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SUVs: Article

Automotive Industry Solutions

IBM's middleware innovates change

You don't have to look any further than your own driveway to get a sense of some of the challenges facing the automotive industry.

First, is the type or brand of vehicle you're driving now different from your previous vehicles? The answer is likely yes. The days when buyers bought a Chevrolet, Ford, or another brand again and again are largely over. Today, many people also move between economy cars, sporty cars, mini-vans, SUVs, and luxury cars as their needs and desires change. This makes it very challenging for automotive companies to meet customer demands and to do so ahead of fierce competition.

Second, what happens when your vehicle needs maintenance? There's hardly any do-it-yourself anymore, and maintenance and repair is not simple for professionals. Increasingly sophisticated vehicles chock-full of intricate electronics and software have made it more difficult, and more essential, for service professionals to receive ongoing training. Parts suppliers also must keep pace with the ever-increasing complexity. If they don't, quality suffers, warranty issues and costs increase, and customer satisfactions drops.

Third, was your vehicle made in the U.S.? Whether or not your answer is yes, foreign-made vehicles have become so common that U.S. manufacturers are grappling with significant over-capacity in their manufacturing capabilities. That pressure on efficiency undermines their businesses.

In addition, automotive industry players need to compete on a global scale, offer costly incentives to customers, and deal with increasing government regulation. As a result of these pressures and more, the industry needs to keep in lock-step with rapidly changing customer demands and improve quality and efficiency from product design to vehicle service across their operations.

Many are looking to information technology (IT) to help them do so. They need to integrate their business and IT processes within and beyond their own organizations to allow them to respond with speed to customer needs, technology issues, market opportunities, and competitive threats.

IBM has worked closely with automotive customers for years. The top 10 worldwide motor vehicle and parts companies listed in the July 2003 Global 500 use IBM WebSphere software. IBM Rational is number one in embedded software test automation tools, and seven of the top 10 worldwide automotive manufacturers use IBM Lotus e-learning solutions.

In addition, IBM has created software solutions designed specifically to address the challenges facing the automotive industry. The solutions are part of IBM's effort to deliver solutions based on customer preference for buying solutions designed for their industry. Each solution draws on the appropriate capabilities from IBM's WebSphere, Lotus, Tivoli, DB2, and Rational middleware brands, and IBM's industry-specific middleware combined with applications from independent software vendors (ISVs) and industry-expert services.

IBM automotive solutions can speed the design and development cycle, and improve plant operations and dealer communications. From design to ongoing service, the solutions help companies analyze data to improve quality and customer satisfaction. They also provide ways to meet varying customer expectations and respond faster to market shifts. Offering better collaborative tools and automating early warning business processes allows for cost-effective development and deployment.

"Each solution has multiple scenarios that address a range of industry challenges," said Larry Carvalho, market segment manager, Automotive Industry, IBM Software Group. "And they're based on open standards and industry initiatives so that companies can begin by addressing any challenge they choose and move on to the next when they're ready."

The solutions are also designed to allow customers to reuse existing and new applications and components. "The solutions are based on a services-oriented architecture which means that each application (including legacy applications) can be constructed as a Web service to be reused and added to as needed," said Chae An, director, Industrial Sector Solution Development, IBM Software Group.

"This approach also enables the integration of back-office applications, such as Enterprise Resource Planning (ERP) systems, with plant floor applications or devices, such as those for scheduling, robotics and printing at a manufacturing facility," said An. "Also, because of the open architecture, the applications can integrate in today's heterogeneous IT environments," he added.

IBM's solution for automotive product design and innovation helps companies more effectively collaborate within and beyond their organizations. Automotive manufacturers have long depended on single-vendor CAD/PDM solutions to support their enterprise-wide engineering and design activities.

In recent years, however, industry trends including mergers and globalization, increased product complexity, more dynamic and volatile partnering on product value chains, and the need for tighter team integration and collaboration with primary partners and suppliers have created new challenges for OEMs (original equipment manufacturers), their primary suppliers, and their product line value chains. More and more, first tier suppliers are being forced to deploy, maintain, and integrate a widely heterogeneous environment of CAD/CAM/CAE and product data management systems, particularly if they wish to participate in multiple product value chains.

The design and innovation solution helps enable effective collaboration in these heterogeneous environments by providing seamless integration of PDM systems from multiple software vendors. This ensures that all parts of the system are well integrated and work together as one coherent enterprise PDM. The solution extends the basic capabilities in IBM's Business Integration (people, process, information) portfolio for federating data and processes across multiple heterogeneous PDM systems and data sources in a product design, development, and manufacturing environment. This enables real-time visibility and centralized access and management of product data, configuration, and process information throughout the product life cycle, across the partners working together in product design and development.

The solution also has an embedded system life cycle management offering that combines software, services, and consulting to improve the strategy, design, and support of in-vehicle software and electronics. These systems are expected to provide much of the innovation for automotive companies in the future and they also have a tremendous impact on vehicle warranties. The offering improves embedded system design, thus reducing warranty issues and improving product differentiation through enhanced features.

