Digital Transformation and the revolution of the Auto Industry
Mary Barra, CEO and Chairman of General Motors gave already on the World Economic Forum 2016 a speech saying:
"I believe that the auto industry will change more in the next 5 to 10 years, than in it has in the last 50"
Since then you can see this shaping up as a truth in the hole industry, not only affecting car manufacturers but also the surrounding ecosystem. Suddenly there are Car Technology Companies, not delivering parts, but Software to industry giants. Parts are getting Smart, Car Producers become Service Providers, while cars are now more of a plattform to add revenue generating services, than the product itself. Yes, they are still the core of the company like an iPhone for Apple, but the money for Apple is in the App-Store and their Services, not so much the Hardware.
Mary Barra talks about the examples of E-mobility and the dusk of petrol cars, IoT supported smart driving assistance, where cars "talk to each other" to avoid a crash and the future of car sharing instead of car selling.
Two years into her prediction, the whole industry feels the change and rapidly innovates with more or less focus. The industry is undergoing a radical digital transformation with automotive manufacturers becoming mobility service providers, traditional brick and mortar dealerships turning into digital showrooms, and the taxi-hailing hand being replaced by an app on our smartphone. Out of the comfort zone of traditional engineering, the survivors of this change will be different companies.
A good automotive company is a good IT company, is a good automotive company.
New competitors in the car market are suddenly Companies like Apple, Google, Uber and Telekom. Mobility service offerings will drive additional revenue, even more so as analyzing rich customer data uncovers currently hidden demand. Embedded in an eco-system of partners and dealers, successful auto companies will turn into one of the leading mobility service providers of tomorrow - or loose market-share and relevance in their core market. You don't want to be the Microsoft that refuses the idea of a smartphone or the Blackberry that refuses a big touch screen or a company that still invests in horse whips a 100 years ago, instead of car parts, for that matter.
What to do now to become this Digital Automotive Manufacturer?
To support the current business and address new industry trends, successful automotive companies must evolve into a pivotal transformative business partner that operates across two critical and uniquely challenging characteristics:
?Industrial IT — Keep existing back-end performing optimally and at high availability, in line with business requirements (such as on the factory floor), yet ready to accommodate sudden change.
?High Speed IT — Transform into an agile, consumer-driven, customer-facing organization that embraces new trends (e.g., revenue-generating mobility services), while striving for quality.
With budget reductions expected at many such companies who feel the pressure and divert resource in many new projects and R&D over the next few years, this bimodal focus would lead to a strategy of:
?Savings in complex legacy systems and processes
?Freed-up resources needed for a true digital automotive revolution and its associated revenue growth
Digital Enterprise Management refers to a set of IT solutions designed to make digital business fast, seamless, and optimized from mainframe to mobile to cloud and beyond. Digital Enterprise Management represents the critical foundation upon which a competitive industry strategy is based. Despite the critical juncture at which automotive manufacturers find themselves, profitability awaits those who get it right.
To transform into a Digital Automotive Manufacturer, and what solutions might support this endeavor is a core knowledge BMC developed over decades and successfully implemented with most of the Automotive Industry already worldwide and also in Germany, where actively help clients to achieve their goals.
IT Transformation Paves the Way to Digital Automotive
In the automotive industry, “Good enough” has long been the approach to IT Management capabilities, robustness, and reliability. However, to address the new business imperatives that are driving the digital automotive transformation, IT must help develop new solutions that will not only help run the current automotive manufacturer more efficiently but also allow for change.
Key Technology Enablers
Digital Governance
Goal: Proactive Automated Compliance
Reduce risk by proactively addressing vulnerabilities and automatically proving process and data management compliance
Digital Sourcing
Goal: Creating and Leveraging Eco-systems
Drive cost savings by speeding provisioning, lowering the need for specialized skills, and ensuring a seamless digital multichannel supply chain
Digital Products
Goal: Data-Driven Customer Interaction and Consumer Demand
Increase revenue by developing new agile services with standard integrations and taking a corporate approach to Big Data to improve customer interaction
Digital Operations
Goal: Construction Kit to Assemble Components to Services
Allow operations to quickly provide new services on entire plants, leveraging collaborative knowledge
BMC Leads with Unique Digital Enterprise Management Solutions
Digital transformation within successful automotive companies is about people, processes, and technologies. To support the former, BMC evolved the latter. Years of heavy investment and innovation have led to the release of BMC’s Digital Enterprise Management – a set of IT solutions built on modern technology and infrastructure. Integration is at the core of BMC’s Digital Enterprise Management (DEM for short), starting with persona-based design, supporting end-to-end IT process flows based on customer policies, and resulting in core business value realization that guarantees security and risk mitigation.
BMC’s DEM architecture is designed to support the following key areas where most customers find value while accelerating their transformation: Digital Workplace, DevOps, Multi-Cloud, IT Optimization, Service Management Excellence, Security and Compliance, and Big Data
Case for Change
An in-depth analysis of how automotive IT organizations support key business imperatives today is more important than ever before. Such a case for change details the qualitative and quantitative benefits of Manufacturer Digitization, and allows IT to make the necessary transformational changes to become agile and innovative, and to remain an enabler for the business.
(click the picture to go to the source: McKinsey Report)
The Path Forward
Innovation and Industrialization Cannot be “Siloed”
Building a Digital Automotive Manufacturer (DAM) of the future will not happen by segregating the legacy and the new. Such a polarization of IT will only grow internal resistance, slow down the evolution, and give competition a bigger chance to gain an edge.
When going 100% agile, BMC recommends a convergent plan, built on initiatives leveraging proven and industrial solutions, which can be consumed out of the box with native integration's. This drives focus on what matters most in Automotive IT: a flexible organization and operation models that best support customers and products.
Our implementation methodology is agile and enables short cycles for continuous improvement and inclusion of new capabilities. With a prime focus on value targets, BMC supports a community mindset shift that includes organizational change management and adoption monitoring.
Becoming a Digital Automotive Manufacturer cannot be accomplished by a one-time activity. It will be a journey with multiple steps keeping alignment with constantly changing business priorities.
For BMC, a solution means not only providing enabling technology, but rather being a partner on a long journey that considers multiple aspects.
I recommend to start with my previous article about Digital Transformation, or just ask me for your business case to help you in Germany.