There are many reasons why cloud is attracting automotive companies today, but the biggest is the need to win the battle for the digital space. Provisioning of digital services and platforms is easier in the cloud, for everything from already well-established in-car connected services to innovative virtual showrooms. Another factor is the recent cloudification of production processes – something that nobody foresaw even just a few years ago.
A further important motivation for moving to the cloud is the need to modernize legacy platforms. Legacy systems are becoming hard to run because relevant in-house capabilities may no longer be available. Another factor is the ending of product support by technology suppliers. For example, SAP’s move to S/4HANA means that all SAP users and implementations will have to be moved across by 2025, when maintenance of the earlier versions will be discontinued. Unsurprisingly, two-thirds of automotive companies acknowledge migration to S/4HANA as one of their top three IT projects for the near future.
Lack of support, of course, is not the only motivation for moving away from legacy systems. Equally importantly, these systems simply cannot provide the level of interaction with suppliers and other partners that companies now need. Business today is going beyond just-in-time and just-in-sequence towards ever-closer integration between companies and their suppliers and partners. It’s crucial to make processes as flexible as possible, and to manage them accurately to ensure that the business runs like a well-oiled machine.
Only with high reliability and tight coupling between elements of value/delivery chains can processes be fully optimized and reliably run. So one of the most compelling reasons for moving to the cloud is the opportunity to slash go-to-market time for new services by adopting software as a service (SaaS) offers, or by deploying to the stable, scalable, cross-regional infrastructure available from a “hyper-scaler.” The company no longer has to worry about ordering, configuring, and administering hardware and basic software components.
Further encouragement to move to the cloud arises from the drive to standardize IT solutions. Particularly for smaller automotive companies, this type of standardization is a major opportunity to access the best IT solutions in return for modest expenditure, minimal disruption, and optimal timescales.
For companies of all sizes, greater standardization offers a chance to avoid the maintenance costs and difficulty in upgrading that are associated with highly customized solutions. Companies today need to be renewable enterprises, constantly transforming themselves to keep ahead of the market. As the innovation cycle gets faster and faster, it is critical to be able to benefit from the latest software releases. Cloud solutions make this possible, and also provide the opportunity to standardize business processes along with technology, which can bring further cost reductions. Unsurprisingly, 90% of companies are keen to standardize.
Outsourcing is an additional factor in the move to cloud. As many as 63% of companies are aiming to increase the level of outsourcing in their organization. More and more, outsourcing means cloud – and our research shows that more than half of IT services are now deployed in the cloud.
An increasingly important argument for cloud computing is the sustainability benefits that are available through closing down corporate data centers and instead obtaining computing capacity from cloud providers. With capacity shared across many organizations, less is needed in total, so that waste is reduced. Cloud operators can also manage the capacity in more energy-friendly ways, switching servers on and off dynamically in line with current usage. There is also the opportunity to site centers in, for example, Nordic countries where it is easier to achieve “green IT” thanks to factors such as availability of renewable energy and more efficient cooling because of the climate. Increasingly, cloud providers are competing with one another to provide the most sustainable offers.