Cloud computing has enabled the automotive industry, in particular the IT function, to be faster and more agile in the delivery and management of IT services. It addresses several key attributes of a competitive automotive supplier, including a flexible cost structure and the ability to adapt to change. Speed, flexibility, ability to adapt—this is what any CEO or CIO wants.
Cloud computing has been around for a long time. Maxion Wheels, like a lot of automotive companies, has had a “private” cloud providing centralized services like ERP and email for years. The evolution of technology has driven the cost of delivering Cloud services internally to a much lower point and has allowed the option to deliverthe Cloud externally to be cost competitive.
How has this benefited the automotive industry? To be competitive in the automotive industry, especially as a supplier, you need a flexible, competitive cost structure, and you need to be able to react quickly to changing demands. You also need the ability to mold the organization and IT services to best fit the company. Cloud computing enables all this.
The ability to host the service outside the company is the real power of Cloud computing. This typically reduces a company’s CAPEX requirements in exchange for more operating expense. In an external Cloud environment you are paying a fee to use the service. Stop paying the fee, the service goes away. No licenses, no infrastructure, no CAPEX. For the highly competitive automotive industry, this has provided a level of cost flexibility that allows you to better match the IT cost structure to the financial situation of the company. Having this choice has significantly changed the mindset of IT organizations. We can be better partners with the business and contribute to adapting the business to current market conditions.
Agility is another key benefit for the automotive industry. When you need to quickly turn on a new service, an external Cloud option gives you a shorter path to go-live-no infrastructure to buy or provision internally or waiting to install software. Once you find the right solution, IT can focus on business integration.
One overlooked aspect of Cloud computing, is how it allows you to mold the people side of IT to better fit the business. Resources that spend most of their time keeping infrastructure running are not providing enough direct business value. As you move more services to external cloud environments, the IT organization can begin to move people to more value added services. Technologies like mobile computing, and video conferencing still require technical expertise, but are clearly more business facing and are viewed as enablers. When you are leading a global IT organization, being viewed as a strong enabler by the business is huge. Getting more of the organization providing direct business value gets you there.
We are taking a strategic-value and risk-based approach. Any time we need to invest in a service, we ask the Cloud question. When analyzing the Cloud, we not only look at costsbut we alsoanalyze the long term strategy and risk level for the service. In many situations, keeping a service in-house poses too much risk to the service, usually because it’s a fast growing service that will need more and more investment and support over time. This is a great candidate for an external Cloud service. In this case, our long term strategy for the service and its risk to the business out-weighs a small cost penalty. In the past, when the Cloud wasn’t an option, companies had limited ways to deal with this and were forced into additional investment and had to allocatenon-value added resources.
There are also times when we view the service itself as a commodity. Datacenter services are a good example. In this case, it’s purely a cost discussion. We recently chose to co-locate data center services instead of investing in new data center technology. We avoided huge CAPEX and realized an overall reduction in operating costs. For services we view as a commodity, we pay close attention to what the industry is doing. We annually benchmark certain external Cloud services to understand the costs. When the service becomes less costly to do externally, we make the move.
The move to Cloud, especially external Cloud, is a mindset shift that all IT organizations in the automotive industry need to make. There’s too much opportunity and value to the organization to ignore.
One overlooked aspect of Cloud computing, and another huge benefit in a highly competitive industry, is how it allows you to mold the people side of IT to better fit the business
Critical Point with the IoT
Connected people, connected cars. The convergence of personal devices and automobiles. Connected, software driven cars. Now more than ever, technology is driving the future of innovation in the automotive industry and IT will be critical to this evolution.
The IoT within the automotive industry, specifically with the automobiles themselves, is similar to what we have seen with the mobile phone industry. First a mobile phone was just a phone, then it could text, then Internet, then WiFi and now all is possible. Your phone knows where you are, where you like to eat, how many steps you took today, or sends your doctor information. Most importantly it can also connect to other devices, e.g., home HVAC and alarm systems and your “connected car.” Your “connected” car is going down the same path.
Just like with mobile phones we are wrestling with privacy, security, integration and how to standardize across platforms. These are all huge challenges that the industry is now tackling.
Getting on board with the IoT early is important for automotive suppliers. The industry will continue to wrestle with multiple platforms and integration. The innovative supplier will get out in front of this in their respective areas and form partnerships with the OEMs and other suppliers. IT’s opportunity to positively impact theIoT for Automotive is now.
Look at what Tesla is doing. The entire platform is software driven. Download an update, just like you do with your iPhone, and you get new features to customize your driving experience. The value of IT to a company like Tesla is much different than for a “traditional OEM,” yet this is just the beginning of where we all need to go.
Suppliers need to be innovators now in supporting connected cars so we can drive the direction and not be forced to react to a direction that may not fit our company. IT, taking a position of leadership within the organization and partnering with the innovation process, is how great companies will adapt faster with the IoT.