By Aniello Pepe and Marco Lanzetta, Oracle
Cars aren’t just standalone machines for personal transportation anymore. They’re morphing into digital ecosystems.
Connected cars with internet capabilities that can install updates to their onboard software for safety, comfort, navigation, or entertainment are quickly becoming mainstream—representing half of new vehicles sold globally. By 2030, that number is expected to reach 95%, according to consultancy McKinsey & Co.
Today’s car is built around software. Today’s electric vehicle architectures, with an array of onboard electronics, have become defined by the software they contain. There is also a clear separation between vehicles’ computer hardware and their software, which makes the software much more updatable than ever.
That’s creating new business opportunities for automakers, which can update software for navigation, entertainment, and other functions over the air, as well as unlock features a driver might want to add after purchasing. Automakers can also deliver data streams with useful information such as city parking, and make use of data they’ve collected to sell additional onboard features or better understand their customers’ preferences.
Drivers also benefit from more personalized services. The smartphone has become the standard for interacting with computers, so drivers expect a car’s user interfaces, connectivity, and app ecosystems to be comparable with those on their phones. Automakers don’t always possess the software to deliver that experience and need to partner with technology companies for at least some of these functions.
That means carmakers have a decision to make as they look to tap into the lucrative opportunities presented by connected, software-defined vehicles: Should they develop the underlying software that powers these services in house, or tap the expertise of global technology companies whose business is creating software services and delivering them at large scale?
On the one hand, in-house technology development can differentiate car manufacturers from their competition. Companies that keep software engineers inside their corporate walls reduce the risk of losing control over product roadmaps and the customer relationships forged through interactions with in-dash software.
But automakers risk over-customizing their offerings and slowing time to market by trying to create and control the entire digital chain of cloud computing services, network updates, and onboard software. Automotive manufacturers that let cloud computing providers handle aspects of their development can take advantage of the security, scalability, and agility of those platforms.
Many automakers would do better taking a more standardized, modular approach that lets them integrate third-party services to scale up development faster, while preserving control over drivers’ experience in their cars.
Savvy automakers are rethinking how they build software for the connected, software-defined car era. They’re considering using off-the-shelf components from established vendors to reduce complexity and accelerate time-to-market. A large cloud service provider such as Oracle with a focus on data management and business applications can be the right partner for automotive manufacturers in four critical areas: developer tools and cloud infrastructure; data analysis via machine learning and digital twin factory models; data governance, including security, privacy, and compliance; and integration with business applications and processes.
Using the partnership approach, car manufacturers can keep control of their overall IT architecture, while relying on tech partners for specific components and capabilities. In addition, they can focus on developing specific software features, such as on-demand services, infotainment, and onboard payment systems to differentiate their cars and brands.
For example, Mazda Motor Europe saves time and gains efficiency using a cloud-based customer data platform to intelligently leverage all available data to improve communications with customers.
Third parties in the automotive industry can benefit too. For example, U.K-based. company ODO Drive processes data collected from customers’ vehicles using Oracle technology to analyze and optimize costs and the green benefits of electric vehicle fleets.
The global market for onboard automotive software is set to grow at 9% annually to $50 billion through 2030, according to McKinsey. As vehicles become always-connected, the amount of data they generate grows. Addressing this coming world requires that automakers take on characteristics of tech companies themselves, overseeing large, complex software projects—some that they’ll develop and some that will come from outside providers—while properly governing huge data flows from connected vehicles and other sources.
Now is the time for car brands to embrace data and all its benefits. If they allocate resources effectively and use commercial software where it makes sense, they can succeed in designing vehicles that are as connected and convenient as smartphones.
In doing so, both carmakers and drivers stand to benefit.