By Karan Kirpalani
By Karan Kirpalani
Global manufacturing is going through a period of transition, especially in the automotive sector. Every aspect of the automotive manufacturer’s business – whether it’s products and services or where and how they’re sold or what regulations apply across different geographies – is going through a sea of change due to changes in the patterns of demand from the market.
As the industry adds new capabilities and enters new unexplored market segments, it also faces challenges in the form of ever-growing complexity and the cost of managing IT assets. Is the cloud the answer to these concerns? Let’s take a look at what the cloud has in store for the automotive industry.
As manufacturers increasingly rely on IT to ensure the smooth running of their supply chains and handling distribution/dealer network, the question of whether or not to move to the cloud is unavoidable. The cloud can help manufacturers become more flexible and adaptable to market and logistical demands. In particular, it can help them cost-effectively optimize their supply chains for sudden and sometimes unexpected growth. The cloud provides elasticity, both in terms of cost and more importantly the agility needed in the supply chain to support future growth.
The complex IT environment of the automotive sector
The automotive industry faces a multitude of challenges in its IT computing environment. The demand for data centres for computing capabilities continues to increase as organizations operate business processes, perform engineering simulations and provide business analytics.
As the demand for data centres increases, the energy consumption at the data centre also increases. The need to obtain the necessary power and cooling to handle the increasing computing demands is becoming a serious consideration for most automotive companies. To add to the woes, the automotive industry also faces annual challenges as hardware reaches its end of serviceable life (EOSL). Re-implementation projects provide few new functions – and integration efforts are often expensive due to upgrades or system changes.
The cloud can help automotive companies to reduce their data centre and energy footprint through virtualization, while at the same time addressing the EOSL problem. Opportunities exist for automakers to employ cloud technologies to reduce their data centre and energy footprint through virtualization, while at the same time addressing the EOSL problem. Virtual servers can be migrated from machine to machine in transparent fashion. As equipment reaches EOSL, new equipment can be introduced to the server pool. Cloud technologies can further improve the EOSL solution by extending the provisioning of the sources necessary for virtual servers.
Computer-created designs and crash test simulations generate huge amounts of data, which need to be stored. As data volumes grow, the ability to provision vast amounts of low-cost storage presents a huge challenge. Cloud storage technologies can help automotive companies address their storage needs.
Often in the automotive industry, test and development environments are periodically underutilized. Maintaining these environments is so expensive that automotive companies often prefer to let those machines sit idle until their next period of use. The cloud can help automotive companies derive significant cost efficiencies by enabling rapid automated provisioning and de-provisioning of services through virtualization. Virtualized development and test environment images can be moved online or offline in the cloud at a lower cost, making it possible for the underlying infrastructure to be used for provisioning new services.
Aggressive manufacturers now also use cloud computing to drive product innovation – from development to end of life. Cloud services offer easier provisioning for software development and testing, which can measurably reduce the time and money teams spend on finding, installing and configuring hardware and software licences, and allow engineers to spend their time on innovation rather than IT activities.
Collaboration in the automotive supply chain is important. Companies in this sector need to connect to parts manufacturers, tire manufacturers, distributors and a host of ancillary businesses. Each of these partners will run their own business-to-business (B2B) communications networks, based on their own chosen communications standards. As a result, integration among various constituents of the supply chain becomes difficult.
This is where the cloud can help. A collaboration platform run from the cloud, for example, can accommodate all standards, connecting large players, vendor community and dealer community; and companies can choose to tap into it as necessary, saving the expense of building their own infrastructure or employing specialist staff dedicated to B2B integration.
Automotive companies are also setting cloud-based hubs that foster collaboration and information sharing across a network of partners. These hubs help organizations to effectively plan and manage key supply chain and go to market activities in collaboration with partners. Examples include product co-creation, procurement, demand planning, logistics, compliance, tracking and risk management, new product launches, and collaboration with dealers, original equipment manufacturers (OEMs) and value-added resellers (VARs).
Cloud infrastructure services can also provide automotive companies with much-needed supply chain agility. At the operational level, the cloud approach can improve visibility into specific supply chain events – such as managing the issues relating to a late truck arrival in a dynamic production environment. At the tactical level, cloud-based analytics allow OEMs to more quickly and effectively evaluate a wide range of key performance indicators – e.g., to understand why the truck was late. Cloud capabilities can also support more robust strategic supply chain activities – i.e., examining sea versus air shipments, factory locations, and other complex variables.
Automotive manufacturers looking for growth and expansion need to look to new and unfamiliar markets. Aston Martin has just opened its first store in Warsaw, Poland. BMW has opened a factory in India producing its 3 Series vehicles, and has a full order book for the next three years. These are just two examples of companies relocating to meet domestic demand, but the trend applies across the whole manufacturing sector and also applies to mass market and non-luxury goods. The cloud provides a useful implementation choice for many automotive companies looking to enter emerging markets.
In conclusion, the automotive sector can leverage cloud-based capabilities to:
• Pay only for the capacity they need, when they need it, and nothing more;
• Access instantly available services to scale smoothly – up or down – in response to changing demand or market conditions;
• Fully exploit automation and the shared services environment;
• Improve production, customer service and satisfaction performance;
• Accelerate the development and delivery of innovative products and services;
• Select and deploy cloud services – often an enterprise-class hybrid approach – that best meet their production-oriented requirements today and in the future; and
• Reduce costs while shifting spending away from maintenance and toward strategic investment.
Given the momentum behind cloud computing across so many industries, it is not surprising that automotive companies are beginning to evaluate its potential and capitalize on the benefits it offers. When assessing what cloud can do for their businesses, automotive leaders need to take into account the distinct and rapidly evolving challenges that their industry faces today. These include the fundamental and ongoing changes in the way automotive companies communicate and transact with their customers and business partners; capture, manage, protect and analyse their ever-expanding collection of customer data; strive to gradually eliminate their IT CAPEX while upgrading their capabilities; and expand into new and emerging markets at low incremental costs.
In the future, we see dynamic scalability, inter-cloud collaboration, compliance and supplier OEM collaboration as some of the key areas for automobile industries to move to the cloud.
Cloud computing can provide the automotive industry with substantive benefits. Business agility is not an option, but a necessity in today’s global markets. The just-in-time model enabled by cloud computing for provisioning and de-provisioning IT is very attractive to automotive businesses because they are assured IT capacity while minimizing their ongoing costs. Therefore, the automotive sector must evaluate cloud computing as a viable solution for reducing operating costs, simplifying business processes and collaborating more easily with partners and suppliers.
Karan Kirpalani is general manager, product management, at Netmagic Solutions.