Unlocking the Promise of Cloud Computing

Cloud computing can help automotive manufacturers gain a competitive edge in every aspect of their business—from product design and manufacturing to global expansion. But, success will largely depend on their ability to fully leverage its capability in response to several emerging trends and challenges.

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When assessing what cloud can do for their businesses, automotive leaders need to take into account the distinct and rapidly evolving challenges that their industry faces today. These include the fundamental and ongoing changes in the way that automotive companies communicate and transact with their customers; the need to capture, manage, protect and analyze their ever-expanding collection of customer data; the requirement to decrease their information technology (IT) operating costs while upgrading their capabilities; and the need to expand into new and emerging markets at low cost.

Moreover, companies are facing an expanding multitude of regulations around issues including environmental protection and in-car safety, while rising commodity and raw material prices are also impacting profitability.

Many companies are realizing that cloud computing can represent the next progression from traditional enterprise resource planning (ERP)-style systems. These ERP systems provide most of the management processes and applications used by original equipment manufacturers (OEMs). These may not need to be as flexible as networked, Web-based platforms increasingly used in other industries for activities such as supply chain management and collaboration. As a result, automotive companies are seeking low-price opportunities to upgrade their IT capabilities, while reducing the operating costs of those that will remain. Cloud is being considered more often for this step.

Cloud feasibility

The cost savings and operational flexibility that cloud computing offers can help automakers respond to these and other industry challenges. However, it will be important that companies do not take the potential benefits of clouds at face value, but rather perform a thorough assessment of how best cloud computing can aid them.

First, companies should determine how they will manage cloud capabilities with their existing legacy systems to produce seamless operations. Many are considering this strategy to reduce IT infrastructure costs and increase responsiveness in the marketplace. As customers engage automakers and their collaborative partners through multiple channels, such as In-Vehicle Infotainment (IVI) services, mobile devices and social networking sites, the ability to be more responsive will become critically important.

This will extend to satisfying growing customer expectations for better and differentiated services based on data provided to automakers who are aiming to improve the customer experience. Real-time analytics that can provide predictive analysis for those services will require a great deal of data and computing power that may be well served by cloud computing.

Security and data privacy are concerns that can and must be satisfied to ensure a smooth transition to the cloud. For companies using cloud computing, it will be essential to work with the provider to ensure that it can achieve parity or better levels of security, privacy, and legal compliance than the company currently possesses. The provider also should be required to give a risk assessment and describe how it intends to mitigate any issues found.

Finally, companies will need to look closely into the costs of cloud computing. This should include reviewing rigorous return-on-investment case studies based on actual usage. Savings estimates are not enough. Potential purchasers must evaluate different kinds of cloud services pricing models and develop an effective approach for measuring the costs and return from clouds.

While it is important to take precautions, it is also important to understand that the relatively low capital investment, quick deployment and fast return on cloud services make their widespread industry adoption more a case of when, not if. To avoid missing a distinct competitive advantage, automakers should seriously evaluate cloud computing.

James Robbins, james.a.robbins@accenture.com, is a senior executive for Accenture, a global management consulting, technology services and outsourcing company.

January 2011, Related Feature – Metal Fab Plant Finds Cloud Savings
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