This document discusses automotive IT sourcing challenges and emerging trends in IT sourcing to help automotive OEMs plan for the future. It identifies key challenges as lack of efficiency, transparency, flexibility and resilience. New sourcing trends include a focus on cost reduction, agility, and strategic partnerships. The document outlines Deloitte's sourcing methodology and lessons learned to help companies evaluate sourcing options and make sourcing decisions.

1. Automotive IT Strategy
New approaches to IT Sourcing help automotive OEMs paving the way for a successful future | April 2021

2. Automotive IT Strategy 2021
2021 Deloitte 2
With serious sourcing challenges facing today’s OEMs, we simultaneously see new trends emerging in IT sourcing, that
enable OEMs to achieve their outsourcing goal
Automotive IT Sourcing Challenges and Tech Trends 2021
Automotive IT Sourcing Challenges Outsourcing Goals
Emergence of new
IT SOURCING
TRENDS
Lack of efficiency:
• Complex multi-layered IT services from a globally
distributed supplier landscape may lead to inefficiencies in
workflows and scaling efforts
• Low in-house production depth in areas where insourcing
should be considered (core/non-core)
• Lack of initiative in licensing and contract consolidation
Lack of transparency:
• Lack of transparency and heterogeneous service portfolios
in OEM subsidiaries due to organic growth/new entities
• Lack of transparency and clarity on true value-add of IT
services, raising doubts about positive ROI
Lack of flexibility:
• Traditional contracts with sourcing partners may not be
flexible enough to address dynamic need changes
• Slow and weak collaboration between supplier and internal
teams may limit quick, agile actions
Lack of sustainable resilience:
• Weak partnerships within the ecosystem can make
processes less resilient when unexpected disruptions occur
• Designing resilience into the sourcing strategy may lead to
additional costs, but proof only in the long-run
0%
20%
40%
60%
80%
Cost Flexibility Speed to market Access to tools
and processes
Agility
• Before the COVID-19 crisis, outsourcing companies were trying to achieve
goals other than cost reduction, such as speed to market, faster scaling or
user experience enhancement*
• In 2020, reducing costs became critical once again, as shut-downs and the
uncertain economic environment shifted the focus to business survival
• Outsourcing is still seen as an enabler of business transformation, however,
particularly in fields, such as Robotic Process Automation (RPA) or cloud
computing, according to the Deloitte survey results*
• Overall, not only has the goal of outsourcing changed, the sourcing
dimensions are constantly shifting as well (see next slide)
• Sourcing decisions play a significantly more strategic role as a result, in both
short-term organizational resilience and long-term business growth
*Source: Deloitte Global Outsourcing Survey 2020; interviews were conducted
with 40 client executives, service providers and lawyers
Deloitte Global Outsourcing Survey 2020: Percentage of respondents citing these
as their main goals

3. Automotive IT Strategy 2021
2021 Deloitte 3
The current trends in IT sourcing reflect the broader technology trends in the automotive industry, from cloud
computing and automation to innovation and agility
IT Sourcing Trends
 Cloud disruption and BPaaS offer opportunities to cut
costs
 Increased Tier 1 competition among suppliers
 Regulatory and industry focus on third-party risk
 Increased vendor management spend
 Automotive industry-specific solutions instead of
standardized offerings with no customization
 Data privacy laws and regulations
Change in landscape Shift in “art of the deal”
Technology adoption
 Cloud Reality/Native, i.e., exploitation of the advantages in the
cloud computing delivery model
 Digital exploration of new technologies via sourcing
 Amplified Intelligence, i.e., deploying tools exactly when a
business really needs them for more effective decision-making
 Cognitive Analytics, i.e., the option to apply human-level
intelligence in certain tasks to enable advanced sourcing
 Innovation incubators for new sourcing approaches
 Multi-Sourcing, i.e., contracts with several suppliers
 “Vertical slice” sourcing
 Emergence of alliances, joint ventures, and utilities
 Evolution of ‘ecosystem’ models
 Convergence of IT Outsourcing (ITO), Business Process
Outsourcing (BPO) and Shares Services (SS)
 GBS, captive, co-source and mixed models
 Insourcing key roles to maintain NextGen Talent Model
Shifts in sourcing patterns • Integrated Vendor Models – Integrated multi-
vendor relationships offering seamless service
delivery (e.g., Global Business Services - GBS)
• Cloud –Now that we have overcome the
security hurdle and all infrastructure will go to
cloud, influencing application models and the
role of IT in business decisions
• Agile Contract – Agreements that are stripped
down to fundamentals, with issues posed as
questions/hypotheses instead of detailed
service requests
• Focus on “The Customer” – Reorienting
services into models that fully support
business processes and identify new revenue
streams (e.g., Intellectual Property - IP)
• Transformation-Enabled – Leveraging
partners as a catalyst for change or
transforming/evolving the talent model
• Decrease of offshore and increase of robotics
– Aggressive automation for commoditized
tasks both on-shore, off-shore and in business
processes
• “As a Service” model – Everything goes utility
• Strategic Advisory – With increased deal
complexity, the key is enabling alignment to
strategic roadmap, integration and design of
target delivery model/industry expertise
 Utility and consumption-based pricing models through options
such as on-premise service
 Ecosystem plays, i.e., flexible and evolving network of
relationships between outsourcing providers
 Outcome-driven sourcing
 Transparency and granularity
 Moving back to semi-customized sourcing approaches
 Renewed focus on partnerships with strategic collaboration
Future: IT Sourcing 3.0
Shifts in Sourcing Dimensions

