importance to BMW if it continues to focus on in-house development of new technological features and services rather than partneringwith an established personal technology company, such as Google or Apple? Wouldthose tools need to change if BMW establishes a long-term partnership with atechnology company?
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