Next-Generation Capabilities for the Automotive Industry

We are living in an ever faster-changing world. From the cloud and artificial intelligence (AI) to blockchain and the Internet of Things (IoT), new digital technologies are changing how we live and work. They are expanding the horizon of the possible in terms of new products, services, business models, and the processes that enable these new offerings.

Digital transformation has upended businesses on a global scale and is creating an opportunity for reinvention across all industries. Technology and innovation have become the key determinants in how successful businesses are run. And the Fourth Industrial Revolution significantly changes the customer and employee experience, helping enterprises to grow and scale their business.

For more than 30 years, together with our customers, SAP has been developing industry-specific software and modifications on premise, tailored to their unique needs. But in today’s volatile environment, where industry boundaries are blurring, agility and speed have become a new competitive advantage. Companies need to be able to quickly adapt to fast-changing conditions, be it with new business models or by flexibly adjusting existing business processes.

To help them introduce new business models and run their value chains end to end, our customers want SAP software and technology to drive more vertical, industry-specific processes in the cloud with seamless integration into the backbone, which in many cases are core SAP applications.

We heard this feedback, and we are acting on it. Building on our deep industry expertise, we are developing modular industry applications on our Business Technology Platform. To help ensure a fast time-to-value and solid integration, they are based on the same data model as our core applications. These industry apps help our customers stay competitive in their industry by adapting their processes to new business models and enabling automation. To achieve this, we are co-innovating on our platform with our partners and customers — the biggest brands in the world, across all industries.

As an example, Honeywell and SAP teamed up to change the game in real estate by improving building performance. And just this week, we announced taking this even further, to an industry that like hardly any other represents how business models are changing, how enterprises need to work differently, and how much sustainability matters: the automotive industry.

The automotive industry is racing into a new world of mobility even as it continues with the traditional business model of designing, manufacturing, selling, servicing, and financing cars. Megatrends — including connectivity, autonomous driving, shared mobility, and electrification — are shaping the industry and the world of mobility in real time.

We see rigid automotive assembly lines turning into flexible, highly automated modular manufacturing. Logistics is moving from point-to-point communication to network-based original equipment manufacturer (OEM) and supplier collaboration, and business models are changing from classical direct vehicle sales to subscription-based or pay-per-use models.

This transformation to a new world of mobility requires an unparalleled commitment to digitalization and a networked economy. Automotive companies will need to become intelligent enterprises, where passengers and drivers are the focal points for integrated process design around mobility and the in-car experience.

Succeeding in a digital and networked economy also requires a new approach to production. Automotive companies will need to be flexible and shift focus from hardware to software innovation. In addition, a unified business network that connects the entire value chain across enterprises will be the critical success factor.

The partnership between Bosch and SAP that we announced emphasizes our strong commitment to the automotive industry transformation. Together, we will develop a digital industry standard for the exchange and use of company data along the value chain, thus building the network for the automotive industry of the future.

From incoming orders to production and delivery to invoicing, we will build on Bosch’s industry expertise and leadership to translate business processes into SAP systems. By merging and automating these processes, we want to jointly define new digital standards and facilitate real-time data exchange with suppliers and customers to ultimately make the entire process more efficient.

For example, real-time data exchange in a network around the digital twin will enable efficient quality assurance. Data harmonization and secure data exchange along the automotive value chain helps ensure that every stakeholder has end-to-end, real-time access to all relevant data.

Let’s assume that a new norm on distance control is introduced. For safety, this needs to be reflected in all driver-assistance systems. Based on a networked approach and the digital twin, both the system and the automobile manufacturer simultaneously get insights into how many and which vehicles and systems are affected and can easily collaborate on quality analysis and simulation. Required software updates can then easily be deployed “over the air” across the supply chain as an efficient reaction to safety risks.

Based on this increased efficiency and the strong networks of Bosch and SAP, our cooperation’s benefits will span across the entire industry by connecting the automotive value chain to establish a true digital thread for the industry. Together, we will develop a blueprint for other companies as well, and will thereby be able to help our customers drive continuous innovation by adopting best and next industry practices and to ultimately grow and transform their businesses to lead in their industries.

As we are convinced that we can only succeed together, we invite the whole industry to actively participate in this exciting journey!


Christian Klein is CEO and member of the Executive Board of SAP SE.
This piece was originally published on LinkedIn.