How the Automotive Industry Can Monetize Digital Transformation Investments

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According to the analyst firm Research and Markets, automotive industry investments of $19.57 billion US in 2015 will increase to $82 billion by 2020 as a result of growing digitalization and technology advancements. Innovations in electrification, supply chain digitalization, connected vehicles, autonomous driving, and shared driving are all offshoots of this greater digital transformation trend.

Although these changes open the door to new business opportunities, some significant challenges need to be overcome in order to capture those opportunities. Digital transformation in the automobile industry will demand a major increase in IT infrastructure CapEx and OpEx investment. This new IT infrastructure will also drive up the level of energy consumption. Data centers that house IT infrastructure are energy intensive. In addition, data is emerging as the new competitiveness currency, and will need to be managed in such a way as to safeguard data ownership and assure proper data usage. Expertise in the area of data management will also translate directly into a competitive advantage by helping organizations to better visualize future market opportunities.

Within the automotive industry, digitization trends are all encompassing. They will impact each stage of the automobile design/build/operate and support process, spawning many terabytes of data. For example, a new generation “connected” and autonomous car will produce 50 megabytes of data each second. That’s, on average, 20 gigabytes of data per day when on the road. In order to exploit and monetize all of that data, IT systems across automotive enterprises that gather, process, analyze and store that data, will need to be re-architected and reconfigured.

New business models demand reinventing IT systems

Traditionally, most car makers are engineering-focused organizations. In this new world of mobility, a cultural shift to a more marketing and services-driven business model is required. In many cases the financial subsidiaries of these auto makers are taking the lead in the development of these services. Companies like Daimler and BMW, for instance, are undertaking joint efforts to develop new mobility services.

In order to facilitate these business model changes and the new influx of data, the various pockets of IT assets across centralized data centers, warehouses, manufacturing sites, R&D facilities, regional sales divisions and local dealerships will need to be reconfigured and expanded.

Within both on-premise enterprise data centers and colocation facilities that host public or private clouds, modular/scalable solutions will be required to allow for quick capacity expansion to accommodate business growth and to enable agility when rapid marketplace changes occur. In dealerships, where customers will undergo virtual reality experiences when assessing what might be their perfect car or truck, edge computing systems that provide real-time responses without experiencing any latency will be required. Plants and warehouses that need to quickly ramp up their ability to process locally captured data will deploy pre-fabricated data centers that can be up and running within six weeks.

IT infrastructure will enable best user experience and data monetization

To ensure the data generated are leveraged, auto makers are motivated to make such IT infrastructure investments, for several reasons:

• Additional revenues – By analyzing in real time and cost-effectively the huge amount of data continuously generated by the connected cars on the road, they will be able to generate customized and differentiated mobility services, quickly adding to profits and revenues.
• Traceability – By enabling better traceability of parts and tracking of vehicle performance in the field, potential auto recall impacts will be lowered. This will result in faster repair cycles, enhanced brand image and increased customer experience.
• Value-chain digitization – In order to evolve to smart manufacturing, automotive companies will implement new digital solutions in supply chains, production and processes, thereby enhancing productivity, safety, and quality. This will empower the workforce and enable management teams to perform lean manufacturing. The data generated on a daily basis will be continuously monitored, leveraged and benchmarked.
• Sustainability and energy consumption – Traditional data centers consume lots of energy. In the new “big data” environment, it will become more important to control data center-generated energy costs. New scalable power and cooling technologies allow for both much higher energy efficiency and higher density computing in each rack. In addition, new generation data center infrastructure management (DCIM) software systems helps to bolster data center performance by enhancing systems uptime. This improves systems availability and lowers maintenance costs as problems can be identified before an unscheduled downtime occurs.

Big picture: A holistic approach adds value across the product life cycle

IT infrastructure solutions can add value at each stage of the automobile life cycle. A critical success factor is to assure that IT systems can maintain maximum uptime so that both employees and assets are productive. In addition, in an era of electric and even more autonomous vehicles, IT system availability will be critical to the driver experience.  Therefore, smart IT infrastructure consisting of standardized, scalable, end-to-end solutions will both cut costs and improve the overall quality of service and support that automakers can provide their dealers and customers.

Companies like Schneider Electric are well positioned to accommodate these IT system changes. Whether it be energy management, innovative data center designs (from micro data centers in dealerships and offices, to centralized enterprise data centers, to rapid prefab data centers in plants and warehouses), Schneider Electric has the solution portfolio–from consulting, installation, operation and maintenance–and the expertise to help fuel auto industry mobility expansion.

To learn more about how enterprise and edge data center architectures can help to enable automobile industry modernization, visit our Automotive and Mobility Solutions web site.