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Volkswagen and its digitalisation journey

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Kathy Gibson reports from Fujitsu World Tour in Johannesburg – The automotive industry is one of those that is facing massive disruption, and has had to make some strategic changes.
“These changes are enabling us to move to some of the new innovative changes the industry is faced with,” says Antonio Raposo, CIO of Volkswagen Group South Africa.
“The automotive industry is one of the major industries being challenged by the digital era.”
Raposo points out that the industry has traditionally been very labour-intensive and governed by a small group of companies.
“As the industry grew over the years, it continued to be dominated by these organisations; those with the key competencies to manufacture vehicles.”
The only thing holding it back now, he says, is the lifecycle of the products that it works with. “In the automotive industry, the transformation of a model from one generation to another has a fixed lifecycle which makes it affordable.”
A couple of years ago that all changed, Raposo says. It had already improved manufacturing with electrification and later robotics – but the same way of building the cars didn’t fundamentally change.
“The new era we are going into, with digitalisation, the companies that traditionally supported us are now also competing with us.”
These organisations include companies like Google and Apple. “This industry is becoming as competitive as any other industry; and just as doable as any other industry.
“The information that is available thanks to the Internet is so widespread that it’s easy for any organisation that invest effort and time to break into the market.”
The first challenge Volkswagen run into in the digitalisation era was the changing customer. The customer needs and wants are not necessarily the same as the customer of the past.
“The way they interact socially on the internet has brought about a different person,” Raposo says. “We have had to look into, analyse and develop some digital mobility and connection elements.”
The next challenge was how to provide these solutions. “If we take all the technologies that customers have to connect and interact, they have more knowledge than we probably have. Customer are doing things we haven’t even thought of, and they are sharing it on social media.
“For us to understand this new era that the new generation is going into, there was a clear need for us to set up interaction between sales and marketing, developers and the consumers.”
Of course, there are still traditional customers, so the industry is in a transitional phase and needs to fulfil the needs of all its customers.
“We were faced with how to confront these changes, and had to figure out how to address them. We had to decide if we were going to drive the disruption ourselves, or help our service providers to do it.
“We had to drive a change that would allow us to confront the challenges and find solutions for the new trends and tracks.”
Disrupt of be disrupted – this is a true call, says Raposo. “Customers are well informed and have a clear idea of what they want.
“We had to look inside our own businesses to see how we could address these changes.”
Volkswagen has partnered with organisations that are living the changes, and is working on defining a clear roadmap on what it needs to deliver – and how it should change its organisation to do this.
“It was important to have a clear digitalisation strategy so we can start adapting our business model to address requirements.”
The business turned to the IT department to facilitate the move from a silo-based, isolated organisation to an era where information is available, but secured.
Volkswagen began implementing its Vision IT in 2014 and expects to complete it by 2018, with the goal of transforming IT from a cost burden into a strategic advantage.
Raposo says IT has a five-point mantra that it brings to the company’s digitalisation strategy.
There are five points that IT keeps in mind with any digital transformation project, he says. They are:
* Defining with digital transformation means for the business strategy.
* Establish a collaborative disciplined practice for executing and implementing a digital transformation process, supported by a cross-function IS competency developing agile high-quality software applications.
* Ensuring IT is the lead source for change and innovation, with the capability of driving business transformation where the opportunity arises.
* Identify the IT resources with capability to run with the digital transformation initiatives (possess an assertive leadership quality)
* Establish a continuous learning culture in the new space where experimentation is required.
The digital transformation at Volkswagen started right at the IT landscape, Raposo says. “We had to come out of the silos, consolidate information that we could then access and take decisions on.
“We have been able to embark on this journey, taking on a number of different solutions like virtualisation, software as a service, big data and others. We ensured the client base was more mobile, had virtualised desktop environments, and that we were achieving a more mobile environment through the use of cloud technology.”
It’s been a long journey, Raposos says. And it’s not over yet. “The most important aspect of this is that we were working with technology providers that helped us to make the change, and start working with our customers in ways they want.”