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The future of automotive: Scenarios driving the digital transformation of an industry

Published: December 21, 2016

 

We are at the threshold of unprecedented value creation for industry and society, driven by the accelerating pace of change enabled through digital technology. Whether it is about bringing together patient records so they can be shared quickly for better patient outcomes, or changing the focus from disease management to wellness in healthcare, digital transformation is changing how we work and live.

 

Called the Fourth Industrial Revolution, this significant disruption of traditional industries is fueled by speed, the falling cost of technology and how quickly companies are growing. There is broad agreement that the economic opportunity from digital transformation could be as high as $100 trillion across all industries over the next decade.

 

This impact is broader than economics alone. Take the automotive industry as an example. Recent analysis from the World Economic Forum estimates approximately $670 billion of industry value and nearly $3 trillion of societal value at stake by 2025, with 1 million lives saved due to digital transformation, and the mass adoption of autonomous vehicles.

 

From Uber to Tesla and Airbnb, high-profile startups have already disrupted traditional industries. Every business and industry is considering what digital transformation means for them, and how it helps them reimagine their company and their industry. The question isn’t “if”; and the challenge isn’t “when,” but “how?”

 

Embracing digital has had mixed results. Why? There’s no set path to digital maturity and mastery. What is the magic recipe for success? When you look  at successful companies in different industries, two core themes emerge.  First, enormous organizational change requires strong leadership — a clear vision tied to real business outcomes. Second, digital must be embraced across the entire business. Start with small projects that can be measured and learned from, but plan for all areas of the company.

 

The digital roadmap can be built from a few questions:

 

  • How does the customer experience change from sales to service?
  • How does the company empower people to work together, do their best work and get more done?
  • How do operations get optimized for efficiency?
  • How does digital open possibilities to transform products, business and, perhaps, the industry?

 

Look at the automotive industry. We will reimagine how we build cars. We will reimagine how we buy cars. We will reimagine what it is to “own” a car. We will democratize the automotive experience for billions of people across the world, and we will do this with our emerging digital capabilities. Traditional car manufacturers – not known for digital innovation – are embracing the ideas of connected cars and autonomous vehicles. Real social and economic impact will be realized.

 

From entertainment and connectivity to predictive maintenance and customer support, the in-car experience is changing, as is our expectation of road safety. Digital will transform every aspect of the automotive industry from core operations (supply chain, manufacturing, dealerships/retail, service) to the entire value chain (service, aftermarket, financing, vehicle insurance).

 

Digital transformation marks the inflection point where new technology becomes the central nervous system of the business, connecting sales, marketing, finance, HR, production, logistics and customer service, while changing forever how companies operate and people interact. The cloud, data analytics, artificial intelligence, augmented reality and other emerging technologies are the tools that enable new, improved and, sometimes, disruptive new business capabilities. It’s about combining those tools with business insight and techniques such as design-led thinking to examine a problem from a different perspective and envisage new opportunities.

 

Microsoft is partnering with automotive companies worldwide to provide the digital platform to help you rethink the possibilities for human mobility. This report surfaces “what could be” in the digital transformation of the automotive arena.

 

Welcome to the era of the connected company. The connected people. The connected world at large. Digitally enabled and transformed.

 

Read the full report.

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