Application Management: Challenges in The Automotive Industry

Application Management:
Challenges in the Automotive Industry

Gary Barnett, Partner and CTO, The Bathwick Group
In association with IBM Application Services

Application Management Research Study - Automotive - 2008
Contents
Contents.........................................................................................................................................................................2
Figures............................................................................................................................................................................2
Background ....................................................................................................................................................................3
Executive summary ........................................................................................................................................................3

Automotive leadership through innovation ..............................................................................................................3
Application management is key to delivering business adaptability.........................................................................5
The Survey Results .........................................................................................................................................................8

1. Business alignment and responsiveness................................................................................................................8
2. Innovation and time to value...............................................................................................................................11
3. Application development management (ADM) portfolio and performance.......................................................13
4. Information integration and knowledge management .......................................................................................15
5. Modernization and risk management .................................................................................................................17
Conclusion....................................................................................................................................................................18
Figures
Figure 1 Factors leading to project cancelation.......................................................................................................9
Figure 2 Extent to which legacy systems represent a challenge .............................................................................9
Figure 3 Extent to which inflexible or non-integrated business processes represent a challenge........................10
Figure 4 Project initiation ......................................................................................................................................11
Figure 5 Project approval.......................................................................................................................................11
Figure 6 Impact of legacy systems on innovation..................................................................................................12
Figure 7 Scoring of application roadmap priorities ...............................................................................................14
Figure 8 Extent to which standard processes have been adopted for key business processes ............................14
Figure 9 Ability to see all data relating to a customer in a single unified view .....................................................15
Figure 10 Taking too long to get business information out of systems...................................................................15
Figure 11 How respondent companies manage information ..................................................................................16
Figure 12 Extent to which critical data is on individual desktops and laptops ........................................................16
Figure 13 Shortage of in-house skills inhibiting development and maintenance of applications ...........................17
Figure 14 Internal resources tied up in existing maintenance ................................................................................17
Figure 15 Moving towards BPO ...............................................................................................................................18
All contents © The Bathwick Group Ltd. 2008 -2- www.bathwick.com

Background
The automotive industry is under enormous pressure as leading manufacturers fight to retain or regain market
share and profitability in a climate of constant innovation and fierce competition. The industry faces pressure to
innovate on multiple fronts. Cost pressure is immense, the lead-time needed for product development must be
shortened, and there is a stronger emphasis on collaboration throughout the supply-chain than ever before.
To meet these challenges, automotive companies must improve all their business processes – and then improve on
those improvements. Effective application management is essential to deliver the level and pace of change the
market demands. The right approach to application management helps the bottom line by increasing adaptability,
reducing costs and enabling automotive companies to deliver the level and pace of innovation and change their
businesses require.
This paper draws on the results of an independent survey of over 600 decision-makers across seven geographies
and six industries, commissioned by IBM and undertaken by The Bathwick Group. This paper analyzes the
responses from the automotive industry organizations surveyed.
Executive summary
Automotive leadership through innovation
Automotive companies live and die by their ability to innovate. The demand for innovation comes from many
fronts: process innovation to lower production costs, product lifecycle innovation to reduce time to market,
business model innovation to engage effectively with partners and innovation in CRM (customer relationship
management) to develop better links with and insight into consumers.
Fifty-one percent of automotive industry respondents report they need

51% of respondents report innovation is to deliver significant levels of innovation regularly in order to remain
essential in order to remain competitive. competitive. Fully 82% report investment in the application space is an
enabler for innovation.
This demand for constant innovation inevitably puts pressure on automotive companies’ existing application
portfolios. Automotive companies face a number of challenges with respect to portfolio management, legacy
modernization and enhancement and the delivery of management information.
Organizations that lead the market in terms of growth and profitability

will be those that create the internal framework, processes and culture 45% of all respondents report the
to enable them to adapt rapidly and deliver constant improvements in complexity of their application
cost management, product development, collaboration, and consumer landscape is making it difficult to
innovate
insight.
The approach automotive companies take to their application portfolios and the methods they adopt to govern
the way in which applications and business processes are enhanced are key factors in supporting innovation.
There are four main drivers that determine the need to support continual innovation in the automotive industry:
process efficiency, collaboration, time to market and cost.

