The Digital Transformation of the Automotive Industry

The topic of “digital transformation” substantiates the fundamental change in private and business processes, driven by the exponentially increased performance of information technology. For the automotive industry as one of Germany’s key industries, this results in an existential challenge both for the strategic orientation towards new mobility services as opposed to vehicle ownership and for new ways of distribution. In addition, there are also highly efficient business processes such as Industry 4.0-based production, which are briefly outlined. Finally, there is an explanation of the essential elements which lead to a successful transformation of the automotive industry and determine the structure of this book.

Driven by the extreme increase in the efficiency of information technology (IT), the digitisation wave keeps approaching us unstoppably and ever faster. The so-called Moore’s Law, which more than 50 years ago has already described a doubling of the capacity of integrated circuits over a period of 12 months (Moore in Electronics 38(8), 1965), has been synonymous with the ongoing massive increase in the performance of IT. If the basic technology was not changed, this law would no longer be valid. However, due to technological leaps, the principle of exponential growth in performance still applies. There don’t appear to be technological limits and it is only a matter of time until human intelligence will be overtaken by “machine intelligence” and so-called singularity be reached.

In the previous chapter, it was shown that information technology will drive digitalisation with an exponential increase in performance. Digitalisation will penetrate society and companies comprehensively and massively change processes and organisations there. These changes will encounter a very heterogeneous buyer and employee population with different education and experience regarding digitalisation. An increasing number of customers and all of today’s young professionals in companies belong to the generation of so-called digital natives. These are people who have grown up with IT-based offerings such as computer games, the Internet and Facebook as well as smartphones. Dealing with these digital solutions is a matter of course for them and has shaped their behaviour. This chapter explains what expectations the natives have as car and mobility customers and also how they act as employees in companies and what new forms of work are developing from this, such as Sharing, Crowdsourcing, Open Innovation and Wikinomics.

This chapter presents technologies and innovative solution approaches that are available today or will be available in the foreseeable future for digitalisation projects in the automotive industry. These relate to information technology such as cloud offerings, mobile applications, big data and cognitive computing, but also to production technology with robotics, drones, nanotechnology and 3D printing, small electronic devices that can be worn on the body and even playful forms of project work, so-called gamification. The chapter explains the main developments with the aim of understanding the practical applications and potential benefits of these solutions in order to be able to assess their relevance for current and near-term projects for digital transformation. The aim of the explanations is to understand their possible uses and potential benefits in order to be able to assess their relevance for current and upcoming projects in the short term.

New framework conditions and opportunities associated with digitisation are encouraging new competitors, also from other industries, to aggressively enter the automotive market. It is therefore vital for the established automotive companies to tackle the necessary changes with a comprehensive digitalisation strategy and roadmap. The starting point is an analysis of the future expectations of the market and customers as well as a brief assessment of the current strategies of selected manufacturers. This is contrasted with a vision of how the automotive industry could develop and look in 2030 with the implementation of digitalisation initiatives. Electric cars, autonomous driving in flexible mobility offers and also Connected Services in complete synchronisation between vehicles and smartphones are covered as well as a completely changed customer experience in sales and service along with the increased efficiency of business processes through automation, for instance in development, production and administration.

The first chapters of this book have presented the drivers, influencing factors and technologies of digitisation. In addition to IT as a driver of digitisation, the innovative technologies and solutions relevant to the automotive industry were described and the influence of digital natives as future employees and customers was discussed in particular. Following on from this, Chap. 5 looked at changes in customer expectations and buying behaviour, analysed the current level of digitisation maturity in relation to the main technological changes in the market regions and described in detail a vision of the digitised automotive industry up to the year 2030. In this chapter detailed proposals are developed for the necessary actions to be taken in each transformation area, based on the author's many years of studies and projects, supplemented by relevant experiences and references presented in studies and specialist literature. As a basis for a comprehensive digitisation roadmap, a “digitisation house” is developed as an overall framework, divided into four focus areas and two cross-cutting themes. For each focus topic, the necessary steps for implementation are deepened in this chapter to establish an integrated roadmap to achieve the 2030 goals.

The topic of cultural adaptation and the creation of a start-up mentality characterised by agility and entrepreneurship as a mandatory prerequisite for a successful transformation driven by digitisation are the content of this chapter. To this end, new methods for innovation and project management, such as scrum and design thinking, are presented and organisational proposals are explained under the aspect of digitisation. The IT scope should be detached from the IT organisation and migrated to the specialist departments in order to take into account the importance of IT as a strategic core element of the automotive industry and to gain momentum for the digital transformation within all business areas. The change in the importance of the CDO role away from the Chief Digital Officer to the Chief Data Officer is covered as well as contemporary aspects of HR with new ways of training, hiring and career development along with adequate change management and innovation management for a successful digital transformation.

Information technology as a corporate function has a key role to play in the digital transformation. This organisation is not only in demand as an advisor and supporter of all departments during the transition, but must also provide the existing technical IT environment and then operate it cost-efficiently and securely, as well as comprehensively develop itself further. This challenge requires a “two-speed IT” that implements a holistic IT strategy based on the digitisation roadmap as a working basis and also establishes a method for evaluating the benefit aspect of IT for business processes. A “software-defined environment”, i.e. the complete flexibilisation of the IT infrastructure, is the basis for contemporary microservice-based apps using open source solutions and also for AI-based projects. The established architectures and technologies must be modernised or replaced by new solutions in order to meet the requirements of the departments flexibly and efficiently. Financing this transformation can be achieved through savings resulting from successful computing centre consolidations, application harmonisations and standardisations in service delivery. In this context, security is seen as a high priority for business IT as well as for shop floor and vehicle IT, but without becoming an obstacle to new initiatives such as API commercialisation. This situation is looked at in the following with a focus on business IT, while the IT installed in the vehicle with control units for various functions such as air conditioning or distance control, as well as the plant IT with its field bus systems, plant and robot controls, are discussed in passing.

There is a great deal of uncertainty in this industry about how to approach the topic of digitalisation. For motivation and illustration, this chapter shows innovative and successful practical examples for the supporting pillars of digitisation developed in Chap. 6. The minibus “Olli” is an example of crowdsourcing, 3D printing and cognitive solutions as a basis for autonomous driving. Preventive maintenance, transparency in the supply chain and e-learning at the assembly site are solutions from the field of Industry 4.0 and learning configurators and vehicle sales via the Internet are changing the customer experience in sales. Furthermore, an example is explained of generating additional turnover through the marketing of data and through the mediation of services.

The explanations in this chapter provide a glimpse into the year 2040 and, by means of a few examples, a vision of how the environment, IT, the automotive industry and mobility could develop. The futuristic outlook is intended to strengthen the attitude and the courage for the digital transformation which is running up at full steam to act innovatively and quickly in short steps. In the current situation, speed is of the essence and must come before lengthy careful weighing. It is time to “execute”, as then IBM CEO Lou Gerstner at that time hammered his team in times of massive change. Only in this approach is there a chance that the Goliaths, being the established manufacturers, will continue to prevail against the Davids, alias the new challengers.