Business Ecosystem Transformation€¦ · digital transformation at the centre of their corporate...

1© 2018 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independen t firms are affiliated with KPMG International. KPMG International provides no client services. No

member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

Document Classification: KPMG Confidential© 2018 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.

Business EcosystemTransformation

OLIVER Cunningham

KPMG Brazil Head of Transformation



Document Classification: KPMG Confidential

Dieter Becker KPMG Global

Head of Automotive



Document Classification: KPMG Confidential© 2018 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.

Business EcosystemTransformation

OLIVER Cunningham

KPMG Brazil Head of Transformation

“When you consider what

matters to the customer –

updates, security of my

data, an online persona –

when you go to a car

dealership, they’re still

trying to sell you

floor mats!” Kent Helfrich, Vice President and Chief

Technology Officer, Flex Automotive




The Transformation Imperative

Why

Now?The

RewriteToday’s

Challenges

Tomorrow’s

Challenges




Enterprise

Digital

Transformation

Omni-

Business

Activity was centered on

front office and customer

experience

Consulting firms created

digital practices through

strategic acquisitions

Digital agencies entered

the market and played a

big role

A digital focus on just the front

office will not provide sustainable

competitive advantage

Organizations must focus on

restructuring operations beyond

customer-facing functions to

enable enterprise-wide digital

transformation

Organizations plan to spend more

on digital in the middle and back

office than the front office

Digital Disruption has dramatically changed the Business Environment

Digital

Customer

Engagement

Digital

Marketing

Mobile

Digital

Business

Strategy

Digital

Supply

Chain

Disruptive

Business

Models




Digital Transformation = Business Transformation

“Not Innovating Would Be Our Biggest Risk.” Debby Blakey CEO Health Employees

Superannuation Trust Australia

“By the end of 2017, 2/3 of CEOs of Global 2000 enterprises will have digital transformation at the centre of their corporate strategy.” IDC, Market Intelligence Firm




The Mobility Ecosystem

Source: 2016, WEF, Digital

Transformation of Industries:

Automotive and 2017,

KPMG, Global Automotive

Executive Survey

Conhecimento da Indústria

50% of global

consumers

consider privacy

& security as an

extremely

important

purchasing

criteria.

Digitalization

will drive more

innovation in

the next 20

years than

there was

been in the

past 100

years.

Data is the

fuel for future

auto business

model for 83%

automotive

executives

By 2020, more

than 90% of

cars sold will

be connected

78% of

global

automotive

executives

would choose

an electric car if

they were to

buy a car over

the next

5 years.

80% of global consumers

expect the OEM to take care of

charging stations.

By 2020, more than

90% of cars sold will

be connected




The Future Auto Industry

Electric Vehicles &

Alternative Powertrains

Mobility as

a Service

(MaaS)

Connected

and

Autonomous

Vehicles

Changing consumer and

societal demands

• Moving people

• Moving goods Collaboration in the future Mobility

Ecosystem

Mobility Value Chain

Source: 2017, KPMG, Global Automotive Executive Survey




Innovation Model (Linear)Product / Price

Competition

Long

Processes

High

Investments

Few Ideas Fixed Offered

Value

01

Passive

Customers02

Transactional

Data03

Source: 2016, Rogers D. The Digital Transformation Playbook




Experimentation Low Investments Many Ideas Customizable

Offered Value

Innovation Model (Exponencial)Value

Competition01

02

Strategy

Data03

Long

ProcessesIntegrated

Clients

High

Investments

Few Ideas Fixed Offered

Value





Source:

2016 MIT Sloan Management Review,.

Aligning The Organization For Its Digital

Future

2016 KPMG CEO Outlook

83% believe there will be a business

model disruption in the next 5 years

84% agree that digital ecosystem will

generate higher revenues in the automotive value

chain than the hardware of the car itself.

75% say that measuring market shares

simply based on unit sales is outdated.

81% agree that if OEMs don't have a

structured approach to integrate or cooperate

with innovative startups, they will fail.

What Executives say





Digital disruption

is the change in form and substance that occurs when new digital technologies and mental

models which create new business models with value propositions

that exponentially challenge existing goods and services.

