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Digital transformation strategy for the automotive sector

These issues should form the basis of a digital transformation strategy for the automotive sector, according to IBM. Companies that wish to stay ahead of the competition need to develop operating models that take advantage of new technologies and the most successful of these will seek to achieve competitive differentiation.

As noted by Forbes, the automotive sector is undergoing rapid change. By 2020, growing digitalization and advancements in technology are expected to increase the automotive industry investments to $82 billion. Investments are orientated to new business processes, value chains, management practices, information systems, and customer relationships.

The key areas of focus need to be, as set out in the IBM report “Digital transformation in the automotive industry”, areas like connected vehicles and mobility services. There are two main areas that automotive manufacturers should be focusing on, according to the report. These are reshaping the value proposition and reshaping the operating model.

Reshaping the value proposition

This relates to the way that products and services, information and customer engagement can all be reshaped using new capabilities for mobility, interactivity and information access. The challenge for automotive firms becomes how to monetize new customer value propositions.

Reshaping the operating model

The automotive operating model can be realigned so that customer preferences and requirements inform every activity in the buying and selling chain. Implementing this requires the firm to integrate all business activities and to optimize the use of data related to those activities.

The report moves on to discuss taking a holistic and integrating these two focus areas so that transforming the customer value proposition and organizing operations for delivering this end-point. To achieve this the firm needs to address some key factors:

Where products and services are on the physical-to-digital continuum in the industry
Customers’ mobility and social media adoption levels
Strategic moves by other industry players
The degree of integration at every stage of the transformation and in the complex automotive value chain – between new digital processes and legacy physical ones.

The two main business opportunities for the automotive sector are assessed as being the
move to digital are connected vehicles and mobility services.
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Dr. Tim Sandle is Digital Journal's Editor-at-Large for science news. Tim specializes in science, technology, environmental, business, and health journalism. He is additionally a practising microbiologist; and an author. He is also interested in history, politics and current affairs.

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