Process efficiency
Process efficiency isn’t just the domain of the manufacturers whose nameplates get affixed to vehicles at the end
of assembly lines. There is intense pressure to improve the quality and lower the cost of making the many parts
and components of cars throughout the entire supply chain. Manufacturing costs are as much products of the
many decisions made in design and purchasing as they are of the processes implemented on the factory floor. The
ability to offer greater choice to consumers in the form of build-to-order (BTO) vehicles requires a high level of
flexibility across all business processes.
In order to deliver the level of process improvement that the business 29% of respondents report they struggle
demands, application portfolios have to be adaptable in the face of to customize and reconfigure
change and capable of providing the right feedback of management applications and systems as business
information to enable process optimization to take place. needs change
Collaboration
The days of the monolithic automotive manufacturer are long past. They have been replaced by an environment
within which designers, manufacturers, suppliers and fabricators need to collaborate seamlessly. This places
enormous burdens on existing processes and applications in terms of integration, the time it takes to form
effective partnerships and the costs and risks associated with managing an increasingly complex product lifecycle.
35% of respondents report they do not The ability to adapt existing systems to support new forms of
integrate well with their supplier’s partnerships and a far greater exchange of information is vital.
systems Application portfolios have a key role in making these changes possible.
Time to market
Car buyers demand product innovation in the form of a continual demand for new models options. In the 1980’s
the time lag between design and the first car rolling off the production line was between 18 and 24 months. In
many cases this time to market has now been compressed to only 12 months.
This has been achieved through better re-use of components between models, and improved design processes.
Automotive manufacturers are engaging with suppliers much earlier in the product lifecycle, and key component
suppliers and partners are actively involved in the design phase for new models.
The flexibility of existing applications and processes are key factors in reducing the time it takes to bring
automobiles to market.
Cost
The intense competition of the automotive market has had an inevitable impact on margins. Car companies
struggle with the need to address consumers’ demand to pay as little as possible while enjoying more and more
choice.
53% of automotive respondents report
In order to achieve the cost reduction necessary to improve margins, redundant applications across business
automotive companies have to develop ever more sophisticated units lead to increased complexity and
sourcing strategies that combine quality, cost and flexibility. cost
In all industries, a significant element of the cost of products and services is ‘scrap and rework’ – not doing
something right the first time. In application management, that issue can be addressed by proper testing and
management across the entire application lifecycle. With current manual testing resulting in too many post-launch

defects and delays, the introduction of automated testing could improve the overall return on application
investment.
Lowering the cost of application maintenance and enhancement isn’t just a short-term budgetary matter – it’s also
one of the best ways to fund the future transformation upon which long-term survival often depends.
Application management is key to delivering business adaptability

Application management describes the processes involved in delivering a portfolio of application services that
support the organization’s business processes. The way organizations manage their application portfolios, and the
processes that govern how they are enhanced and modified determine the extent to which the organization’s key
applications enable or inhibit change. It is essential, therefore, that automotive organizations examine and
benchmark their application management processes to ensure their application portfolios are managed in a way
that maximizes their competitive edge.
Application management covers a range of activities, including:
Application portfolio management -- The management of applications as a portfolio of business assets
Change management -- The processes that govern how change is initiated and managed
Legacy application modernization -- The management of legacy assets so that they do not hinder change
In order to better understand how automotive companies are managing their applications and which areas need
the most improvement, IBM commissioned The Bathwick Group to conduct a cross-industry survey of 600
decision-makers across seven countries and six industries. Around 100 automotive executives participated in the
study, which concentrated on five focus areas that examined their ability to manage applications. They include:
Business alignment of applications and responsiveness
Application management innovation and time to value
Application development and management of portfolio including performance
Information integration and knowledge management
Application modernization and risk management
All of these activities, which are essential to ensure that application assets are in a position to support change and
deliver enhanced business value, were assessed in the application management research study, concluded in
December 2007.
Inflexible applications mean higher costs and lower flexibility

Automotive industry respondents were highly concerned about the extent to which the complexity of existing
applications and business processes create challenges to delivering change. There is a strong indication that the
complexity of the existing application portfolio leads to a reduction in the ability of organizations to respond to
market change, higher maintenance costs and a general reduction in competitiveness. Over two-thirds of all
automotive respondents reported inflexible or non-integrated business processes as representing a real threat to
competitiveness.
Fully 48% of automotive industry respondents (compared with 40% of all industries surveyed) report that altering
business processes requires a lot of work to modify supporting applications and systems or, worse, that change
creates upheaval and can be very difficult to implement.

