For a long time, the big three of the auto industry — Ford, GM and Chrysler — maintained a status quo in the way they functioned, while, constantly experiencing huge sales and growth during the boom years in the pre-recession era. As a result of which, most of the departments within these large corporations, including IT, were overstaffed. In addition to this, serious challenges were posed by foreign automakers which were leaner and much more efficient. As GM filed for bankruptcy and Ford avoided one marginally, the auto makers began to take stock of the problem areas in the value chain.
For the auto industry which is at crossroads and trying to be profitable again, enterprise adoption of cloud platform can boost growth. Cloud can be leveraged by automakers to achieve flexibility, increase cost efficiency, optimize their value chains and consciously understand and cater to consumer demands in the current business environment.
Agility and rationalization
As per estimates, nearly 80% of management applications in the auto sector are based on ERP systems. And hence, changing or adding components to these applications can be cumbersome, time-consuming, and expensive for the OEMs. Also, many of these auto OEMs require massive consolidation and transformation of aging applications and platforms. Cloud options can enable faster and more flexible changes and additions, boosting the OEMs’ agility.
Rising innovation and a sea change in the auto industry will further make vehicle infotainment systems more significant and sophisticated, creating both huge challenges and the greatest opportunities for the OEMs in near future.
As per estimates, 40% of the world will live in cities with populations of more than one million by 2015, and 17% will live in “megacities” populated by five million. In such crowded urban localities, drivers will require assistance from in-vehicle systems to readily access their routes through congested city streets. Additionally, there will be increased demand for features that are user friendly, comfortable, and easy-to-use while driving. Hence, technological advances will lead to more in-vehicle services, entertainment and extended connectivity.
Separate cloud-based environments can be a solution to improve communication between automotive OEMs and various stakeholders in the value chain and the supply chain, including, suppliers, customers, auto dealers and also lending banks. Cloud or SaaS based online applications can enable OEMs to collaborate in novel and innovative ways, without the level of capital investment typically required for building and supporting a new channel.
Cloud-based CRM is the new buzz word in automotive businesses. For example, Just Right Auto Sales, an Atlanta-based automotive financing company, is partnering with Cbeyond for cloud communication, cloud backup, and cloud hosting, as well as hosting accounting and customer data in the cloud, a move that will significantly reduce their on-site server costs.
Been there done that!
- In 2009, Daimler extended its agreement with CompuServe’s Covisint group to build and maintain a comprehensive portal and identity management solution that securely connects Daimler with its vast network of suppliers globally. Covisint provides Daimler and its suppliers an industry-standard connectivity and security solution, enabling single-sign-on in a cloud computing, SaaS model, along with seamless and secure collaboration for critical-business information.
- At the CES show in Las Vegas in 2010, Ford unveiled its new cloud-based MyTouch system. The program had high-tech applications, WiFi capability, and second generation of Microsoft’s SYNC software into Ford vehicles. “What the mouse did for the PC, we need to create for the automobile.” ~ Jim Buczkowski, Ford’s director of electrical and electronic systems engineering.
- In January 2011, General Motors Components Holdings (GMCH) purchased LotusLive, IBM’s cloud offering, to provide employees with cloud based email, calendar and contact management services. GMCH was looking to improve collaboration among its employees in plants in New York, Michigan and Indiana that manufacture HVAC climate control systems, powertrain cooling systems, engine management systems, automotive electronics and related products.
- In June 2011, Toyota and Microsoft decided to jointly develop a new content delivery network on Microsoft’s Azure cloud computing platform. This aims to deliver content and usage data to and from the car to computers and mobile devices, unlike the current system in Ford’s Sync which require the use of car controls. (Sync was also developed by Microsoft.)
The auto industry is among those currently, betting big on the cloud and this might significantly change the entire car driving experience for the customers in the years to come. As some automotive OEMs are grappling with the idea of moving to the cloud and assessing potential risks, possibilities and the cost of writing off current IT investments, for many auto firms the transition to a hybrid cloud space is already under way.