How we work with Microsoft in the auto industry
In automotive retail, the sales model is currently undergoing fundamental changes. The old rules of the game, according to which the automaker delivers the car to the dealer, and the dealer then sells this car to the customer, are changing. Automakers no longer understand why they need a dealer in the sales chain if the only value that the latter provides is to function as a place of vehicle delivery. After all, today everything can be bought on a website. Partner relations with global vendors are also changing. Integrating, consulting, and simply buying all become less advantageous when they are done through a partner network.
End users and companies are ready to buy cars and services online. And today more than half of all buyers take their first step towards a car purchasing decision on the Internet, one way or another. Car buyers spend 59% of their time researching online. Tesla sells cars through its website. The end point for vehicle delivery is now moving to the website. And this model is starting to be adopted by other automakers because it provides value for the customer in the form of cost savings. The dealer is eliminated from the sales chain because they do not offer any added value.
The same thing is happening today in partner relationships. The old partner model that existed in the past, whereby partners would jointly sell their solutions, brings no value to the end customer. The customer derives no great value from the fact that you are selling partner services. Why does Microsoft, for example, need you to do that?! I believe that the sale of partner services and the integrated business model will both definitely die. Of course, there will always be enterprise customers who value building relationships. But when it comes to your mass consumer sales, if you do not deliver additional value, then the situation will be very simple: you will become a mere distribution point, just like what is happening to dealers in the auto industry. When you find yourself in this situation, all that you will receive is an extremely fixed margin that does not exceed 10 percent.
Again, returning to the automaker-dealer relationship model, automakers are currently telling their dealers that they must offer some added value. And the latter have to think what they can do for the customer, whether it be financial services or after-sales service. They need something to sell in a package together with the car because simply selling a car is just selling a commodity. The same is true of selling Microsoft Azure services.
We work with Microsoft just like we would work with a partner. We do not treat them like a technology supplier that provides us with something to sell, which we can then forget about. And for us, this is an opportunity to build our solution based on the technology that the vendor provides. This way, we are making a decision to sell a product with high added value to the customer. Our basic sales model is to sell car subscriptions on an annual basis to the car manufacturer or distributor. The cost of an annual subscription to Azure and other Microsoft technologies is currently about 10%. The other 90% represents the added value service that we provide. Our direct costs account for 10% of this total. The rest is the intellectual property that was created by the company.
In order to work together, it is necessary for each side to understand the technology well. That’s why our R&D department works a lot with Azure developers at Microsoft. They are members of the Azure Cut Team. As partners, they liaise between us and the customer as well as between teams that work on industrial solutions. We work together to learn what new technologies are coming down the pipeline so that we can choose the right technology and test it together. This saves us both time and money and helps us to understand what is worth implementing and what is not. In addition, this allows us to market together, i.e., to understand how much money you can spend together in order to deliver something to the customer.
In 2014 we were chosen as the Microsoft Country Partner of the Year in the Azure Service for Business category. Since then, Bright Box has done a lot to boost our projects’ technological sophistication. We have implemented our Connected Car solutions on the basis of advanced Microsoft technology in Europe, the Middle East, the USA, and Russia. Microsoft’s support has provided our company with a basis to grow our business, and receiving the “Partner of the Year” award this year has been a great honor for us. It is proof of the high value of our mutually beneficial long-term cooperation.I know from my clients that none of them want to spend a lot of time working on long-term and tedious consulting and implementation projects. I sincerely urge you to provide services in cooperation with a partner. That way, you can simply avoid losing your margins.