Application strategy portfolio and change management need to improve

The top three reasons for projects failing to meet all of the business requirements are:
The business requirements had changed by the time the project was delivered
The business requirement was not sufficiently understood by those implementing the project
The business requirement was never properly specified
The need to more closely link application management to the business is reinforced by the fact that all of the top
three reasons for project failure relate to business requirements management. All of these issues fall within the
domain of application portfolio management – suggesting that the processes of portfolio management, project
inception and program management need to be addressed.
When looking at reasons for project failure, the responses from the automotive industry indicate there are some
challenges to managing change and the application portfolio. Nearly half (49%) of automotive respondents report
“lack of clarity in stated business objectives” creates significant challenges. One-fifth admit unclear business
objectives lead to serious problems. This suggests improvements must be made in defining an overall strategy that
links the business mission with the management of the applications upon which that mission depends.
Legacy and redundant applications represent a continued challenge

While the automotive industry fares better than others in the survey, 49% of all automotive respondents report
their legacy applications are difficult to modernize – and nearly half report their legacy systems are often
misaligned to business requirements.
The issues created by legacy or redundant applications are clearly having a

48% of respondents report their major impact on company strategies. Fifty-seven percent report significant
legacy systems are misaligned to planned investment to reduce the number of applications in use. Fully 65%
business requirements report significant planned investment in aligning the current application
environment with business objectives.
Better information is a vital ingredient

Automotive industry respondents report a higher level of confidence in their ability to provide management with
the information it requires than other industries surveyed. Three-quarters of respondents report managers
generally demand, and get, the information they need in a timely manner.
This is offset, though, by the lower than average proportion of respondents 65% of respondents report the
(35%) who report the majority of their information sources are linked and majority of their information sources
the 54% of respondents who feel it takes too long to get management are not linked
information out of their systems.
How do you stack up?

The findings provide a benchmark that can be used to understand where the market and potentially your company
stand today.
It is only through a detailed view of your own organization that you can understand the next steps required to
shore up your application management strategy.

To overcome application-related barriers that inhibit achievement of your company’s business goals, we
recommend you:
Implement the business processes and technology that enable your organization to innovate, by better
integrating people, processes, and information
Leverage your existing assets and unlock your application potential, including assessing internal and
external applications
Implement changes to your applications environment in an incremental, non-disruptive manner to meet
business requirements

The Survey Results

In November 2007, The Bathwick Group surveyed 600 IT and business decision-makers in seven geographies and
across six industries. This report looks specifically at the automotive industry findings and highlights the challenges
and opportunities faced by IT and business decision-makers in delivering application and business services that are
able to keep pace with evolving requirements in the automotive industry.
The survey looked at five specific issues:
1. Business alignment and responsiveness

2. Innovation and time to value
3. Application Development Management Portfolio and Performance
4. Information integration and Knowledge Management
5. Modernization and Risk Management
1. Business alignment and responsiveness

These questions were designed to measure the extent to which the application portfolio is able to deliver business
requirements.
Project performance
We asked respondents to state the percentage of their major IT projects that met the criteria below (the
percentages denote the percentage of respondents who stated that 50% or more of their major IT projects had
these attributes).
Criterion Automotive All

Met all business requirements 42% 45%
Delivered on time 43% 52%
Delivered on budget 50% 49%
Significantly redefined during development 36% 40%
Been canceled after development 21% 18%
Respondents report significantly lower than average scores in delivering projects on time. Although the incidence
of projects being significantly redefined during development is below the all-industry average, this is possibly
because there is a higher incidence of projects simply being canceled.
We also asked respondents to rank factors contributing to project failure. The responses from the automotive
industry, while consistently higher, were comparable to the overall average in the weighting given to the different
factors.

