Peter Fintl Capgemini Engineering About Automotive Software program

“How does the OEM want to position itself in the future?”

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Is the program more important than the drive? It is indeed an important purchase criterion – and the percentage of value added that can be achieved increases significantly. For auto manufacturers, this means: act now!

Peter Fintl, Director of Technology and Innovation at Capgemini Engineering: “The software transformation has long been in full swing and now modern automakers must get started – across the board.”

(Photo: Capgemini Engineering)

The future of automobiles is no longer determined solely by the classic virtues of vehicle building. There is a demand for new skills, especially in software and artificial intelligence.

It’s clear that the vehicles of the future will be defined by their software: More and more vehicle functions, including automated driving or infotainment, becoming more important, require a robust backbone of intelligent software – and customers see it more as a purchasing standard. In many markets and sectors – with the exception of the luxury segment – there is indeed a stronger emphasis on features and functionality than, for example, on the color of the contrasting seams on the interior.

billion market program

The numbers speak for themselves. According to our “Next Destination: Software” study, the share of the software business in total sales of auto manufacturers will increase in about ten years from today.
8 percent to 22 percent and represent a total market of $640 billion in 2031, explains Peter Fentel, director of technology and innovation at Capgemini Engineering.

Among other things, the growing market for connected services is responsible for this huge advantage, and also in terms of over-the-air updates and on-demand functionality. In addition, the automated driving mentioned at the beginning will of course also play an important role in the software field. The question for OEMs is whether they develop their own software components, rely on open source software or whether they choose platforms from technical players. Examples can be found in the industry for all styles.

One thing is clear: there are advantages and disadvantages to both methods. At the same time, the race is still open: it is almost impossible to predict today which provider will come out on top at the end. However, it is important not to neglect a certain feature of OEMs: they have direct access to the customer interface, control the user experience and can exploit this advantage.

Transformation affects the entire organization

But here OEMs are facing a massive shift. Part of this is the car as such. In order to be able to design vehicles more intelligently in line with customer requirements, software expertise is essential. The best sensors, processors, etc. are useless if they are not controlled by intelligent software and integrated into intelligent systems.

To do this, however, car manufacturers have to rethink their chassis. Thinking about individual silos such as engineering, research and development and information technology is outdated. Processes and methods should be checked. “Agile systems engineering and continuous delivery are some of the next steps,” says Peter Fentel. “Agile systems engineering and continuous delivery are some of the next steps.” Related to this is the question of how the OEM wants to position itself in the future.

What parts of the value chain can it cover and does it want to and how is it positioned for this? The industry now has to build expertise in the field of semiconductors, for example. Whether for processors or power electronics. “From a product development point of view and in terms of secure supply chains, more knowledge is needed here,” Ventel says.

In the past, OEMs could only make money from car manufacturing and from repairs and parts. Financial services have added important sources of income. But through digital services such as searching for charging stations, integrated billing systems, and on-demand activation of assistance or convenience systems, software-defined components are becoming increasingly important parts of the “vehicle” system. All-new revenue streams are available to OEMs. But in order to achieve this, service providers must make the best possible use of the vehicle and customer data mix.

Enable transformation

OEMs must master transformation in these three areas – in engineering vehicles, organizing processes and structures, and implementing connected services. To drive this shift forward, OEMs are using very different approaches: while some are building new partnerships with technology players, others are relying on modified operating models and still others are building entirely new organizations. Here, too, each approach has its pros and cons.

But one thing is also clear: the old process model of classic vehicle development is out of date in the digital age. So car manufacturers have to take a closer look at the path they want to take. However, time is working against them in this case.

Fitness is the key

This rapid transformation is closely related. In particular, lonely thinking must be dismantled, especially in engineering and information technology. In the age of cross-sectional technologies and consistent digital product lifecycles, development, production, sales and services must work together. The potential cannot be fully tapped without a consistent approach.

The focus here should be on “customer familiarity” which is often cited. Manufacturers must be able to become a relevant part of their customers’ “digital” lives – and not only – and to react quickly to changing needs. This is the only way to ensure customer satisfaction and ultimately the company’s long-term success.

The country needs new talent

However, agile structures alone are far from sufficient to solve all problems. The transformation cannot succeed without the right experts. OEMs need software developers, IT engineers, data scientists, AI specialists, etc. – the list is long. All the talents for whom the auto industry is not necessarily the first classic point of contact today. Many car manufacturers see themselves in a “war for talent” with tech players, start-ups or other industry sectors. As a result, the auto industry must now copy best practices from the ICT industries. Globally distributed development in partner ecosystems is key to being able to efficiently win the “market race,” says Peter Fentl. In addition to engineering, business model and IT expertise across all sectors will be required of development partners in particular.

The software transformation has been in full swing for a long time and car manufacturers must now get started – across the board. According to the Next Destination: Software study, only 15 percent of OEMs have the potential to become a leader—and only those early adopters have the potential to benefit above average in the coming years. It is important to act.

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