Rethinking IT change in the automotive industry
The automotive industry is undergoing fundamental change; consumer expectations are rising while agency and subscription models are reshaping sales dynamics. On top of this, regulations such as the Zero Emission Vehicle (ZEV) mandate are creating new commercial and compliance pressures.
Against this backdrop, OEMs and national sales companies (NSCs) face growing demand for seamless, data-driven customer experiences. Yet many are still constrained by fragmented, siloed IT ecosystems built for a different era, where data sharing, interoperability, integration, collaboration and adaptability were not priorities. These automotive industry challenges hinder progress in implementing effective automotive software solutions.
While automotive digital transformation efforts are underway across the sector, progress is often undermined by disconnected systems, overlapping ownership, a lack of shared incentives and poorly prioritised investments across functions. The result is slow execution, inconsistent service delivery and missed opportunities to create value at scale.
To meet the demands of the modern mobility landscape, OEMs and NSCs must move beyond isolated IT upgrades and rethink how they structure change – starting with the way they govern, connect, evolve and invest in their technology ecosystems, particularly through automotive IT transformation
The challenges of a fragmented ecosystem
The siloed nature of many IT systems makes it difficult for them to scale or evolve with the needs of the business and its customers. This leads to a range of issues, including:
- Disconnected systems and departments – Legacy systems across engineering, manufacturing, sales and finance are less able to share data. This creates information blind spots that limit visibility into the wider organisation.
- Missed opportunities – Even when an organisation pursues a clean-slate transformation, it’s often without considering the continuous improvement of existing systems. This can lead to gaps in functionality and user experience.
- Barriers to collaboration – With IT often seen as a hindrance rather than an enabler, securing investment in new systems can be difficult. This can harm collaborative efforts across business functions.
- Customer frustration – A lack of integration can lead to a fragmented car- ownership experience, which affects customers, NSCs, and OEMs.
Automotive IT systems began in finance departments, using spreadsheets and basic tools to manage accounting. This limited the growth of IT and downplayed its strategic importance. Today, OEMs still manage disparate dealer management systems (DMS) that fail to integrate, leading to a fragmented customer journey. This makes cross-functional collaboration increasingly difficult, despite growing pressure to digitise and meet customer expectations. The automotive industry challenges must be addressed through innovative automotive software solutions.
When radical change isn’t enough
There are three distinct types of change:
- Kaizen: ‘Good change’ – Ongoing process of small, incremental improvements made consistently over time.
- Kaikaku: ‘Radical change’ – Wide-scale, extensive improvements to existing systems or processes.
- Kaikushin: ‘Disruptive renewal’ – Doing something completely different, rather than iterating or refining an existing concept, approach or output.
Transformation efforts can fall short when they focus on radical change or disruptive renewal without the necessary incremental improvements to existing architecture. This can lead to costly mistakes, such as building systems that aren’t compatible with what’s already in place. This then requires expensive APIs and integrations that don’t always work as required.
How can OEMs and NSCs overcome fragmentation?
While many OEMs have initiated large-scale transformation projects, these can sometimes lead to further fragmentation. Overcoming this needs to go beyond clean-slate thinking. A more nuanced approach is needed.
In the face of widespread disruptive renewal, central teams often aim to limit radical change or incremental improvements on legacy systems. The thinking is that because these systems and processes are set to be replaced by new standardised solutions, ongoing improvement is unnecessary.
Delivering innovative change is complex, often with long timescales. As a result, uncontrolled departmental solutions and shadow IT rise to fill the gaps. In our experience, the problem is not a lack of ambition. The real issues are in understanding, strategy and execution, , particularly in the context of automotive IT transformation.
Integrating the automotive ecosystem
In our recent report, we outlined the three principles for effective change: Devolution, Collaboration and Product Mindset.
Devolution
Rather than large-scale transformation projects being managed by global leadership, this principle favours managing change at the lowest possible effective level. When guided by the wider organisation, this allows different departments, functions and locations to create the systems that work best for their needs.
Collaboration
Collaboration is key alongside Devolution. No single programme, business unit or individual organisation can deliver transformational, end-to-end change with the budgets and timescales available.
Product Mindset
Large programmes have consistently failed. A product approach empowers those closest to internal and external customers to drive change while ensuring accountability for reusable, iterative IT solutions instead of one-off projects, , which is crucial for successful automotive digital transformation.
With these three principles, OEMs can overcome fragmentation through a connected ecosystem where each element serves the needs of its users. Not only is this a more effective way of delivering wide-scale change, it also benefits everyone from manufacturing through to the end customer.
Improving the data ecosystem
NTT DATA worked with a large automotive OEM to improve its dealer management system and simplify data sharing. The solution was a global system with a common data structure and standardised processes. The streamlined flow of data improved the sharing of information from OEM to NSCs to dealers.
When teams fail to collaborate across functions, the result is poor data integration, disconnected systems and a fragmented experience for customers. The DMS case study shows how overcoming these silos can deliver improved results across the board, , showcasing the importance of automotive software solutions.
OEMs and NSCs typically know the strategic steps they need to take to change, but the real challenge lies in the execution. This is where NTT DATA makes the difference. Our extensive automotive change experience and capabilities mean we not only help to define and deliver, but also provide the ongoing support and services that ensure the new technology solutions, processes and ways of working result in true business value.
To learn more about delivering change and eliminating IT fragmentation, download our report today.