Lightning-fast advancements in technology are driving OEMs to evaluate the future roadmaps of their potential technology suppliers to stay ahead of the curve.
21 Aug 2023 | 2514 Views | By Mayank Dhingra and Chandan B Mallik
The accelerated evolution in technology and the need for companies to stay competitive in the market is pushing service providers to offer end-to-end solutions to fulfill their customers’ demand for comprehensive and integrated solutions. While many technology companies have adopted the acquisition and partnership route to expand their product and ...
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The accelerated evolution in technology and the need for companies to stay competitive in the market is pushing service providers to offer end-to-end solutions to fulfill their customers’ demand for comprehensive and integrated solutions. While many technology companies have adopted the acquisition and partnership route to expand their product and service offerings, some have taken to the strategy of vertically integrating their operations, taking control of multiple stages of the supply chain to deliver complete solutions.
By integrating various technologies and services, companies can provide end-to-end solutions that address a broader range of customer needs, as well as optimise their solutions for seamless integration and enhanced performance.
Adopting a platform approach too has enabled technology companies to provide an ecosystem where third-party developers could build on top of their core technology, extending solutions and capabilities and create a more comprehensive offering, while many companies have also shifted their focus to cloud-based solutions, enabling them to offer scalable and flexible end-to-end services. Cloud platforms allow technology providers to bundle their software, infrastructure, and other services into integrated packages.
According to Tony Hemmelgarn, CEO, Siemens Digital Industries Software, “We are investing into new products as well as looking at organic and inorganic growth. While we have done over 30 acquisitions over the last two decades, we intend to keep doing more acquisitions to build the Digital Twin and make it more comprehensive.
“Part of the reason we are growing in today’s scenario is because our story is different from our competitors, and we are thinking holistically about solving our customers’ problems. We are talking about electronics, software, mechanics — all things coming together. Our customers expect us to solve problems across these domains,” he said.
The company, which is a global major in industrial software, PLM, and Digital Twin solutions, is undergoing a significant transformation in the form of switching to a Software-as-a-Service (SaaS) business model for everything it offers. “In the past, customers would buy the software, and procure hardware to install and run it. However, in the SaaS format, they buy the subscription, and pay for what they use when they need it. The beauty is that it is scalable as per their requirements. But, instead of being present locally, everything is being run on the cloud,” Hemmelgarn explained.
“So, while the fundamental business has not changed, it is the way we recognise the revenue changes significantly. While one realises a full product sale at one go and it reflects in the P&L sheets, in the SaaS world, we recognise the contract term, and therefore, the revenue could be spread over a longer duration, like a period of three years,” he added.
According to Arun Krishnamurthi, MD and CEO, Axiscades Technologies, “If we look at current scenario in the automotive industry, the demand for embedded, digital and software solutions is clearly outpacing the need for mechanical solutions, and this is particularly driven by the increasing foray of connectivity and ADAS functions in vehicles. With the growing complexity in
the integration of these subsystems, along with the pace of change in technology, an increasing number of end-to-end contracts are being awarded, whether they are to Tier I suppliers, or to service providers.”
“When it comes to features like infotainment, connectivity, and ADAS, more solutions are being offered over the cloud, which allows OTA capabilities. Therefore, the industry is going through digitisation, software-as-a-service (SaaS), and cloud transformation, and this is determining the revenue streams as well. The revenue trend is shifting towards more usage-based pricing
than just the cost of the product or service,” Krishnamurthi added.
Leveraging IoT, data and AI
While the SaaS transformation comes with its fair share of hard work in terms of rewriting the software to be able to offer secure and seamless performance on the cloud, technology companies the world over are also recognising the value of tailoring solutions to meet the specific needs of individual customers or industries. By offering personalised packages, they can provide more comprehensive and targeted solutions.
Furthermore, the Internet of Things (IoT) integration too has been a significant driver in the transition to provide end-to-end solutions. Technology companies have been incorporating IoT capabilities into their products and services to create connected ecosystems that provide comprehensive solutions.
According to Hitesh Garg, Country Manager, NXP Semiconductor India, “This is the trend in the industry right now. More and more OEMs are expecting technology providers to support them in the long run, and once they latch on to a technology provider, OEMs are willing to stay with them for a prolonged period. That is why vehicle manufacturers are evaluating the future roadmaps of technology providers, to continue evolving their products with the advancement in technology.”