Figure 1 Factors leading to project cancelation
Ineffective IT governance process
Casualty of budget cuts
Costs out of control
Poor work from IT supplier or outsourced provider
Superseded by another project
Substantially altered business requirements
Automotive All industries 0% 5% 10% 15% 20% 25% 30% 35% 40%
Where projects failed to meet all of the business requirements, the following reasons were ranked in the top
three:
The business requirements had changed by the time the project was delivered
The business requirement was not sufficiently understood by those implementing the project
The business requirement was never properly specified
All of these issues fall within the domain of application portfolio management – strongly suggesting the process of
portfolio management, project inception and program management need to be addressed.
Challenges faced in project delivery

The automotive industry is a mature one, with a long history of investment in IT. As a consequence, it is no surprise
that 55% of respondents report challenges with regard to the flexibility of existing legacy systems. This is higher
than the all-industry average of 48%.
Figure 2 Extent to which legacy systems represent a challenge
40%
35%
30%
25%
20%
15%
10%
5%
0%
No problem Some inconvenience Real problems that Serious problems Reason for at least
were overcome one project failure

The ability to adapt business processes in response to change is a key factor in competitiveness. It is clear this
represents a significant challenge within the automotive industry, with over half of all respondents stating that
inflexible or non-integrated business processes represent a challenge.
Figure 3 Extent to which inflexible or non-integrated business processes represent a challenge
30%
25%
20%
15%
10%
5%
0%
No problem Some inconvenience Real problems that Serious problems Reason for at least
were overcome one project failure
A major area of concern relates to the clarity of stated business objectives. Half of automotive respondents cite
this as an area of concern. Eight percent (compared to an overall average of 6%) report a lack of clarity in the
stated business objectives was responsible for at least one project failure.
Resourcing also emerged as a significant issue in the industry. More than one-third of respondents report
insufficient headcount causes serious problems (compared with an all-industry average of 24%). This is echoed
with regard to budgets, with 33% reporting serious concerns (compared with an overall average of 23%).
Project initiation
When we asked automotive respondents about the relative roles of business and IT in project initiation, we looked
closely at the differences between the responses of IT decision-makers and business decision-makers. As in other
industries, we noted a difference in perception between these two groups. Although, we do see some difference
between IT and business respondents in the automotive industry, the difference is not nearly as marked as it is in
some other industries (notably banking and finance).
This is positive news for the automotive industry. As the following chart illustrates, development projects in the
automotive industry tend to be initiated with a better than average balance between IT and business input.
All contents © The Bathwick Group Ltd. 2008 - 10 - www.bathwick.com

Figure 4 Project initiation
Most or all of our development projects are initiated by the

business
Most of our development projects have both IT and the

business fully involved in specification
We have a mix – some development projects have a high level

of initial business/user input, some do not
Most of our development projects are initiated by IT, but with

business input
Most or all of our development projects are initiated by IT

with little business involvement
When respondents were asked about project approval, the same trend was evident. Automotive industry
respondents report more balance between the business and IT in project approval than the all-industry average.
Figure 5 Project approval
Most or all of our development projects require final approval

from the business
Most of our development projects require approval by both IT

and the business
We have a mix – some development projects required

approval from the business, some do not
Most of our development projects gain final approval from IT,

but with business input
Most or all of our development projects gain final approval

from IT with little business involvement
2. Innovation and time to value

The ability to deliver new business processes, products and services are key factors in determining an
organization’s competitiveness.
More than half of all automotive respondents view innovation as important in order to remain competitive. Twelve
percent report innovation is core to their business.
The automotive industry faces a greater challenge than many others in changing business processes. Forty-eight
percent of automotive respondents (compared with 40% of all industries surveyed) report it takes a lot of work to
change applications and systems in support of changing business processes – or worse, that change creates a lot of
upheaval and can be very difficult to implement.

