Škoda Auto, a renowned Czech automaker, is embarking on a digital transformation journey by partnering with IBM Consulting to streamline its logistics processes using the SAP S/4 HANA platform. This strategic move aims to enhance flexibility, reduce costs, and modernize operations, positioning Škoda at the forefront of the industry's digital evolution. Traditionally, Škoda Auto relied on a plethora of applications developed over time to meet operational needs. While these systems served their purpose, they lacked integration and created a disjointed workflow. The new, standardized SAP solution aims to replace these systems, providing a solid foundation for logistics management while saving costs and increasing efficiency.

Embracing Digitalization and Centralization

The shift to the SAP S/4 HANA platform signifies Škoda’s commitment to leveraging digitalization and centralization. This transition is not just about technological upgrade; it's about creating a flexible, efficient, and cost-effective system.

The Rise of Agentic AI

The agentic AI is at the heart of automotive industry for next years. It can help make decisions, solve problems, and perform a variety of tasks autonomously, essentially acting on behalf of human employees. This digital labor evolution offers the potential to increase productivity and redefine workflows, challenging traditional notions of leadership and decision-making.

Looking Ahead: The Software-Defined Future

In the next decade, the automotive industry is expected to shift dramatically towards software-defined vehicles. By 2035, 74% of automotive executives predict that vehicles will be software-defined and AI-powered. Škoda, with its foresight, is already making strides in this direction.

The IBM Institute for Business Value's (IBV) Automotive 2035 study highlights three key areas for automakers to excel: using software as a differentiator, tackling technical complexities, and addressing skill gaps. As the industry moves away from mechanical-centric models, automakers must adapt their mindsets and workflows.

Software as a Brand Differentiator

In the software-defined era, brand value will be determined by the quality of driver and passenger experiences. These experiences extend beyond the vehicle itself, encompassing virtual shopping and test driving. A company’s capacity to deliver advanced technologies, seamless connectivity, high performance, and personalized services will be crucial for success.

Recurring Revenue Streams and Future Trends

Automakers anticipate multiple recurring revenue streams from software-defined vehicles, driven by features such as autonomous driving, immersive in-car entertainment, and remote diagnostics. However, the future holds more surprises, with executives acknowledging that some trends are yet to be imagined.

Safety, Reliability, Data Security, and Privacy

As the industry evolves, safety, reliability, data security, and privacy will be the top competitive differentiators. These considerations are paramount as automakers strive to create brand-defining digital experiences without compromising on consumer trust.

The future  signifies a big evolution in the automotive industry's digital transformation. By harnessing generative AI and adopting a software-defined approach, car makers  would redefine its position in the market. This journey offers valuable insights for other players in the sector navigating the exciting, albeit complex, transition to the software-defined future.

Vladimir Seibert, IBM Consulting Partner