Today’s cars are more digital than ever before. They can connect to the internet, offer convenient entertainment services and a sophisticated digital user experience. But tomorrow’s cars will be capable of even more: They’ll be able to look around street corners, interact with other cars on the street, pick the rider up autonomously when requested, and find parking themselves — all for the sake of increased comfort, convenience, and security of the rider.

What is more interesting for OEMs (Original Equipment Manufacturers like auto manufacturers) and partnering companies is that these services offer completely new revenue opportunities. At the same time, these new services also heavily rely on digital layers to enable them as well as external partners and industry collaboration to make these new concepts a reality.

The Solution to Overcome Hurdles of Partner Collaboration: APIs

Application Programming Interfaces (APIs) are technological means to significantly reduce transaction costs, make complexity more manageable, and to make risk and opportunities calculable. They enable the distribution of data on a large scale and allow for traceability around ownership. Gaining regulatory clarity will drive confidence in the system and help attract investment from a variety of players.

From a technology and business model perspective, such partnering technologies are the bridge between the current reality of mobility systems and future ambitions. Mediation layers are evolving to process and share data at scale (e.g. through APIs). They will expand into additional functionalities around data distribution and securitization, moving from bespoke agreements and case-by-case partnerships to standardized agreements.

Mobility as a Service: Consumers Want Usership, not Ownership

One area where these partnering technologies are immediately applicable is Mobility as a Service (MaaS). MaaS describes mobility offerings that are consumed as a service rather than being centered around individually owned forms of transportation. Think of services like Uber, Lyft, Turo, Lime, or Bird. The current mobility standard for people living in urban areas evolves around multimodal forms of transport—a combination of car rides, the use of public transport, and other offerings like last-mile solutions (electric scooters). These offerings are being provided by a multitude of different operators, which means that the user is confronted with dozens of different points of interaction when booking, scheduling, and using mobility services.

The ideal experience for customers, who are currently turning into mobility services consumers, is a seamless transportation offering. This means a simple, streamlined offering of integrated services, getting an individual from A to B without putting too much thinking (or barely any thinking and planning at all) into it. The consumer wants to push a button and get to their destination, as quickly and effortlessly as possible.

To illustrate our point lets dive into two specific examples around current developments in the MaaS and API space from two industry leaders, Daimler and BMW.

Daimler OneAPI: Enforcing Partner Collaboration in a Billion Dollar Market

German auto giant Daimler has recognized early that one strategy to tackle this new billion dollar market is to focus on facilitating collaboration with external partners. APIs (application programming interfaces), a digital socket that external partners can plug into, are a great way to facilitate partner collaboration because they open up digital services for external use. Daimler started its “OneAPI” initiative two years ago, followed by the official launch of a developer portal in the fall of 2017. This offering is very popular amongst Daimler’s partners: In April 2018, 1,100 developers were involved in OneAPI projects, up from 50 in April 2017. Daimler is currently offering more than 340 APIs, up from 39 APIs last year. The auto giant’s strategy of building digital leadership by facilitating external collaboration seems to meet a big demand in the market.

“For us at Daimler AG, it is one of our IT priorities to further open up and release public APIs. This enables customers, developers, suppliers and external partners to participate,” says Daimler CIO Jan Brecht.

One example from this area: A car’s entertainment system is only really great for the customer if they can use any music service they want, be it Apple Music, Spotify or another service. In order to achieve that, auto companies have to partner and exchange data efficiently—they can achieve that through APIs, which serve as a socket that entertainment services can plug into. Consumers are satisfied in the end by having the choice between a range of entertainment services in their cars.

BMW: Privacy and Data Security Come First When Building Digital Mobility Services

BMW takes a layered approach with regards to the IT setup for connected vehicles. The German OEM structures different types of data in different “protection layers” in its BMW CarData platform, with highly sensitive data like driver assistance data being the most closely secured, followed by information, entertainment, and comfort data. The outer protection layer is comprised of data types and interfaces used for charging, smart home, repair and maintenance use, and interaction with external devices like smartphones. The BMW IT backend is connected to those layers via specific secured connections and interfaces. The overall setup also specifies data types and interfaces that are being shared with external partners. Functional separation and secure data storage are key aspects of this setup.

BMW puts data security and privacy first and lets business follow. Their digital services, labeled “BMW CarData” provide secure access to in-vehicle data for third parties. The company also stresses the collaborative approach of the platform. BMW wants to make vehicle data accessible for third parties in a fair, secure, and non-discriminatory way, while remaining the sole administrator for all systems (onboard and off-board).

The Call for Better Automotive Backends

These developments call for better API orchestration and better digital mobility backends. The shift to mobility services is hard for automotive companies because their systems do not speak the same language, let alone in the context of external partners’ systems.

There are no common standards across industries and modern cloud infrastructure and legacy systems cannot integrate easily. At the same time, secure scalability is not given, mainly with regards to external partnerships. This is mainly related to security concerns and hinders innovation and new products tremendously. In addition to that, automotive companies are not software companies at their core, so they also struggle with historical burdens. What those companies need is an API mediation layer with full data control so that they can share their interfaces and data sets in a smarter, more effective way—both internally and with external partners, thus facilitating partner collaboration and the development of digital mobility services.

The reality is: Daimler’s and BMW’s approaches to sharing data make it clear that both companies are taking a more service-centered approach in their product strategy. The problem that such automotive manufacturers are currently facing in that area is that they have to come up with digital service offerings to meet the growing market demand, but they do not have sufficient resources to bring such services to market. They are in need of a mobility service backend that is capable of running data-related tasks while they focus on creating a coherent user experience.

In terms of Daimler and BMW, this means: Their overall setup is giving clear structure and strategy to collaborative approaches for building new mobility services, yet shifting from a hardware- to software-focused firm is hard, also in the area of mobility services. A solution is a dedicated software that serves as a backend for those mobility services.

The Vision: Completely New Applications and User Experiences

Let’s just assume that automotive companies were able to solve this challenge in the near future: Where are the developments described above headed in that case? Certainly to a better user experience and an improved partner business.

APIs can serve as a connector between different systems and enable new digital mobility services — allowing for flexible, customizable, secure, and most importantly scalable data exchange across companies. Infotainment services will improve because automotive OEMs will be able to integrate an ever-increasing number of infotainment services (e.g. around entertainment, food, parking, insurance, fueling, and charging) into their systems, delivering a sophisticated, holistic, and extensive user experience for their customers.

With an API and data orchestration layer, large, complex fleets of vehicles are more manageable, because data transformation allows OEMs to create generic vehicle APIs that their partners can more easily integrate with. This way, data sharing, for example in the logistics, maintenance, and driver analytics areas is being facilitated significantly, allowing for new services and products.