automotive it strategy

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Automotive IT Strategy

Three Major Success Factors for Automotive CIOs to Shape a Future-Proof IT Organization

For many automotive companies, the new reality has exposed deficits of their digital transformation initiatives and their dependence on resilient supply chains. Even before the current crisis, the shrinking economy had already made it clear that automotive IT organizations would have to adapt drastically. The economic slowdown during lockdowns was as inevitable as hitting the brakes when you approach a curve. However, knowing when to downshift and accelerate is an entirely different matter – and a crucial one – particularly when it comes to setting new targets such as future operating models. It is up to IT leaders to find the ideal time to leave the racing line and emerge from the crisis as winners.

We have identified three major success factors for Automotive IT Strategy that can help CIOs to get to the checkered flag and achieve long-term success. In our deep dive, we outline how automotive OEMs should approach IT sourcing to pave the way for a successful future.

Steering Automotive IT in challenging times

IT leaders have, by all accounts, already overcome the infrastructure breakdowns, license limitations and traffic overload of the initial phase of the COVID-19 crisis. Yet automotive companies and suppliers are still suffering from severe revenue declines and the drastic reduction in shifts and working hours that many players were compelled to introduce.

There are also other challenges facing automotive companies above and beyond those related to the crisis. They still have to contend with macro technology forces that came into play long before the crisis and are now more important than ever. Various long-term megatrends in the global automotive trade are adding to the whirlwind of change and keeping automotive industry leaders on their toes, particularly IT department heads. To name a few examples: the rapid ramp-up of digital sales could be a make-or-break factor for the survival for automotive companies; investing in cloud technology could serve as an enabler of business continuity and future growth; and core automotive innovations such as autonomous driving are in urgent need these days to transport people and facilitate contactless delivery.

We advise automotive CIOs to focus on three success factors in their future IT systems to master macro technology and automotive megatrends like those mentioned above as well as the current global pandemic. This automotive IT strategy paper outlines all three: Digital Strategy & Innovation, Future IT Operating Models and IT Cost Efficiency.

Success factor 1: Focus on Digital Strategy & Innovation to enable growth

In our experience working with CIOs from various automotive companies, we have identified ten core areas to focus on when developing digital strategy & innovation pipelines – two of which are more important than ever before. Our article provides an overview of these two key areas, namely a robust innovation funnel process and a sound cloud strategy that allows for instant scalability. You can learn more about the most important aspects of these two innovation areas – for example, how crucial it is to establish a well thought-out, agile innovation funnel along the R&D timeline from ideation to a market ready product – as well as other areas designed to ensure business growth.

Success factor 2: Take your Digital Operating Models to the next level

From an organizational perspective, automotive IT needs to shift towards an agile product-centered structure, putting both internal and external customers at the heart of their mission and tearing down the barriers between business and IT. Our presentation offers insight into the structural and behavioral adjustments required and the key things to consider when creating a promising Target Operating Model. One example would be a shift toward providing high-performance platforms that ensure a seamless and efficient automotive value chain. This goes hand in hand with a change in mindset from the predominant time-and-material-based approach to a softer, more value-based posture.

Success factor 3: Speed up your Cost Efficiency initiatives

With the widespread uncertainty of the current COVID-19 crisis, automotive IT organizations have prioritized securing cash flow at the expense of several important innovation programs. This could prove to be fatal if long-term goals are sacrificed for short-term cost reductions. That said, costs must still decrease, making it even more urgent for CIOs to balance rapid innovations on the one hand with efficiency improvements in IT operations on the other.

When it comes to adapting the IT department’s cost reduction strategy, CIOs can deploy three major strategic alternatives: rather harsh cost-cutting (tactical strategy), securing the company’s survival with a balanced strategy, or taking a transformational approach to prosper in the long run. Assessing a company’s circumstances and needs based on several cornerstones, such as time pressure to achieve savings and overall corporate strategy, can help identify the right approach to reducing IT costs. Our article provides more detailed information about these three strategies and their particular features.

Automotive CIOs need to get the balance right between all three major success factors to shape a future-proof IT organization

To successfully reposition their IT organizations, automotive CIOs should focus their IT strategy on these three major success factors. This will require investment in digital innovation capabilities, a number of organizational adjustments and a sound cost strategy that does not neglect innovative advances or critical investments in the future.

Check out our insights into “Automotive IT Strategy” and find out more about how CIOs can successfully transform their organization for the future.

Automotive IT Strategy

Three Major Success Factors for Automotive CIOs to Shape a Future-Proof IT Organization

DEEP DIVE: Automotive IT sourcing: Speed up your cost efficiency initiatives

Today’s IT leaders are faced with numerous internal as well as external structural challenges: a lack of efficiency in the multi-layered IT service structure of globally distributed suppliers and a limited transparency within the self-built IT service landscape of subsidiaries, to name just two. Rather than just accepting these challenges as a fact of life, we believe OEMs should see them as an opportunity to create a truly resilient IT supply chain.

New automotive IT sourcing trends are emerging, which also help OEMs to address common outsourcing goals. In this Automotive IT Strategy Paper, we provide an overview of levers in four IT sourcing dimensions that will help OEMs to respond to this market dynamic with smart, streamlined IT sourcing and a pioneering IT sourcing 3.0 strategy.

In order to leverage the full potential of IT sourcing, we recommend a comprehensive, end-to-end strategic approach.

Deloitte’s strategic IT sourcing methodology offers a comprehensive, integrated set of methods, content and tools to support IT sourcing projects.

Check out our insights into “Automotive IT Strategy” and find out more about how CIOs can successfully transform their organization for the future.

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