“While at one end, this shift is making us push ourselves to cook the right solutions for our customers, it requires a vision-based thinking and dedicated work across the various product lines, which, today, are also talking to each other,” Garg added. Another angle of technology is data, and artificial intelligence (AI), which are increasingly allowing tech companies to provide more intelligent and data-driven end-to-end solutions to their customers. These technologies enable better insights and decision-making for customers, whilst expanding their service offerings such as consulting, training, maintenance, and support services, which enhance the overall value of their solutions.
“Traditionally, the space was very fragmented but over time, technology providers have started offering multiple solutions under various units. The new-age customers too have standardised platforms, and would pick one platform, for instance, Altair, for all their simulation needs. There may be a few gaps here and there, but most of their requirements would be taken care of by one technology provider itself. This is in line with the industry’s need for concurrent engineering as today nothing is done in isolation, and therefore, one must meet the industry’s need for
Multiphysics simulation in our case,” said Vishwanath Rao, Managing Director, Altair India. "Therefore, to offer that competency is a combination of organic development as well as acquisitions based on our identification of the industry’s requirements in the future. Having said that, our differentiators are simulation, high-performance computing, and artificial intelligence, which help us meet the specific requirements of our customers,” Rao added.
Adopting a customer-centric approach
Lastly, maintaining a customer-centric approach is critical for companies to focus on
understanding their customers' pain points and requirements, tailoring their end-to-end solutions to address specific challenges, and delivering a superior customer experience. User-friendly, and intuitive interfaces are crucial in delivering end-to-end solutions effectively, and technology companies have been investing in UX designs, easier licensing, and accessibility options for their customers, to ensure their solutions are easy to use and understand, as well as operate.
In a nutshell, the massive undergoing transformation in the mobility landscape is not just restricted to the product, but encapsulates the entire ecosystem, thereby changing the way it has been historically operating. And, with tremendous headroom for growth in its automotive industry, India is poised well to remain a focal point of this mega transition. “When we talk about
SaaS and cloud, India has always been ahead of the curve, with large back-office setups from multinational technology giants. So, from that perspective, India will continue to grow, and the automotive industry, with its transition to software-defined vehicles, cloud, and remote maintenance, among other things, will play a big role in the growth going forward.
Companies are investing in technology, and that needs to happen more rapidly,” said Sunjay Kapur, President, Automotive Component Manufacturers Association of India (ACMA). “We have reached a stage of maturity where large Tier-1 suppliers or service providers can manage their vendors, thereby offering their customers a complete solution or module,” Kapur said.
Changing automotive landscape
Talking about the overall automotive landscape, Prashanth Doreswamy, President and CEO, Continental India said that the automotive domain is metamorphosing, with a lot of changes that are now being necessitated due to various factors or influences. “If we talk about 2017-2018, there was an emergence of what we call Connected, Autonomous, Shared, and Electrified (CASE).
This was the trend all of us were talking about and there were a lot of things that are built around this trend. If you see now, I think we have gone past that era and we are talking about software defined vehicles now.” So, a car is no more a sort of a product which takes you from A to B, he said. "Rather, it is becoming an extended IoT device and we as consumers treat the car as our third living room. And sitting inside the car we want to enjoy the similar features that we
enjoy at home or at office,” he said and added, “So that's where cars are moving towards being the most well software defined vehicle I would say.” More systems mean more challenges in integrating them and this is why tech-savvy companies like Continental, Siemens and others are diversifying into emerging or new business areas with a host of solutions for OEMs in particular.
India-specific challenges
When thinking of bringing new technologies to India, it is evident that the country is a value-driven market. So, affordability is the biggest consideration while our consumers want these technologies. Unfortunately, they're not ready to pay, said Doreswamy. “So how do you bring this technology and make it affordable in the market is one of the biggest challenges. That's where we are working in terms of bringing these latest technologies at an affordable cost. These are the key challenges that one must address for markets like India," Doreswamy said.
The way to do it according to the Continental India head is to bank on localised research and development facilities that can look at various ways to make technology tailored to the market.
“Sometimes we may not be successful in bringing it as it is, because the Indian usage conditions are different,” he admitted. The second challenge is how much to localise in the market and make the products or services available to OEM customers.
This feature was first published in Autocar Professional's August 15, 2023 issue.