Automobile: IT's Fast Lane

DQI Bureau
New Update

With the growing number of digital systems under its roof,

the automobile vertical is becoming one of the leading showcases of IT usage.

Besides streamlining the entire value chain, IT is also increasingly finding its

way into product innovation. According to Rajiv Nair, regional director,

Autodesk India, the interoperability and ease of collaborative use of multiple

IT systems (PLM, CRM, ERP) will become even more important.


Driving Factors

The evolution in IT in the auto sector is being led by the huge growth and

investments being made by auto multinationals in India. All the large auto

companies in the world are now in the country. Growing competition, in effect,

has led to increased pressure on squeezing the manufacturing lead time and

time-to-market, even while maintaining cost competitiveness and efficiencies.


  • Focus on IT

    consolidation and centralization

  • Investments into

    collaborative systems and processes by integrating IT systems and

    processes across the value chain followed by spearheading

    standardization efforts

  • Focus on the CRM

    system to reach out to customers and factor in their feedback more


  • Well automated and

    agile supply chain planning

  • Processes for high

    visibility and agility towards customer feedback/demands

  • Strong product

    development lifecycle management

The growing competitiveness can be gauged from the fact

that the number of segments is increasing and new product introduction within

each of these segments is also growing at a rapid pace. There are several new

products as well as variants of products, which are being launched frequently

within very short time spans as an answer to competition or to drive the edge

over competition. This, in turn, is not only increasing the complexity but also

constantly challenging the ability of the OEM to introduce a new vehicle as well

as new variants in the shortest possible time and market it.


According to Hilal Isar Khan, head, Information Technology,

at Honda Siel Cars, all this requires the product development lead time as well

as the supply lifecycle to be minimized and controlled more efficiently to react

as well as innovate faster. These are some of the fundamental market dynamics

that are warranting the need to move beyond the basic ERP (the initial wave of

significant IT adoption in the auto vertical) first and then move to a

collaborative system. Standardization of systems across the various partners is

an area of concern that auto companies are now beginning to address.

As Nair points out, the way the auto industry is evolving,

the supply chain (the suppliers) is now providing more value with complete

vehicle systems. The OEMs are learning that in order to share risk with the

suppliers, they must share innovation, knowledge, and profit as well. All this,

in effect, is leading to movement towards collaboration on the IT systems as


Branching Out

The initial wave involved getting the ERP in place, the next wave is leading

to the extension of the automation drive to the partners (dealers and suppliers)

and customers through SCM, Dealer Management Systems (DMS), CRM, etc. While the

companies have already started extending out, there is going to be greater

mainstream adoption of SCM, DMS, and CRM applications in the coming years.


Rajesh Uppal, chief general manager (IT), Information

Technology Division of Maruti Udyog, touts CRM and SCM as the next big drivers.

“Going forward there is going to be more focus on CRM areas and integrating

the complete supply chain including logistics as the scale of operations are

increasing with huge variability and shortened product life cycles,” he


The auto industry is very heavy supplier and supply chain

dependent. Supply chain forms an integral part of an automobile manufacturer's

operations considering that a sizable chunk of the production costs is made up

of material costs. Therefore, inventory visibility, management and control are

key to driving efficiencies, driving the market for SCM applications.

CRM could be the next big thing in the auto sector. With

the basic supply chain systems in place, the next 'big' rollout area for the

companies will be CRM. Considering the growing market competitiveness, customer

orientation is becoming the differentiation factor. “Entire focus now is on

CRM and how do we listen to our customer and take the feedback to our operations

till product development. Thus, agility to change, based on the feedback from

customer and also anticipate and create, will be the key in differentiating from

competition,” explains Uppal. Within CRM, the trend is also gradually moving

from reaching out to the customer base through dealers and third parties to

directly reach out to the customers.


"Interoperability and

ease of collaborative use of multiple IT systems (PLM, CRM, ERP) will

become even more important"

-Rajiv Nair,
regional director,

Autodesk India

"Owing to the demands

of the challenging competitive environment, it has become critical for the
auto companies to upgrade their IT infrastructure"

-Shailender Kumar,


"The primary areas of

interests in terms of upcoming technologies and solutions hover around ECU
design and telematics"

-Ajay Chamania,
senior vice

president, Product Engineering Services, Patni

"The status of IT

adoption in the auto ancillaries is not very high, investments are now
being made and in the next 2 to 3 years, a lot of automation will be


-Sanjay Agarwala,
director, ESS

"What we are now

talking about is tightly integrating these various systems with the ERP,
and considering CRM and SCM as an extended entity of the ERP system


-Hilal Isar Khan,

Information Technology, at Honda Siel Cars

Collaborative Gains

Taking this a step further, the trend will eventually move towards

integrating the dealer, supplier and enterprise systems into one seamless system

and achieving some level of standardization across the partners and third

parties' systems. This essentially means integration of their IT processes

across the value chain to effective collaboration.

According to Uppal, in order for the auto industry to

succeed the entire value chain, suppliers, distributors and logistics partners

have to work like a well-oiled machine to deliver value to the end customer.

Inefficiency or failure in any one of the partners could affect the delivery

process. So it is important for OEMs to make the value chain agile to meet the

changing demand of the customers. One of the main challenges is to manage change

demanded by customers in the entire supply chain including suppliers and

distributors, which a collaborative environment can help overcome. These are

some of the market factors driving the move towards collaboration.


In the last five years, big auto giants had made their

internal IT infrastructure strong and stable which can cater to immediate

business requirements and good support to internal users through ERP. Today ERP

steps out into SCM and CRM as well. “Once they have put their house in order,

now they are able to think of collaborating with their business partners. Some

of them have already collaborated with their dealers' and vendors' systems.

