Driving Digital Transformation

Less than one-quarter of automotive companies are making investments in digital transformation. This highlights clear vulnerabilities in most automotive companies that sit outside the vision-driven quadrant. In response to this data, automotive OEMs and their suppliers should seek to develop strong digital strategies across all departments.

The end-state for automotive companies will be a digital transformation of the value chain, driven through bringing suppliers, manufacturers, and customers together via a centralized platform. This will bring improvements in efficiency, data-sharing, supply chain management (SCM), and the overall customer experience (CX).

>Digital Transformation in a Highly Competitive Market

Top Concerns Expressed by CEOs in the Automotive Industry

Automotive CEOs have numerous concerns around the future of their industry. Here are the top five concerns that need to be addressed in the digital era:

Capitalizing on Digital Disruption

Capitalizing on Digital Disruption

There is a growing need to create new products and technical features that improve safety and comfort. The product development and research lifecycle needs to be shorter and deliver more rapid iterations aligned with the evolving digital ecosystem.

The logistics and transportation industry are closely tied with the automotive industry. Digital transformation is unveiling new business models and technologies, such as automated logistics systems which leverage platooning (similar to a convoy) to drive vehicles in tandem using AI.

Partnering for Success

Partnering for Success

There is a growing need for partnerships with technology companies and, among automotive manufacturers, to compete with new digital-first organizations. Larger automotive original equipment manufacturers (OEMs) compete by merging and acquiring technology providers. This simplifies the assimilation of components from parts suppliers, integrating digital technologies into automobiles and ancillary services without the research burden.

A Dynamic Regulatory Environment

A Dynamic Regulatory Environment

Major shifts in environmental regulation and government policy are pushing the automotive industry away from gas and diesel towards electric vehicles and supplementary technologies.

Market Position and Meeting Customer Needs

Market Position and Meeting Customer Needs

Demand for personalized automobiles is growing, leading to more manufacturers exploring new approaches to manufacturing, technology, and service that enhance the customer experience (CX).A lack of digital skills and technological expertise is preventing automotive manufacturers from incorporating new technologies into their automobile products and services.

Transforming the Value Chain

Transforming the Value Chain

OEMs and other large automobile component manufacturers need to transform the value chain to retain their dominant market position. Newcomers such as technology companies, telecom companies, and device manufacturers are quickly catching up in terms of R&D, sales, and aftermarket solutions.

The Most Successful Digital Transformations Are Powered by Analytics Capabilities

Our benchmarking services are powered by over 1.5 million data points in addition to our primary research and data collection capabilities. With access to leaders across more than 40,000 companies in various size segments, industries, and geographic locations, we can quickly gather additional data to address how your business is performing against the competition.

A graph showing which industries are investing the most in digitalization.

Source: Trasers

Data Analyzed in this report comes from 4,000+ responses. For the automotive industry, data from 340 companies have been used.

Our automotive industry experts can offer insights into the following sectors:


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How the Automotive Industry is Evolving

The automotive industry is gradually progressing towards enterprise-wide digital transformation, with established OEMs driving evolution across their existing product and service stacks to deliver new innovations. New players experience less friction to innovation thanks to minimal operational bloat, whereas existing players must deflate their operations to compete. This results in the revival of old ideas, leading to continuous innovation in products and business models that force a Darwinian environment of “adapt or die.”

For new and existing players, this environment is creating a hotbed for innovation through digital transformation. Rapid change is a requirement, and falling behind digitally is becoming synonymous with failure via loss of momentum. Automotive vehicles and technology are converging to introduce new paradigms like electrification, vehicular autonomy, diverse mobility models, and integrated connectivity.

This presents an avenue for the High Tech and Aviation industries to cut across the automotive realm, namely due to their superior technological prowess. The automotive industry must insulate itself with increased awareness and sensitivity to the competition and, through the adoption of technology and data-driven business models, to do so at a pace that meets or exceeds that of competitors.

Only 7% of Companies Are Delivering on Their Transformational Initiatives

Our research has shown that 30% of companies will fail to survive this decade due to an inability to evolve digitally. To address this negative trend, we have developed the Digital Enterprise Evolution Model™ (DEEM).

Digital Enterprise Evolution Model™

An image showing the stages of analytics capability evolution.

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DEEM allows our clients to recognize digital evolution patterns, implement benchmarking and prioritization strategies, and initiate application management protocols to satisfy stakeholder and market requirements.

Reinventing the Automotive Value Chain

To reinvent the value chain in the automotive industry, manufacturers must reimagine the customer value proposition and respond by integrating new digital capabilities. Competitors in the industry have already begun to realize the importance and urgency of “digital first,” a steppingstone towards digitally enhanced customer experiences (CX).

To lead in this space, keeping pace with industry averages is not an option. Instead, companies need to use digitalization to deliver connected and personalized experiences throughout the value chain, and to all stakeholders.

Digital disruptors like Uber and Lyft are facing increased competition following a “goldilocks” period where existing competitors lagged behind. Previously, automotive organizations worked with these companies to get a foot into the industry.

Now, automotive organizations are taking this experience and adding fuel to the “mobility-as-a-service” fire by creating their own ride-sharing and self-driving service platforms that directly compete with these digital disruptors. With this in mind, it is no surprise that over two-thirds of large enterprises plan to become fully digital, and focus on reinventing existing experiences to survive in an increasingly competitive business environment.

No Room for Error

There is no room for error in how automotive companies develop and implement strategies for the digital era. A majority of companies are still outside the vision-driven quadrant with digital transformation. This indicates that perceived urgency for digitalization in the automotive industry is leading to continuous action with the goal of transformation — however, the action itself is sub-optimal.

New and emerging competitors in the automotive market are pushing established players to transform their existing products and services. This is leading to a significant proportion of automotive companies reporting investments in analytics and process digitalization. Additionally, these companies are introducing electrification and Internet-of-Things (IoT) capabilities to drive connected and autonomous vehicular experiences. The goal being to regain market share and reposition themselves for the digital era.

Investing in Human Capital

The automotive industry sets a new standard when it comes to human capital practices in the digital era. First, planned investment in human capital digitalization is among the highest of all industries, driven by changes to processes and the adoption of analytics. Talent acquisition is another key area for human capital management, with advanced analytics and AI-automation introducing new skill requirements. This highlights the need for vision-driven digitalization among automotive companies, while also exposing vulnerabilities for companies that fall outside of the vision-driven quadrant.

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Trianz enables digital transformations through effective strategies and excellence in execution. Collaborating with business and technology leaders, we help formulate and execute operational strategies to achieve intended business outcomes by bringing the best of consulting, technology experiences and execution models.

Powered by knowledge, research, and perspectives, we enable clients to transform their business ecosystems and achieve superior performance by leveraging infrastructure, cloud, analytics, digital and security paradigms. Reach out to get in touch or learn more.

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