Cloud is the solution for automotive

Cloud’s benefits for the automotive industry are well known—improved cost-efficiency, better scalability, faster time to market, and increased reliability—as well as access to new and innovative technology as a readily available service.

These benefits are needed now more than ever. Many Automotive Original Equipment Manufacturers (OEMs) began 2020 facing their first slowdown in five years. With advances in connected, autonomous, shared and electric (CASE) transforming technology and business models, and fast-evolving consumer behavior fueling changes in the market, the industry’s traditionally static value chain continues to be rapidly disrupted.

When COVID-19 struck, these challenges were accelerated and amplified exponentially. The industry now needs to figure out how to continue investing in CASE while reigning in costs and staying profitable—and simultaneously managing the repercussions of the pandemic.

To do so, automotive manufacturers need to focus on four areas in particular:

Cost containment and transformation through short- and long-term returns on investment in operations.

Use data analytics and core IT to redefine the customer experience in the new reality of sales and marketing.

Accelerate the advances of engineering and manufacturing for software-defined vehicles.

Develop new opportunities in the mobility services and connected cars ecosystem.

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The value case for cloud

Cloud-based transformation is a key part of the solution for automotive OEMs as they look to simultaneously reduce costs, increase agility in how they do business, and enhance scalability for the vehicles of the future.

Graphic displaying the how the automotive industry value chain has evolved with entirely new segments including in-vehicle software, connected vehicle services and mobility services.

While transformative cloud solutions can enhance every stage of the automotive value chain, there are four areas where cloud may offer the greatest return on investment over the short term.

  1. Core IT Transformation
  2. Customer Experience
  3. Mobility Services & Connected Car
  4. Software-Defined Car
Setting the right priorities in the right sequence is essential for a successful cloud journey.

Why now?

Due to the COVID-19 pandemic and rapidly changing environment, the need for cloud has been amplified and become more urgent than ever before. To respond to current industry trends and challenges, automotive companies are adopting the cloud as a platform for:

Cost savings:

Cloud IaaS and PaaS offerings enable OEMs to minimize their overhead costs and focus on the use cases and applications that generate business value.

Scalability:

As-a-Service offerings enable a shift from capital to operating expenditure. They also improve OEMs’ ability to quickly scale IT resources up and down according to need without the need for large upfront investments.

Speed:

Rolling out changes across locations can easily be slowed by deficiencies in the existing setup. In contrast, cloud services can be provisioned, replicated and decommissioned instantly, enabling the business to implement changes quickly.

Reliability:

The hyperscalers’ immense resources, experience and specialized assets enable them to deliver greater reliability, resiliency, and stricter SLAs than OEMs could hope to achieve with self-run infrastructure.

Tech innovation:

Cloud makes innovative technologies easier to adopt. Some of today’s most innovative solutions are exclusive to the cloud and cannot be realized by OEMs alone, either due to their proprietary nature or the associated investment costs.

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How to get started

Scaling up the use of cloud is an urgent imperative for automotive companies. But it needs to be done in the right way. Many companies adopt a two-speed approach to their cloud journeys, investing significant time and resources into cloud projects, while simultaneously maintaining their legacy systems. An alternative approach is to focus first on modernizing and optimizing the existing legacy landscape. This frees up much-needed resources, enabling the organization to properly concentrate on the four key focus areas: core IT transformation, customer experience, mobility services/connected car, software-defined car.

Cloud maturity will increasingly define the winners and losers in the years to come. Now’s the time to capitalize on the scalability, efficiency and innovation of the cloud.

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