The automotive industry faces a similar challenge to the banking industry with respect to the difficulties presented
by legacy applications and processes. Forty-eight percent of automotive respondents report it is often or
completely true that their legacy systems are misaligned to business requirements. This is underlined by the 68%
of respondents who report application functionality tends to lag behind business requirements.
Legacy systems and their impact on innovation

The following chart illustrates that legacy systems present a significant challenge to many automotive companies.
While a lower than average number of respondents report their legacy systems are very difficult to shift because
they are mission-critical and monolithic, the percentage of automotive respondents reporting no problems with
legacy systems is only half that of the all-industry average.
Figure 6 Impact of legacy systems on innovation
We don’t have any legacy systems
We have no problem dealing with all our legacy systems
Our legacy systems are being systematically replaced
We are hesitant to make changes to or disturb our legacy

systems
Most or all of our legacy applications/systems are very
difficult to shift because they are mission-critical and
monolithic
Automotive All industries 0% 5% 10% 15% 20% 25% 30% 35% 40% 45%
Attitudes to innovation
The automotive industry produced very positive responses to questions about senior management’s attitude
toward innovation. Fully 71% of respondents report senior management understands the potential impact of new
technologies on the business and 62% report senior management encourages new ways of thinking.
The importance of investment in the application space to support innovation is widely recognized with 45% of
respondents stating that this is completely or often true.
Managing change
The engagement of senior management and effective communication of strategy is important to manage change
effectively. Unless there are processes in place to ensure business goals and requirements are well understood by
everyone, there is little chance those requirements will be fulfilled.
The level of confidence automotive respondents have in their senior management is above average. Seventy
percent of respondents report that senior managers almost always convey information about strategy and
performance to the internal audience. This confidence is also expressed in the way the company deals with

suppliers. Fully 76% report their companies collaborate well with suppliers, customers and other stakeholders. This
is particularly important, given the extent to which the automotive industry depends upon its supply chain.
Less positively, 37% of respondents report business requirements tend to change so often that it is sometimes
hard to keep up, which is significantly lower than the all-industry average of 46%.
3. Application development management (ADM) portfolio and performance

This next section examines the current status of the application portfolios within the surveyed organizations and
the mechanisms that they have in place to monitor and measure performance.
The trend towards packaged applications continues, but more slowly than other industries
Half of all automotive industry respondents report some movement away from custom applications to packaged
applications over the past two years. Only 37% report the reverse.
Looking at the next two years, 54% expect a continued shift away from custom applications while 32% expect a
shift towards more custom applications. Sixty-five percent of respondents report a significant proportion of their
effort will be spent enhancing existing applications.
There is a strong focus on eliminating redundancy within the application portfolio. Fifty-seven percent of
respondents report this is a priority and 29% cite it as a significant activity.
The role of application management in competitiveness and innovation

Forty-seven percent of respondents report the complexity of their application landscape is having some impact on
their organization’s responsiveness to market change. One-fifth admit the impact is significant.
This inevitably has an effect on the organization’s ability to innovate -- and 34% report the complexity of their
application landscape is having a significant impact on innovation. One consequence of this is that 52% of
respondents report having to develop temporary solutions to meet business needs.
Application roadmap and business process standardization

In planning the organization’s application roadmap, priorities are set very much in business terms although cost
reduction still has an important role to play.

Figure 7 Scoring of application roadmap priorities
Business need
Cost reduction
Eliminating redundancy
Legacy application replacement
Reducing the complexity of your application landscape
5 = critically important 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5
While organizations have made some progress in the adoption of standard applications for key business processes,
automotive industry responses were slightly lower than the all-industry average in reporting their processes were
completely standardized. In terms of finance and administration, for example, only 36% of automotive
respondents report their processes were completely standardized compared with 50% of the total survey base.
The greatest variation is found in the extent to which HR processes are not standardized. Twenty-eight percent of
respondents report either no standardization (2%) or variations by geography (26%).
When looking at the standardization of application assets across the organization, there is inevitably a tension
between the desire to deploy and use a single solution and the (often passionate) argument that “My geography is
different” or “Our division is different.” In practice, there are cases in which local or divisional differences can and
should be justified. But there has to be a rigorous exception management process to ensure differences can be
justified in terms of their value to the organization as a whole.
Figure 8 Extent to which standard processes have been adopted for key business processes
Core business/operational
processes
Procurement
HR
Finance and accounting
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Completely standardized Mostly standardized Variations by business unit/geography Not standardized at all

