Softwarization can generate an ongoing revenue stream by offering digital services: Capgemini

Softwarization enables products to become “smart,” connected, and even autonomous — capabilities for organizations.

Aanchal Ghatak
New Update

Softwarization does exactly what its name implies: it substitutes generic hardware, such as servers or, in certain circumstances, virtual servers, for some specialised networking equipment, such as routers, switches, firewalls, load balancers, and other network-specific devices. Less specialised hardware and more general server gear, with software making up the majority of the rest.


In an interview, Rajesh Kosalram, Head Automotive, Capgemini Engineering, India, tells more:

DQ: What are the key drivers of softwarization? 

Rajesh: Softwarization is the growing share of software and digital technologies in physical products that add smart, connected, and autonomous features for converting them into digital products. Connected vehicles, wearables, medical devices, smart home devices, and the integration of voice, artificial intelligence/machine learning (AI/ML), and analytics in devices are driving spending across all industries. Also, products such as smart meters and smart grids, and connecting industrial equipment for remote monitoring and asset tracking are driving engineering spends in asset-heavy industries,


Rapidly evolving customer expectation is one of the key drivers of softwarization. Today’s customers are digitally savvy, demand hyper-personalized experiences and seek immediate feedback, which is only possible through smart connected software-defined products.  For example, the need for immediate feedback across the fitness and healthcare verticals has resulted in the emergence of smart wearables with devices configured to monitor user data and provide customized insights and recommendations in real time. 

Faster product upgrades and releases have been made possible due to softwarization. With products being connected, it is possible to update and upgrade connected products over the air (OTA). For example, Tesla is a leader in releasing software updates remotely and improving customers’ in-car and ownership experiences. Connected products enable enterprises to generate revenue through a service business model. Softwarization can generate an ongoing revenue stream by offering digital services.  

Smart and connected products also generate insights for engineering teams and benefit both the customer and enterprise by generating data about product performance and failures to improve the R&D process. Advances in technology such as AI/ML, augmented reality/ virtual reality (AR/VR), Internet-of-Things (IoT), and connectivity with 5G have also empowered use cases across industries.   


Softwarization and the integration of digital technologies in products is a trend that is here to stay, and software-based companies have realized much high valuations compared to legacy enterprises with products centered around hardware. We often see traditional companies including HP, VW, and more transforming themselves from traditional hardware focused companies to software companies.

Converting physical products to digital products through softwarisation can offer capabilities like connectivity, remote control, optimization, and autonomy.  Connectivity due to the integration of sensors, communication gateways, and the cloud enables the transfer of data from a product, making it possible to continuously monitor the product’s condition and environment for alerts and feedback from product use. Software offers more control often remotely over the function of the product and personalization of the user experience and feature enhancement through OTA upgrades. 

Software algorithms and data analytics can be used to optimize product performance and enable predictive and preventive maintenance, diagnostics, service, and repair. By integrating intelligent technologies such as sensors, connected digital products can be made autonomous, making self-diagnosis and service, and autonomous interactions with the product environment a possibility. 


We are involved with customers at various stages of their software transformation. Through Invent, we consult and help customers to define their softwarization strategy and roadmap. Our engineering team works with Original Equipment Manufacturers (OEMs) and Tier 1s to develop software, digital & hardware integrated systems like e-cockpit, vehicle-to-everything (V2X), Advanced Driver Assistance Systems/Autonomous Driving (ADAS/AD) solutions, and e-mobility solutions. We have also proactively invested in an Autonomous Vehicle Solution, which is now driving in our Bangalore campus autonomously. 

Capgemini Engineering is proud to be a part of 2021 live trial of a new driver and pedestrian safety technology in Turing using 5G-Edge networks. Capgemini had provided innovative federated MEC or Multi-Access Edge Computing platform and applications to this 5GAA trial to demonstrate the true value of intelligent industry, leveraging data in vehicles and edge-cloud.

DQ: What are the common pitfalls/challenges for enterprises as they integrate software into their products?  


Rajesh: The key challenges enterprises faced in softwarization fall into the following categories.Organisation: A platform-centered approach and the increasing mix of software demands a cultural shift away from the legacy systems within engineering teams and processes. Enterprises that are hardware focused are often risk-averse. The lack of management buy-in of digital can also be an impediment to full-scale adoption of digital technologies.  

