Why is the Automotive Software Industry at a Critical Crossroad?

Maddison Baldwin, Director of Information Technology, Volvo Cars

Why is the Automotive Software Industry at a Critical Crossroad?Maddison Baldwin, Director of Information Technology, Volvo Cars

Research shows a significant gap between strong software organizations and less capable groups, with top businesses reporting throughput and quality three to six times greater than bottom performers.

The automotive industry is being rapidly reprogrammed by software. Autonomous vehicles, Connectivity, Electrification, and Shared mobility (ACES), the four most significant disruptions in recent years, rely heavily on cutting-edge software. More upheaval in these areas is on the way. OEMs, suppliers, and new entrants from across the industry are hoping to seize critical control points in this new, software-driven value chain.

Even as the landscape alters, automakers that lack adequate software capabilities will face significant risks, such as Standard Operating Procedure (SOP) delays and budget overruns. They may also lag behind competitors and new entrants, bringing far more innovative products to market much faster. Even more concerning, software issues could result in massive recalls or leave businesses vulnerable to customer safety risks due to hacking attacks.

Research shows a significant gap between strong software organizations and less capable groups, with top businesses reporting throughput and quality three to six times greater than bottom performers. That is a much more significant disparity in productivity than the one between hardware developers. Many automobile companies are becoming more conscious of the benefits of good software development and are taking dramatic measures to increase performance.

In the next few years, some companies intend to expand their software capabilities and hire hundreds of software engineers, while others change their governance models, form alliances, and establish global centers of excellence.

These measures, however, are insufficient because actual change will only occur when automakers upgrade their core operating models for software development. According to research, just 40 percent of R&D leaders who see software as a major disruptor are confident in their ability to make the necessary operational changes. While leaders across industry segments have made significant improvements in their software engineering practices, the majority of auto­motive players continue to lag far behind high performers. Agile practices, continuous integration, and automated testing are all areas of concern.

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