4. Information integration and knowledge management

The effective management and use of information is fundamental to the automotive industry. Management needs
up-to-date information to make critical decisions about risk and the growth of competition. Customer insight is
equally important in determining which products to offer to whom.
Management use of information

When asked whether managers get access to the information they need in a timely and accurate manner, 75% of
respondents said either “yes, in most areas” or “yes, across the organization,” indicating a relatively high level of
confidence. We then asked to what extent it is possible to see all of the data relating to a customer in a single
unified view.
Figure 9 Ability to see all data relating to a customer in a single unified view
40%
35%
30%
25%
20%
15%
10%
5%
0%
Yes across the organization In most areas In some areas Not true at all
Only 18% of respondents report they can provide a single view of the customer across the organization. In 47% of
cases, a single customer view has been implemented only in some areas or not at all.
When it comes to getting business information out of core systems, the automotive industry is a little below the
average of all industries surveyed.
Figure 10 Taking too long to get business information out of systems
50%
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
Agree completely Agree somewhat Disagree somewhat Disagree completely

Data integration
When asked about the extent to which automotive companies’ different information repositories are integrated,
the responses were in line with results with regard to single customer view. Over a third of respondents report the
majority of their information sources aren’t linked. While this figure is slightly better than the average for all
industries, it still represents a significant challenge.
Figure 11 How respondent companies manage information
We have fully integrated information sources or repositories
Most of our sources are now integrated, including linked

customer and back office data
Quite a few of our information sources or repositories are
now linked – we try to have one view of the customer and also
some linked back office data
A few of our individual sources or repositories are linked but
the majority remain separate
Few of our information sources or repositories are linked
0% 5% 10% 15% 20% 25% 30% 35% 40%
We also asked about the existence of “feral data” – data that reside outside the control of central IT. The results to
this question were notable. More than half (52%) of automotive respondents report there is a lot of critical data
out on individual desktops and laptops. While this compares favorably with an all-industry average of 57%, it is still
a concern.
Figure 12 Extent to which critical data is on individual desktops and laptops
40%
35%
30%
25%
20%
15%
10%
5%
0%
Yes across the organization In most areas In some areas Not true at all
The presence of key data on desktop PCs and laptops creates a number of issues. There’s the obvious question of
security (How secure is the data from loss or theft? Can the data be recovered?), and issues of compliance and
confidentiality (Is sensitive pricing information or, worse, design data at risk from loss or theft?). Despite all the

progress made over the years in information handling, the continued existence of this level of ‘feral’ data outside
centralized control still represents a significant risk to many companies.
5. Modernization and risk management

In this section we examine the organization’s approach to modernization and the extent to which existing assets
and processes support change.
When asked to characterize the current state of applications modernization, only one in three respondents report
they modernize applications clearly and efficiently in line with changing business requirements.
A very significant majority (84%) of automotive respondents report application modernization is a priority, but
there are a number of obstacles that make modernization a challenge – the availability of skills for example, which
is an issue for roughly half of all automotive respondents.
Figure 13 Shortage of in-house skills inhibiting development and maintenance of applications
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
Figure 14 Internal resources tied up in existing maintenance
60%
50%
40%
30%
20%
10%
0%
All industries Automotive

Sixty-five percent of respondents agree that their internal resources are unavailable for new projects as they are
tied up with existing maintenance. That result is underscored by the 58% of automotive industry respondents who
believe their current application sets are not flexible enough to cope with changing requirements.
Business process outsourcing (BPO) is a growing trend. In this regard, the results for the automotive industry were
close to the average of all industries surveyed. BPO appears set to enjoy continued growth, particularly in
industries, like automotive, that haven’t yet adopted it as much as others.
Figure 15 Moving towards BPO
60%
50%
40%
30%
20%
10%
0%
Application testing
Testing has an important role to play, not just in ensuring that development projects meet quality standards, but
also as a means to identify improvements that can be made to the overall development process.
While the automotive industry reports the highest incidence of automation in application testing of any industry
surveyed, 51% of respondents admit a significant proportion of their testing continues to be performed manually.
Forty-eight percent report they experience too many post-launch defects. When asked about the outcome of their
testing process, 50% report testing takes too long and causes delays in return on applications investment. Fully
54% admit their companies don’t allocate enough resource to the testing process.
It seems clear that greater automation in testing and the improvement of the processes that surround it would
have a significant impact, not just on application quality, but also on overall satisfaction with the application
development process.
Conclusion
This survey has served to highlight many of the challenges faced by the automotive industry, such as the need for
change and the impact of legacy applications on its ability to change. It provides a measurement with which
automotive organizations can benchmark themselves in order to determine how their responses to the issues they
face map against the rest of their industry.