4. Automotive IT Strategy 2021
2021 Deloitte 4
There are four typical sourcing dimensions to consider when making outsourcing decisions – with support of Deloitte’s
Sourcing Matrix, users can assess the suitability of an IT function or service area based on maturity and importance
Approaching IT Outsourcing
Sourcing – Ready (Cost Effectiveness)
• IT function/service activities are standardized and controlled via KPIs
• IT function/service deliverables are structured
• The IT function/service has defined interfaces with adjacent areas
• Look for cost advantage on external market
Consider Standardization
• IT function/service activities are not standardized and often reactive
• KPIs are not quantifiable or well controlled
• IT function/service interfaces are not defined or managed, making it difficult to externalize
Keep Core Competency
• High complexity of IT function/service activities
• Deliverables have high business impact
• Project/product delivery quality is often difficult to quantify
• IT function/service is often very integrated into IT service landscape
Potential Sourcing Target (Capabilities)
• IT function/service activities are complex, non-standardized and often reactive
• The IT service/function deliverables have high impact on business
• Look for excellence on external market
Low High
Low
High
IT
Function/
Service
Maturity
Strategic Importance
Automotive
Examples
• Data center, cloud hosting (for driving data, etc.)
• Mobility services support for end customers
• IT global service desk; personal vehicle assistance service
Automotive
Examples
• Vehicle/product development
• Smart automotive features
• Combustion engine development
Automotive
Examples
• Development of autonomous driving features
• Platform development (for R&D, etc.)
• Customer interaction portal
Automotive
Examples
• New car software development with low strategic importance
• Existing IT functions of recent automotive start-up acquisitions
• Local IT support for new machines in manufacturing sites
High Medium
Outsourcing potential: Low

5. Automotive IT Strategy 2021
2021 Deloitte 5
Buy
Companies need to identify the automotive-relevant IT sourcing issues and factor them into their principle-based,
structured decisions about the sourcing mix
Identification of IT Outsourcing Potential and Decision
Server/
Storage
Operations
Environment
Support
EUC SME
Oversight
Groupware
Help Desk
SME
Oversight
Help Desk
Operations
Knowledge Mgmt
Help Desk
Personal Device
Management
Remote
Management
Desk Side Support
IMACs
Output
Management
Service Support
Midrange
Midrange
SME
Oversight
Physical Database
Operations
Mainframe
SME
Oversight
Scheduling /
Batch Support
Systems
Mgmt
Tools
Bill/
Print
PC / LAN
Network SME
Support
Monitoring
Support
(NOC)
Network Security
Functional
Design
DR / BCRS
Detailed
Design
Unit
Testing
System
Test
Integration
Test
Project
Capture and
Planning
Business
Case
Development
Maintenance
Business
Architecture
Architecture &
High Level Design
Technical
Requirements
Application Management
Pre–
Production
Testing
UAT
Ongoing Support
/ Maintenance
Development
Build
Logical
Security
Security
Voice / Telephony
Monitoring
Data Center
(Facility)
Physical
Security
Cloud,
Robotics,
Automation
Transport (MPLS)
Security
Operations (SOC)
Cross Functional
Financial
Management
Security
Policy
Strategy &
Architec-
ture
Policy and
Process
Mgmt
3rd Party
Vendor Mgt
Asset
Lifecycle Mgmt.
Business
Relations
Mgt
Design and
Build
Service Mgmt &
Integration
Communications / Change Management / IT Governance
IT
Mgmt.
Implementation
Transition
Support
Core
SAP
Other
Make
Mainframe
Ability to deliver the
service in a cost-
effective manner
Government or
regulatory
factors
Implementation
complexity
and risks
Degree to which a
service is strategically
important or
business critical
Outsourcing Potential Sourcing Mix Decision Principles
+ Selected Criteria =
Most frequently outsourced Less frequently outsourced
Legend: Not typically outsourced