Budgets: Lack of budgets to experiment often prevents enterprises from investing up-front in digital technologies.  

 Collaboration: There is a need for close collaboration between engineering and IT teams to accelerate time to market and new product architectures for scalability, upgradability, and safety. The siloed nature of traditional engineering teams, however, makes collaboration across the value chain difficult, delaying product cycles. 


Talent: The demand-supply gap is one of the key challenges. The quick pace of softwarization across industries has led to a significant talent shortage and resulted in an increase in the cost of talent in engineering. Talent with a diverse skill set and the required domain knowledge to integrate hardware, embedded, software, and connectivity, etc. OEMs now compete with software companies and big tech firms. 

Technology: Uncertainty regarding the viability of new technology can also be a concern for enterprises. Often organizations fail to keep pace with the latest advances and evolution across technologies. Engineering teams are often challenged by how much a product needs to be digitalized. Less digitization may accelerate time to market at the cost of value add for the end user; too much increases costs and can delay rollouts. 

Legacy code base management: It is usually the case that multiple engineers write software within a product, and the engineers working on the product change over time, resulting in countless layers. The complex nature of digital products requires a code and new feature enhancement needs to be built on top of the existing code base, taking into consideration other complexities that have already been incorporated. Maintaining and improving this legacy code can be challenging and delay the release of new features increasing the product life cycle. 


Ecosystem: Increasing levels of software also require compliance with evolving regulatory standards around software development processes, functional safety, cybersecurity, data control and privacy, especially in industries such as medical devices, automotive, and aerospace. Enterprises often overlook cybersecurity aspects that have emerged because of the proliferation of software in digital products, leading to product recalls that negatively impact a firm’s brand image.

DQ: How can enterprises ensure success as they start and then sustain digital products?

Rajesh: A framework-based approach to engineering that addresses all the challenges is important to achieve success in transitioning to digital products and unlocking the complete potential of software in smart, connected, and autonomous digital products. 

To begin with, organizations need to create a roadmap for each product in the company’s portfolio and the overall engineering process, thereafter, setting the goals and objectives for the softwarization journey. Some key elements that an organization should bear in mind in this process are: 1) Invest in market research at an early stage to determine the digital features that need to be implemented and which do not need to be considered based on customer interest. 2) Revamp engineering processes for closer collaboration between engineering teams, IT teams and the rest of the business. 3) Get management buy-in by demonstrating clear ROI, and a solid people strategy to ensure the availability of skilled talent to implement the vision for the product. 4) Extensively reinvent customer experience across various touch points through digital technologies. 5) Engage with the ecosystem to develop and build capabilities accelerating time-to-market.

DQ: What are the key technology enablers for softwarization of physical products?

Rajesh: Connectivity via Bluetooth, 4G/LTE, Wi-Fi, 5G, etc. have enabled the monitoring of physical products and allowed them to connect and interact with other products, external systems, and users, exchanging data and enabling multiple use cases.

IoT has enabled products by collecting data via sensors, while software and communication technologies embedded in the product allow the processing and transfer of data with other devices and systems over the internet.

Cloud computing has made product cloud a critical component of all digital products. Product clouds host the entire product database and provide a platform to build software applications that support the physical product, allowing for greater personalization and control via data analytics and smart technologies. Cloud-based interfaces also let enterprises roll out updates and upgrades OTA.

Advances in AI/ML are addressing user demand for greater customization, improved feedback, and recommendations, enhanced product performance, and more autonomy. They are bringing about the smart component within a product supported by algorithms embedded within the product or on the cloud.

Data analytics is the key enabler for increasing personalization and improving feedback for users, while also increasing product control.

Digital replicas of products (Digital Twins) are increasingly being used in industries such as automotive, aerospace, consumer packaged goods (CPG), and industrial products for product design, shop floor optimization, and gathering real-time data on performance to improve predictive maintenance and make operations safer. 

Haptics and biometric technology improvements in touch and other biometric technologies (voice and gesture recognition) enabled by intelligent technologies are key to enhancing the user experience across products.

Immersive technologies such as augmented reality, virtual reality, and mixed reality are on the rise, primarily to improve user experience and remote user assistance/support.

Applications of technologies such as blockchain in the product are nascent but are used extensively in areas 

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