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A new era for the automotive industry

Cloud computing’s blend of scalability, agility and pay-per-use cost structure can help automotive equipment manufacturers not only adapt, but thrive in an era of connected vehicles.

Overview

The automotive industry’s use of cloud technology today is largely limited to discrete, targeted applications, usually based on a private cloud, with limited integration between cloud applications and little use of the cloud in core operations.

However, in the next few years the rise of the connected vehicle will transform the automotive landscape and create the context for rapidly increasing use of cloud solutions, within and beyond OEMs’ organizational boundaries.

This take-up of cloud will be spearheaded by analytics, mobile and social technologies as OEMs seek to retain their central role in the industry, expand their core competency into digital services and collaborate more widely with drivers, third-party application developers and communications providers.

The rise of the connected vehicle will transform the automotive landscape and create the context for rapidly increasing use of cloud solutions.

Background

As automotive OEMs face converging forces, cloud computing’s blend of scalability, agility and pay-per-use costs—combined with mobile, social and analytics technologies—can play a role in helping companies adapt to the new environment. More and more automotive companies are using the cloud to achieve benefits throughout the value chain, such as faster time to market, more flexible collaboration and data sharing.

While cloud computing is increasing throughout the automotive value chain, most cloud solutions in the industry are still largely limited to discrete, tactical and targeted solutions outside core operations. In contrast, there is relatively little use of cloud in a strategic or integrated way across enterprises, or for fostering external collaboration in the manufacturing supply chain.

Key Findings

As automotive OEMs’ use of cloud computing—combined with mobile, analytics and increasingly social technologies—gathers pace over the coming years, it will help OEMs to adjust to five game-changing shifts that are already beginning.

Over time, we believe these shifts will trigger a profound reshaping of the automotive value chain, in turn driving further adoption of cloud in a widening range of activities. And by helping OEMs adapt to and participate in these shifts, cloud computing will also help them retain their relevance to customers and their central positioning in the automotive market. The five shifts will likely be:

  1. From differentiation on vehicle features to differentiation on in-car digital services and connectivity

  2. From a unified automotive and digital services design cycle to separate decoupled design cycles

  3. From developing and controlling proprietary in-car services to offering an open platform for third-party apps

  4. From car ownership, usually by the individual, to car usage, increasingly shared among drivers

  5. From selling new cars that are physically maintained to providing remote digital maintenance and upgrades on existing cars

Analysis

In the next few years the rise of the connected vehicle will transform the automotive landscape and create the context for rapidly increasing use of cloud solutions.

These advances will help to usher in a new world of automotive capabilities—cars will incorporate embedded machine-to-machine solutions that talk to other connected vehicles and to appliances in consumers’ homes, among other convenient functions.

Migrating to the cloud will enable forward-thinking OEMs to navigate their way through seismic shifts both in drivers’ lifestyles and the automotive industry.

We believe those that hold back from seizing this opportunity risk being left behind, facing a struggle to get back into the race.

Cars will incorporate embedded machine-to-machine solutions that talk to other connected vehicles and to appliances in consumers’ homes.

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