6. Automotive IT Strategy 2021
2021 Deloitte 6
Our IT Strategic Sourcing Methodology provides a proven end-to-end approach as the basis for support in all phases of a
company’s sourcing endeavors
Deloitte’s IT Sourcing Approach
• Deloitte’s IT Strategic Sourcing Methodology
offers a comprehensive, integrated set of
methods, content and tools to support your
upcoming outsourcing project.
• Our 6 phases ensure a holistic view and support
for all activities across the entire outsourcing
lifecycle.
• The iterative approach enables us to tailor the
relevant steps as needed to your current
situation and needs.
Understand current IT environment
to identify and assess appropriate IT
sourcing options
IT Sourcing
Methodology
3. Evaluate
4. Commit
1. Assess 2. Prepare
5. Transition
6. Optimize
Develop sourcing plan with
performance description, RFP details
and required operating model
Evaluate vendor(s) and review
business case to assess continued
viability of sourcing options
Negotiate the deal and commit to a
contract
Transition systems, infrastructure,
staff, contracts, IT service
management process and tools
Monitor and assess the value of IT to
identify and implement improvement
opportunities
1
2
3
4
5
6

7. Automotive IT Strategy 2021
2021 Deloitte 7
Based on our recent projects from the automotive industry, we have identified several learnings that were most
effective in overcoming outsourcing challenges
Deloitte’s IT Sourcing Lessons Learned
• Multiple vendor environments require co-ordination, collaboration and integration
for the model to succeed.
• An effective service integration capability is essential to mitigate the risks of multi-
sourcing, ensuring that all vendors work together to provide a service that not only
meets business needs but drives the generation of business value.
• Finding appropriate incentives for vendors is increasingly important to align goals
and drive collective success or failure: pooled service credits and shared penalties
promote knowledge sharing and cross-company collaboration within the ecosystem.
• The most important capabilities for the automotive IT organizations are:
Service
integration
Service integration layer in place to manage supplier performance,
facilitate service delivery and take overall responsibility for technology
platforms.
Supplier
relationship
mgmt.
Manage alliances within a multi-vendor landscape and ensure vendors
are meeting their contractual obligations, from cloud provider to
connected vehicle service partner.
Innovation fund
management
Support vendors with innovative solutions, from budgeting to trial and
testing of new technologies within dedicated sand-pit environments in
the business.
Service
management
Suppliers who deliver elements of end-to-end services will be
accountable to service owners, e.g., to the feature product owner of an
autonomous driving service.
Revised sourcing mix with strategic models balancing core internal IT
capabilities and captive/outsourcing options
Typical Project Focus Winning Themes & Lessons Learned
On-demand, elastic deals over the long-term, fixed-scope contracts and
integrating suppliers into a plug-and-play ecosystem
Future-oriented target service portfolio and IT operating model
increasing end-to-end delivery efficiency and IT effectiveness
Optimized service delivery unit structure (captive IT and legal entity IT)
improving strategic focus and service portfolio
Renewed contract models achieving savings potential, cost and
performance transparency as well as financial flexibility
Consolidated supplier landscape to improve cost efficiency, innovation
and scalability in “commodity type” IT services
Preferred set of key suppliers to support business continuity while also
enabling the digital transformation journey

8. Automotive IT Strategy 2021
2021 Deloitte 8
Reach out to us and find out how to refocus your IT organization and strategic agenda with respect to sourcing – in a
way that best addresses today’s macro technological forces and automotive challenges
Contacts
Contacts
Christian Pfeifer
Consultant
TechnologyStrategy&
Transformation
Thomas Demel
SeniorConsultant
TechnologyStrategy&
Transformation
David Haslach
SeniorConsultant
TechnologyStrategy&
Transformation
Jonas Glade
SeniorConsultant
TechnologyStrategy&
Transformation
With the contribution of:
Markus Schmidthuysen
Director
Tech Strategy& Transformation
mschmidthuysen@deloitte.de
Uwe Strauss
Partner
Tech Strategy& Transformation
ustrauss@deloitte.de
Partner
Tech Strategy& Transformation
anklein@deloitte.de
Andreas Klein

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