In next 2-3 years, they will be making their business associates' systems

strong and stable so that in future their systems can be integrated with the

large enterprise system. Thereby creating a win-win situation for both,” says

Avnesh Jain, deputy manager, Information Systems, Hero Honda Motors.

According to Khan, in the past companies have been talking

about CRM, SCM and dealer systems on top of the basic ERP. “What we are now

talking about is tightly integrating these various systems with the ERP and

considering CRM and SCM as an extended entity of the ERP system itself. Thereby,

making it easier and faster to get an effective MIS for business critical

decisions,” he adds.

While the dealer management system at the dealers' end

has been connected to the company's enterprise systems and the materials

transaction system at the suppliers' end has also been connected to the

organization's ERP, the two sets, i.e. 'dealer and ERP' and 'supplier

and ERP' have been disjointed from each other. The market is now moving in the

direction of creating a real-time web based single end-to-end system.


Designed to Standardize

The collaboration theme is moving to the designing domain as well,

considering the growing pressure on the companies to shorten design life cycles

and bring products out into the market faster. Standardization is particularly

finding its way in the areas of design collaborations. The OEM and the supplier

needs to be on a single collaborative platform where they can share information,

collaborate on critical design decision and have online meetings to discuss

mission critical scenarios to arrive at the resolution in a real-time


According to Nair, the automotive sector tends to be moving

towards a theme of 'One'-one set of corporate strategies, one common PLM

solution, one set of metrics that drive the business. “There seems to be

universal theme of OEM and supplier businesses moving to single, networked PLM

solutions that all fall under one plan,” he adds. Furthermore, as more

companies are outsourcing part of their manufacturing and design work,

integration and standardization across the systems of these third party

companies is also becoming an issue that automobile manufacturers are now

looking at. All this is geared towards speeding up the production cycle and

reducing the manufacturing lead time. Khan also points out the emerging trend

towards integrating the PLM system with the ERP system.

Other Trends

Among the other trends, PLM is an area abuzz with activity. According to

Rohit Biddappa, marketing manager, Parametric Technology, supply chain firms are

being asked to deliver complete modules and systems to the OEM and not just

parts, sub assemblies and assemblies.


According to Shailender Kumar, MD, BEA Systems, owing to

the demands of the challenging competitive environment, it has become critical

for the auto companies to upgrade their IT infrastructure to provide real-time

assistance and concurrent service delivery. In case of manufacturing process,

technology aids in real time inventory management, which is critical in ensuring

timely product delivery and hence cost cutting. At the customer end, the key to

success is real-time access to information be it pricing, policies, auto loans

etc or for that matter tracking of goods flow between indirect channels. As a

result, some of the technologies that are fast gaining popularity in this domain

are RFID and technologies that enable web based solutions such as portals, Kumar

points out.

Riding on Innovation

With the convergence of advanced in-vehicle electronics, communication

technology and infrastructure and telematics, automobiles of today are on the

verge of getting a complete re-invention yet again. According to Uppal, the

automobile sector is moving towards resembling 'computer on wheels' due to

increased number of digital systems coming under its roof. This includes vehicle

control, engineering management systems, safety control etc. Automotive

electronics today accounts for 22% of vehicle cost, which is likely to go up to

40% in the next couple of years.


Oriented Approach to IT in Auto

Companies in the auto

industry must start to define their SOA roadmap and investigate current

inventory of existing IT assets such as custom applications, ERP systems

and various data sources and application packages and see how they can fit

into the roadmap.

A Service Oriented approach to IT can:

  • Reduce cost of IT

  • Increase


  • Naturally support

    outsourcing characteristics, e.g. distributed, loosely coupled

    development and operation

  • Allow companies to

    participate easily in business process automation and integration with


According to Ajay Chamania, senior vice president, Product

Engineering Services, Patni, the primary areas of interests in terms of upcoming

technologies and solutions hover around ECU design and telematics. IT is

increasingly finding its way into building intelligence in the automobiles.

Among the areas being worked upon include keyless entry systems, intelligent

navigation systems, temperature controls, etc. While today the average

telematics being used in the automobiles is around 7-10%, according to experts,

companies worldwide are already targeting to increase it to 70% over the next 10

years. The trend has already started to show the first signs of its visibility

in India and will gain ground over the next 2-3 years.

Every system and sub-system is constantly being driven by

electronic technology leading to configurable hardware in today's automobile,

says Chamania. Manifestations of these innovations are seen in a number of

upcoming automotive applications ranging from Infinitely Variable Transmission (IVT),

X-by-Wire (Control-by-Wire, Brake-by-Wire), Adaptive Cruise Control (ACC),

Collision Avoidance, Lane departure warning to convenience features like Driver

Assistance and Voice recognition

Stringent guidelines set by various government and

regulatory agencies on compliance of safety regulations and environmental norms

is pushing the demand for applications like intelligent airbags, advanced

restraint/safety systems, he adds further.

Manufacturers today also have to redesign their products

more frequently by reducing the time-to-market and introducing innovation. As a

result, model-driven software approach, verification and validation, PLM

services, and design simulation are typically the areas that automotive OEMs and

tier-1 suppliers are looking for.

Ancillaries Growth

According to Sanjay Agarwala, director, ESS, investments in auto ancillaries

are now being made and in the next two to three years, a lot of automation will

be done.

All the large auto companies are setting up auto

ancillaries or are providing more and more orders to the existing auto

ancillaries. All these multinationals insist that their ancillaries following

strict quality processes and automate their operations, explains Agarwala.

Also, the way market dynamics is evolving today, more

design and production outsourcing is going to the auto ancillaries, who are no

longer single part suppliers. As a result, they are becoming more prominent

entries in the entire value chain.

Shipra Arora