How technology is helping transform BMW's business model

Key Points
  • BMW can trace its roots all the way back to 1916
  • Technology is helping to transform the way big businesses operate
How technology is transforming BMW's business model

German auto giant BMW can trace its roots all the way back to 1916. A lot has changed in the industry since then, of course, but the importance of innovation has remained a constant.

While technological advances such as autonomous driving may be changing BMW vehicles, the company's business model is also being reshaped.

"In the past we had quite a vertical integration," Jens Monsees, BMW Group's vice president of strategy digitalization, told CNBC. This revolved around the customer, the dealer, then a producer like BMW and tier one suppliers who provided parts. This value chain, Monsees said, was now becoming a more horizontal network with other partners involved.

As digital technology becomes increasingly advanced and ubiquitous, and devices become more integrated and interdependent, collaboration is becoming more important.

Monsees cited the example of BMW, Daimler and Audi acquiring digital mapping and location services business HERE. That deal was announced in 2015; at the time, BMW described HERE as a "leading provider of technology" for the digitized world of mobility.

HERE offered services that the business needed for both autonomous driving and location-based services, Monsees told CNBC. Data, such as where exactly windscreen wipers are being used, is entered into the system and shared. "Why not (share with)… Audi or Daimler this data, because we don't want car accidents, whatever the competition," he said.

Monsees sought to emphasize the bigger picture when it comes to sharing information, citing examples from the U.S.

"We can learn from... (Silicon) Valley that… Google and Apple and maybe Amazon, they are competing on one hand… On the other side, they are helping and supporting each other in a bigger sense." This, Monsees said, was a "frienemy" concept, where an Apple phone could have Google Maps and vice versa.

Technology was also transforming BMW's production processes, he said. "We use, more and more, technology and robots to support our people and employees in the factories to do heavy lifting, to sort out things, to transport things."

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