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The following formula is as simple as it is threatening:

Covid-19 + CASE (Connectivity, Autonomous, Sharing/Subscription and Electrification) = immense cost pressure for the industry and especially for automotive suppliers.

On the one hand, suppliers must compensate for the decline in orders caused by the pandemic, and, on the other hand, they must invest more in research and development in order to master the changes caused by CASE. If they do not, they will face long-term problems with massive consequences, such as a permanent decline in sales and creditworthiness.

Cost reduction as immediate action

One suitable answer for both challenges could be the Microsoft Azure Cloud. Migration of on-premises infrastructure to the cloud can, among other things, significantly reduce operating costs almost overnight. Daimler AG, for example, has benefited from up to 50 percent lower operating costs for their SAP landscape after moving to the cloud.

Another example is the migration of a business intelligence (BI) solution from on-premises to Power BI on Microsoft Azure. That has brought concrete savings of about 1.2 million euros to Schmitz Cargobull AG.

Those and various other real-world examples of how companies in the automotive sector are using cloud migration to reduce IT costs quickly can be found in our white paper “Cutting costs and getting companies fit for the future at the same time: How IT and cloud services are helping the automotive supply sector“. The numbers and percentages cited in that document are based on real projects, not estimates or projections.

Agility is key to a successful future

The tangible advantages of a cloud platform are evident both to cost savings and to the agility and flexibility of the supply industry. Each of the four CASE pillars requires huge investment in IT infrastructure. Even in the pre-Covid era, few development budgets were large enough to build, for example, the server and storage clusters needed to develop algorithms for autonomous driving.

Given the timeline changes wrought by the coronavirus pandemic, such investments are now even more difficult to realize. Cloud platforms like Microsoft Azure do not require any initial investment, and billing is based on actual computing and storage usage.

In addition, Azure provides turnkey services that suppliers would otherwise have to develop in-house with immense effort, in particular machine learning functions underlying the abovementioned algorithm development. Azure also provides “in-house” interfaces such as the APIs  necessary to connect to  IoT devices.

Existing cloud services give companies unprecedented agility. Among other things, you can “just test” a new business idea without having to build or expand infrastructure and pay in advance. In addition, cloud users benefit from continuous development of the services – at no cost. That agility is advantageous in competing with American and Asian newcomers in the global innovation contest.

 

Here you can find the article also in German.

 

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