In addition, IBM has put together a set of investments, initiatives, and solutions that create a leading-edge, open standards-based hardware platform for computer aided engineering (CAE) simulation and analysis targeted for the automotive industry. Designed to help automotive companies find new ways to reduce product development time and cut costs for increased quality and competitiveness, the Automotive Engineering Innovation Framework (AEIF) initiative extends IBM's capabilities in Product Life Cycle Management (PLM). It also brings together IBM expertise in Grid and Deep Computing, virtual products, process innovation, and more.

Just as in the design and development process, automotive companies need to improve their manufacturing productivity. They face cost pressures and decreased profits due to excess and obsolete inventory, poor on-time delivery which has hurt customer satisfaction, difficulty implementing product innovations which hurts market share and limited ability to make the most of system capabilities such as electronic procurement.

IBM's solution for automotive manufacturing productivity addresses plant floor systems, ERP, and supply chain management.

For plant floor systems, the offering provides an integrated set of processes, tools, and services that help reduce the cost and complexity of IT for plant operations, improve plant management decision-making, and increase the flexibility of manufacturing operations.

The ERP offering helps companies integrate systems within and outside their organizations so they can make real-time, knowledge-based decisions within the supply chain. The solution allows an enterprise to extend data outward and collaborate effectively with partners, suppliers, and customers. The result is improved productivity and forecasting, as well as reduced cycle times and investments in inventory.

The supply chain management offering helps companies balance demand and supply, improve customer service, and optimize inventory levels by continuously planning in real time across organizational boundaries. Its process, organization, and technology elements assist companies with production planning, profit optimization, and yield management. As a result, automotive companies can reduce planning cycle and lead times, as well as increase order fill rate, inventory turns, and throughput.

Another IBM solution for the automotive industry deals with sales and service issues. It consists of offerings to address quality insight, dealer collaboration, and consumer insight.

Quality issues facing the industry include recurring product recalls and rising warranty costs. IBM's quality insight offering is a process and technology infrastructure framework where the combination of information integration, analytics, and automation identifies and predicts defective products. It does so by creating an enterprise-wide view from manufacturing through customer ownership, thus providing capabilities for risk management, warranty cost containment, quality, and product improvement programs. The ownership experience can be improved and brand loyalty strengthened.

Automotive companies also need to improve their collaboration with dealers. Currently, they incur high costs due to inconsistent processes across dealerships. In addition, customer satisfaction is low and the relationship between dealers and parts manufacturers (OEM suppliers) is deteriorating.

IBM's offering for dealer collaboration, a workplace and business process infrastructure framework, focuses on improving the customer buying and ownership experience. It does so by enhancing collaboration and consistency of processes between the dealer and OEM partners. IBM's Workplace platform provides role-based capabilities for different personnel such as sales managers and mechanics at a dealership. Mechanics, for example, could view 3D drawings and instruction manuals using Workplace capabilities. Within this offering, automotive parts information is managed by the WebSphere Product Center.

The solution, therefore, helps provide dealers with integrated content, improved sales, purchasing, delivery of parts, accessories and service, issue management, and education throughout the aftermarket demand chain. The result is lower process costs, a better buying and ownership experience, and improved relationships between dealers and their suppliers.

Gaining insight into consumer needs is also important for automotive companies. In addition to declining customer loyalty and low customer satisfaction, they have had to absorb high sales incentives costs and have had difficulty implementing effective marketing programs. IBM's offering for customer insight includes enterprise and dealer customer relationship management capabilities, call centers, marketing, and customer intelligence telematics. The use of these capabilities can reduce call center costs and enable marketing programs through better intelligence.

IBM also has solutions for finance management and for human capital management. The solution for human capital management addresses the industry's high HR function costs and inconsistent HR processes. It also helps automotive companies speed up their responsiveness to HR service requests, and provide cost-effective training. The solution for Finance Management helps improve forecasting accuracy, shorten planning cycle times and the time between closing books and issuing financial reports, cut costs in the finance function and improve compliance with regulations.

"Understanding the industry's needs is key to the effectiveness of all the solutions," Carvalho said, and to ensure that this insight continues to be part of its offerings IBM is active in industry groups working on IT issues. Among them are the Automotive Industry Action Group, a U.S. organization similar to groups in Europe and Asia, which is working on industry standards for business-to-business integration, and the Automotive Open Systems Architecture (AUTOSAR) consortium, which is working on the creation and adoption of globally recognized, open-standards-based platforms for the electronics and software in vehicles.

"The pedal-to-the-metal pace of change in the automotive industry makes it a constant challenge for its players to be first to the finish line," said Carvalho. "But the right IT solutions can make a big difference in who wins the race."

More Stories By Larry Carvalho

Larry Carvalho runs Robust Cloud LLC, an advisory services company helping various ecosystem players develop a strategy to take advantage of cloud computing. As the 2010-12 Instructor of Cloud Expo's popular Cloud Computing Bootcamp, he has already led the bootcamp in New York, Silicon Valley, and Prague, receiving strong positive feedback from attendees about the value gained at these events. Carvalho has facilitated all-day sessions at customer locations to set a clear roadmap and gain consensus among attendees on strategy and product direction. He has participated in multiple discussion panels focused on cloud computing trends at information technology events, and he has delivered all-day cloud computing training to customers in conjunction with CloudCamps. To date, his role has taken him to clients in three continents.

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