Applications Planned and Deployed - how automakers are using electronic communications

Automotive Industries,  July, 2000  

• E-mail
• Print
• Link

Like any business sector today, the auto industry relies on a wide variety of information technologies. However, as noted earlier, electronic communications dominates the current landscape. Asked to identify the deployment status of 38 different technologies, survey respondents focused principally on tools that enable communications: electronic mail (in place at 91 percent of responding companies), local area networks (in place at 83 percent), and EDI (in place at 76 percent). Findings also indicate that (like e-Mail) LANs and EDI will be in place at 90 percent or more of responding companies within three years (Figure 6.1).

[Figures 6.1 ILLUSTRATION OMITTED]

It is remarkable that this year's most widely used technologies -- e-Mail, LANs, EDI, bar coding, client-server, and relational databases -- remain exactly the same as in 1999, in the same order, with more or less the same utilization levels. Odder yet, the latter three are expected to have nearly identical growth rates over the next three years (implementation expected by 23 percent to 24 percent of respondents). Of course, future implementation rates among the top three technologies are small because their use already is widespread.

In the auto industry, projects planned for the next 18 months already may be funded. Most of these tend to be applications that drive business improvement through better management of customers, materials, resources, and revenue. Within 18 months, CRM, Supply Chain, PDM, EIS, and Workflow applications will be implemented by an additional 30 percent or more of respondents.

Several applications already on the (18-month) radar screen also have strong longer-term prospects. These include supply chain management (51 percent expect to implement within three years), followed by document/workflow management and EIS decision support (46 percent each) and customer relationship management and product data management (44 percent each). Strong growth rates also are expected for communication-related technologies: ANX (33 percent expect to implement within three years), customer/supplier extranets (34 percent expect to implement within three years), and even video teleconferencing and voice recognition (29 percent and 26 percent, respectively). Despite lower numbers, applications such as dealer application networks and European Network Exchange should see significant action in coming years. More and more assemblers, for example, are implementing dealer application networks to get closer to the end customer.

ERP Stagnates

The ERP train clearly is no longer gathering steam: perhaps due to the resolution of Year 2000 concerns or perhaps due to the high level of completed core-system implementations in large companies. In any event, respondents' application-development approaches are largely identical to those posted in 1999 (Figure 6.2). Like last year, 33 percent indicate a preference for enterprise systems. Another 47 percent (50 percent in 1999) prefer best-of-breed approaches with moderate or significant levels of customization. This year, a slight increase in custom-built systems was registered.

[Figure 6.2 ILLUSTRATION OMITTED]

As might be expected, the preference for ERP becomes more pronounced as company size increases. Only in the [is less than] $500 million category is there a preference for best-of-breed over ERP (53 percent vs. 22 percent). For companies with revenues in excess of $1 billion, 53 percent indicated that enterprise solutions are their companies' preference (vs. 39 percent for best of breed). In the [is greater than] $1B category, only 8 percent opted for a custom system. However, as interfaces become more manageable in the coming years, the whole ERP dynamic could shift. For example, the mainstreaming of XML and increased use of enterprise application integration technology are certain to spur the acceptance of heterogeneous architectures. ERP systems could continue as the enterprise backbone, but the need for greater flexibility clearly will raise the value of best-of-breed implementations.

Several interesting correlations can be made with respect to involvement with enterprise applications. For example, companies that have completed an ERP system implementation are no less likely than respondents in general to describe the return on their I/T investment as unknown, nor are they more inclined to view information technology as an investment as opposed to a cost. However, ERP implementers are quite a bit more likely to have a formal e-Business strategy. In many cases, these strategies are the result of in-depth ERP studies that identify ways to leverage enterprise applications (e.g., ensuring "zero latency" by eliminating human intervention). A powerful example of putting the "e" in front of ERP comes from Mexico, where Volkswagen's Web-based dealer parts order system effectively projects ERP to the farthest reaches of VW's retail network. Another illustration would be dealer management systems, which basically are Web-linked ERP systems that allow customers to schedule service appointments and search new and used car inventories. In this context it is ERP systems that allow users to reach the transact level of e-Business.