The car as a purely material product is increasingly receding into the background. Instead, multimedia equipment, networking options and digital services are becoming increasingly important.
The car as a purely material product is increasingly receding into the background. Instead, multimedia equipment, networking options and digital services are becoming increasingly important.
( Source: gemeinfrei / Unsplash)

Ecosystem The automotive sector as an information ecosystem

| Author/ Editor: Oliver Schwenteck* / Jochen Schwab

New products, digital services, and new customer types are emerging while networking continues to grow in importance. But what does the future of the automotive and mobility industry actually hold? What is changing in the industry and what requirements do these changes place on business intelligence and IT?

The ongoing shift in the industry is evident in every part of it. Increased awareness of resources has paved the way for companies like Tesla to revolutionize the market with future-oriented technology. Industry giants like Volkswagen and Daimler have also caught on to the trend toward electromobility and accepted it as a legitimate structural change. Companies are forming new alliances that would have seemed unthinkable just ten years ago – for instance, BMW and Daimler will be sharing development costs in future – and power relations are changing as a result.

Increased networking, with all its economic benefits, is also resulting in the dissolution of the private sphere: cars are evolving from status symbols into shared goods. Carsharing services are taking over cities, creating an entirely new philosophy with regard to the use and availability of cars. At the same time, consumers hold higher expectations of a vehicle’s digital features. With driver assistance systems, the almost unimaginable fantasy of autonomous driving seems increasingly to be within our grasp.

Digital networking is turning cars into transport control centers that are constantly connected to the outside world. The concept of the car as a purely material product, defined by its engine capacity and horsepower, is fading further into the background. Instead, it is the car’s multimedia features, networking options, and, most importantly, range of digital services that take center stage. In short, the cars of the future will be able to process information in a highly intelligent and customer-focused way.

Future production processes – the breakdown of the hierarchy

This shift in the industry is not only evident in the product itself, but also in the development of planning and production processes. The hierarchical structure of the automation pyramid, with all services carried out within one company, is collapsing. The industry of the future will be able to secure all of these services from external providers. This de-hierarchization will allow companies to respond swiftly to trends, technical developments, and changes in customer behavior.

This shift will have a particular impact on IT architecture: traditional IT solutions are rapidly starting to reach their economic limits. Highly integrated systems cost a great deal to maintain and require high levels of qualification. They also have limited real-time capability and come with expensive license packages. These traditional solutions are now being replaced by flexible and adaptable business models that use the “Anything as a service” (XaaS) concept in cloud computing. The conventional data center is breaking down. Meanwhile cloud services now include not only software (SaaS), platforms (PaaS), and infrastructure (IaaS), but also storage, communication, networks, desktop, monitoring, websites, and security. The main benefit of XaaS models, especially in the mobility industry, is their flexibility and efficiency.

The BI of the future – the information ecosystem as the basis for generating added value

The major challenge facing the automotive industry with regard to its digital services, however, is information management. As a mobile, connected control center, the car has access to an endless abundance of information, but this data varies in terms of format. It also includes data from third parties, such as value-added services providing information about gas stations, restaurants, and tourist attractions, as well as public transport services and how to pay for them.

Future business intelligence will therefore aim to be able to analyze an enormous range of information formats – it must be capable of intelligently integrating all data. This could open up scenarios in which, for example, the vehicle is able to make location-based recommendations for hotels in real time during the journey, using past experience to take into account the driver’s preferences. And there’s more: another potential scenario could be the driver receiving a notification, after two hours on the road, that there is a restaurant coming up in five kilometers with good reviews and the driver’s favorite food on the menu. With an optimally networked system, the driver could order their meal straight from their car. The driver therefore becomes part of the information, part of the information ecosystem.

The VUCA theory – the digital challenge facing companies

The increasing density of information and the shift into the digital age are the biggest challenges facing companies today. The so-called “VUCA” theory spells it out. VUCA is an acronym that stands for “volatility”, “uncertainty”, “complexity”, and “ambiguity”, a series of qualities that are interlinked and mutually dependent. “Volatility” refers to new competitors, as well as shortening product life cycles as a result of rapid technical advancement. “Uncertainty” refers to the state of the market. Technical trends need to be evaluated – a major challenge as, nowadays, technical expertise becomes outdated after less than three years.

Increasing “complexity” refers not only to the evolution from product to service described above, but also to the transformation of entire ecosystems. After all, the changes taking place in the automobile industry affect manufacturers, suppliers, retailers, and insurance providers as well as financial service companies. As a result of, for example, data protection issues, these changes impact everything, including legislature. “Ambiguity” refers in particular to the various data formats that challenge the capabilities of IT and BI.

Viewing the digital shift as an opportunity

Companies need to be versatile, flexible, and open to innovation if they do not wish to lose their identity and stability. One effective strategy for companies to employ in the face of VUCA, therefore, is not to be put off by the changes and all the challenges they present, but to see them as an opportunity – and that goes for every part of the industry. The thing to remember here is: gradually understanding and assessing correlations in minor issues will make it easier to understand and assess major issues. Maximizing the integration potential of data – in an information ecosystem – is becoming the primary purpose of IT and BI. Using this strategy, VUCA can be reinterpreted as motivation to have “vision”, “understanding”, “clarity”, and “adaptability”.

*About Oliver Schwenteck
Oliver Schwenteck is Principal Consultant for Analytics Strategy and Digital Solutions at INFOMOTION. He is a manager and expert in the fields of business intelligence and analytics, and has successfully designed and implemented various strategies. He is currently focusing on developing new concepts in the context of Industry 4.0 and digital transformation.