The Bathwick Group, in conjunction with IBM, will be conducting more research in this area. In addition, we have
developed an interactive benchmark tool that enables organizations to conduct an initial “self-benchmark” against
the results of this survey. To access this tool and learn more about IBM’s Application Services capabilities go to
http://www.ibm.com/services/applications.
About The Bathwick Group

Bathwick researches how businesses actually buy and apply IT to their business, how they innovate using technology, and how
IT is supporting changes in market and organizational models. Our research framework is split into four key domains, each
focusing on a feature that client organizations aspire to be: Dynamic, Smart, Open, and Green.
Combining primary research with trend analysis in enterprise, mid-market and small business sectors, Bathwick provides
research models, benchmarking tools, market analysis, and strategic consultancy services to a variety of IT, communications,
government and media clients, and helps enterprise organizations plan for technology-driven change.
The Bathwick Group also includes:

- The ThinkAgain Partnership LLP, a global collaborative research network, which brings together academics, writers,
business and political leaders to generate new insights into business productivity and performance, geo-political and
environmental issues
- Bathwick Press LLP, which publishes books designed to help business leaders gain insight into how IT can help to
change and drive value in their organizations.
About IBM
As one of the largest providers of consulting and application services, IBM has unrivalled experience optimizing application
portfolios and implementing changes incrementally to scale to business requirements.
IBM Application Services offer an array of end-to-end solutions that address multiple business objectives. IBM solutions can
help align IT goals with business strategy, empower growth, increase productivity, accelerate implementation cycles and
maximize return on application investments. In short, they help transform businesses.
IBM helps clients make the most of their businesses application environment. By leveraging the intellectual capital of IBM,
including its world-renowned research capabilities and global network of partners, companies can take advantage of a range of
skills and capabilities in multiple geographies with the support of delivery centers around the world. For more information go to
http://www.ibm.com/services/applications.
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Challenges in the Automotive Industry

In association with IBM Application Services

Executive summary ........................................................................................................................................................3

The Survey Results .........................................................................................................................................................8

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Fifty-one percent of automotive industry respondents report they need

Organizations that lead the market in terms of growth and profitability

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Application management is key to delivering business adaptability

Inflexible applications mean higher costs and lower flexibility

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Application strategy portfolio and change management need to improve

Legacy and redundant applications represent a continued challenge

The issues created by legacy or redundant applications are clearly having a

Better information is a vital ingredient

How do you stack up?

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The Survey Results

The survey looked at five specific issues:

1. Business alignment and responsiveness

1. Business alignment and responsiveness

Criterion Automotive All

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Figure 1 Factors leading to project cancelation

Ineffective IT governance process

Casualty of budget cuts

Costs out of control

Poor work from IT supplier or outsourced provider

Superseded by another project

Substantially altered business requirements

Challenges faced in project delivery

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Figure 4 Project initiation

Most or all of our development projects are initiated by the

Most of our development projects have both IT and the

We have a mix – some development projects have a high level

Most of our development projects are initiated by IT, but with

Most or all of our development projects are initiated by IT

Figure 5 Project approval

Most or all of our development projects require final approval

Most of our development projects require approval by both IT

We have a mix – some development projects required

Most of our development projects gain final approval from IT,

Most or all of our development projects gain final approval

2. Innovation and time to value

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Legacy systems and their impact on innovation

Figure 6 Impact of legacy systems on innovation

We don’t have any legacy systems

We have no problem dealing with all our legacy systems

Our legacy systems are being systematically replaced

We are hesitant to make changes to or disturb our legacy

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3. Application development management (ADM) portfolio and performance

The role of application management in competitiveness and innovation

Application roadmap and business process standardization

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Figure 7 Scoring of application roadmap priorities