Asset Light

Data Rich

Customer Centric

Platform Based





Why

Now?The

RewriteTomorrow’s

Challenges

Today’s

Challenges




Transformation Drivers

Efficiency

Growth

Budget

ManagementCompliance

and Regulatory

New and Emergents

Competitors

Sources: 20-16 KPMG, Global Transformation Research




Key Trends to the Automotive Industry


Battery electric vehicles (BEVs)

Connectivity and digitalization

Fuel cell electric vehicles (FCEVs)

Hybrid electric vehicles (HEVs)

Market growth in emerging markets

Platform strategies and

standardization of modules

Creating value out of big data

Mobility-as-a-service/Car sharing

Autonomous and self-driving cars

Downsizing of internal

combustion engines (ICEs)

Rationalization of production

inWestern Europe31%

35%

40%

41%

43%

44%

47%

47%

49%

50%

52%

OEM captive financing and leasing

# 1

# 2

# 3

# 4

# 5

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# 7

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# 10

# 11

Ra

nkin

g

#10#10#10

#9#9#9

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#11

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Innovative urban vehicle design concepts

2014 2015 2016 2017

#11 #11 #11

Percentage of executives rating a

trend as extremely important#

#10

#9

#8

#7

#6

#5

#4

#3

#2

#1

#11




The auto industry has to transform the business

Consider cooperation /

partnership with other industries

91% 74% 99% 85% 37% 47%

Believe the number of physical retail outlets will be

reduced by more than 20% by 2025

Agree that OEMs can monetize data

from connected cars

Agree that OEMs that will not

emphasize on data & cyber security

have a high risk to sacrifice their brand

reputation

Consider the OEM will own / take over

the customer relationship until

2025

About half don’t think an OEM will be the best option to provide a better

car sharing experience

Source: 2016 KPMG CEO Outlook



Document Classification: KPMG ConfidentialSource: 2016 KPMG CEO Outlook

2010 2017

Total market capitalization (in $bn)The auto industry has to transform the business

19© 2018 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.

Note: Percentages may not add up to 100 % due to rounding | Source: KPMG’s Global Automotive Executive Survey 2017

2010 2017

The auto industry has to transform the businessTotal cash position (in $bn)




The Connected customer

Source: 2016, WEF, Digital Transformation of Industries: Automotive

and 2017, KPMG, Global Automotive Executive Survey

Vehicles are becoming computer-driven machines and turning to be a two-way hub for data transfers.



Document Classification: KPMG ConfidentialSource: 2016, WEF, Digital Transformation of Industries: Automotive


The Connected customerVehicles are becoming computer-driven machines and turning to be a two-way hub for data transfers.



Document Classification: KPMG Confidential Source: 2016, WEF, Digital Transformation of Industries: Automotive







DOWNSTREAM

UPSTREAM

The Tradicional ecosystem

RawMaterial Supplier

Tier II Tier I

OEM Dealer Car

Customer

Fuel Retailer

Government

Insurance

Finance

Workshop

Labor

Spares

Remarket

End of Life





UPSTREAM

DOWNSTREAM

The New ecosystem

Raw Material Supplier

Tier II

Tier I OEM

Car

Customer

Vehicle Management as a Service End of

Life

85% of executives agree that the digital ecosystem will generate higher revenues than the hardware of the car itself.

MediaRetail Other Services

EXPERIENCE AGGREGATOR

MOBILITY SERVICE

PROVIDER

DATAAGGREGATOR

OtherModels

Other Cars

Infrastructure

Fuel or Energy

InsuranceFinance Service & repair





83%

37%

31% 30% 28%

Inability to execute Failure tounderstand the

complexity of theoperating model

Inability toinnovate

Missing thecultural connection

Failure to take a “business value

first” approach to technology

say their organizations are not highly

capable of executing on an implementation

plan to build and operationalize a new target

operating model.

underestimated the importance

of changes in the operational

model to affect transformation

across the organization.

Transformations that

begin with a specific

technology (rather than

with strategic objectives)

are TWICE as likely to fail.

Where companies are failling

Sources: 2016 KPMG Succeeding in disruptive times





Why

Now?The

RewriteToday’s

ChallengesTomorrow’s

Challenges




New Value Drivers

CUSTOMER JOURNEY

INFOTAINMENT

PREDICTIVE MAINTENANCE

DATA MARKETPLACE

“Measuring success based on unit sales is outdated.

Management according to Product profitability is

over – Customer value will become core focus”

60% of customers

agree when buying a self-driving car that they will

only be interested in what they can do with their

time in the car.

“Possible applications, for example, include online maintenance (updating software remotely), self-

diagnosis (…) provided to the client via the cloud”


and 2017, KPMG, The Connected Car Is Here To Stay

84% of executives

agree that data is the fuel for the future business

model of auto companies.



Document Classification: KPMG Confidential Source: 2016, CB Insights




NEW business partnerships / revenue streams




NEW KPIs


and 2017, KPMG, The Connected Car Is Here To Stay

Passenger revenue

per available seat

mile

Revenue per

available

seat mile

Cost per available

seat mile

Customer

acquisition

costs

Recurring Margins

PROFITABILITY

Churn

Sales

Effectiveness

User Adoption

SUSTAINABILITY

Revenue

Passenger

Miles

Recurring

Revenue

Number of

Active

Customers

GROWTH




Ecosystem



Energy

Banking Tier I

Insurance

Infrastructure

TMT

Consumer

MarketsTier II

Consumers

Government

Logistics

SUPPLY CHAIN OTHERS PLAYERS

Interconnections drive

cost reduction

through a better

managed end-to-end

process.

Partner system

integration increase

transparency and

speed up the whole

process.

Continuous data

analysis creates new

opportunities

Data Flow creates a

channel of connection

with the customer.

Consumer payments for

new services will likely

require new innovative

payment mechanisms

New laws governing

autonomous vehicles and

regulations for MaaS and

insurance required

Opportunities for telco

and media given the

emerging and

interconnected ecosystem

Changes in consumer

buying behavior will

require new business

models




Cultural Barriers to Digital Transformation"The danger for organizations is not to fall

into disuse, as experienced by travel

agencies or Kodak. The danger is that

innovative business models take pieces of

each piece of product portfolios - stealing

your best customers and forcing

reduction rates "

Banco do Brasil has launched a

structured Open Innovation operation

called The Developer Portal. It

concentrates the information of API's

that the Bank will provide to application

developers, which, in turn, will

collaborate to create better, more

competitive and customized financial

products.

Organizations do not have a clear vision of digital strategy

Organizations are reluctant to embrace disruptive projects

Organizations can not recruit / retain technology talent

Organizations lack of clarity about partnership opportunities to pursue

Organizations’s culture is not suitable for rapid change

Source: 2017 KPMG Desk Research




Lessons LearnedPERSONAL/

ORGANIZATIONAL RISK TAKING

CUSTOMER CENTRICITY OR OBSSESSION?

LEAN METHOD

THINKING/ WORKING DIGITALLY

Culture 'Safe to Fail'

Encourage

'Intrapreneurship '

Daily-life

Technology

Integration

Digital Labour

Design everything

based on the customer

Customer Life Cycle

MVP

Agility

Data Analysis

Quick Responses





Why

Now? Today’s

Challenges

The

RewriteTomorrow’s

Challenges




Business & Technology

Digital Transformation

Linear Business Digitalization

CXO CIO




Business Stakeholders

Business Natives

Discover the weaknesses

of the business model

from the inside out

Bring market insights

based on customer needs

and demands

ORGANIZATION

Digital Natives

Value Added

Products

Clients and

Consumers

Internal

processes

Líderes da

Transformação

Shape the new business

model and make it intuitive

for the whole organization.




The Three Layers

Source: 2017 KPMG Disruptive Times

DIGITAL CUSTOMERUse digital channels

(Web, mobile and social)

to consume content,

engage with brands and

complete a transaction.

DIGITAL INNOVATION

Business model

innovation achieved by

leveraging new digital

tools

DIGITAL ENTERPRISEOrganization that uses

technology as a

competitive advantage in

its internal and external

operations

1 2 3




Digital Transformation - Motivations and ApproachesMotivation

Approach

Transformation Journey

OutboundSolutioning

InboundSolutioning

Innovation

Customer

Enterprise




Value ShiftMOST VALUEABLE COMPANIES (in Billions)

Source: 2017 KPMG Desk Research

1.

2.

3.

4.

5.

6.

7.

8.

9.

10.

4 oil companies3 banks1 conglomerate

1 auto maker1 software company

1.

2.

3.

4.

5.

6.

7.

8.

9.

10.

5 digital companies1 bank

2 conglomerates1 oil company1 pharma

2007 2017 EXPONENCIALS




Thank you

The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely

information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future.

No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

© 2018 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG Inter- national. KPMG

International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International

have any such authority to obligate or bind any member firm. All rights reserved.

The KPMG name and logo are registered trademarks or trademarks of KPMG International.

www.kpmg.com/automotive

www.kpmg.com/socialmedia

Oliver CunninghamPartner

Head of TransformationFinancial Services

KPMG, Brazil

Phone +55 11 3940 3115

Assistant +55 11 3940 1812

[email protected] TheClearChoice

Business Ecosystem Transformation€¦ · digital transformation at the centre of their corporate...

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