From Software-Defined Vehicles to Software-Defined Organisations

By Dmitry Lopatik

In the first article, I argued that Software-Defined Vehicles (SDVs) are not simply an AI or software engineering challenge. They represent a much bigger business transformation. Building the software is only one part of the equation. The harder challenge is creating an organisation that can continuously develop, deploy, maintain, and improve that software throughout a vehicle’s life.

That naturally raises the next question.

If vehicles are becoming software-defined, what does the organisation behind them need to become?

Manufacturing was built around launches. Software isn’t.

For decades, automotive companies were designed around manufacturing excellence. Everything worked towards a major milestone: vehicle launch. Once production began, the focus shifted to manufacturing, quality, and cost.

Software changes that model completely. Today’s vehicles continue to evolve during their lifecycle. New features, cybersecurity improvements, battery optimisation, infotainment enhancements, and ADAS capabilities are increasingly delivered through over-the-air updates. The product is no longer finished at launch. It is continuously improving, which means the organisation behind it must also be built to deliver software continuously.

Every function becomes part of software delivery

Many discussions around SDVs focus on software engineering teams. In reality, continuous software delivery depends on far more than developers. Product teams define priorities. Cloud teams manage backend platforms. Cybersecurity protects connected vehicles. Compliance ensures regulatory requirements are met. Procurement works with technology suppliers. Customer support feeds real-world data back into engineering. Even finance begins shifting from one-time vehicle sales towards recurring digital services. Instead of operating as independent departments, these functions become interconnected parts of a single software delivery ecosystem. A delay in one area slows everyone else!

The opportunity is bigger than the vehicle

Software is rapidly becoming one of the automotive industry’s largest value creators. Much of that growth will come from operating systems, ADAS software, connectivity, cybersecurity, cloud services, and software integration rather than traditional mechanical innovation. [1] That’s why this has become a board-level priority: PwC Strategy& estimates that roughly €20 billions of European carmakers’ annual profit could be gained by 2035, depending on how well they execute this shift. [2]

This changes how companies compete. Success will no longer depend only on building better vehicles. It will depend on building organisations that can continuously improve those vehicles through software.

That’s why many automotive companies are changing how they operate. Volkswagen created CARIAD to build a common software platform across its brands. General Motors is developing Ultifi to support continuous software updates and digital services. Toyota introduced Arene to speed up software development across future vehicle platforms [3]. Although each company has taken a different approach, they’re all solving the same problem: how to continuously deliver software throughout a vehicle’s lifetime.

The competitive advantage is organisational

The companies that lead the next decade won’t necessarily be those writing the most code. They will be the ones that organise themselves to deliver software faster, integrate it across multiple vehicle platforms, and continuously improve customer experiences throughout a vehicle’s lifecycle.

That requires shared software platforms instead of fragmented development across individual vehicle programmes. It requires engineering, cloud operations, cybersecurity, product management, compliance, suppliers, and customer support to operate as one connected system rather than independent functions. Most importantly, it requires leadership to recognise that software is no longer an engineering capability. It is now a core business capability.

A new definition of success

For decades, automotive success was measured by production volumes, manufacturing efficiency, and successful vehicle launches. Those metrics still matter, but they are no longer enough. Tomorrow’s leaders will also measure how quickly they can introduce new features, respond to customer feedback, strengthen cybersecurity, improve vehicle performance, and create new digital revenue streams throughout the ownership lifecycle.

The term Software-Defined Vehicle focuses on the product. But the real transformation is organisational.

Once companies can continuously deliver software, the challenge changes again.

 The question is no longer can you do it? It’s – can you do it better than everyone else? That’s where the final article begins.

References

• McKinsey & Company, The automotive software and electronics market through 2035 — https://www.mckinsey.com/features/mckinsey-center-for-future-mobility/our-insights/mapping-the-automotive-software-and-electronics-landscape
• PwC Strategy&, Software-defined vehicles: revolutionizing the automotive industry — https://www.strategyand.pwc.com/de/en/industries/automotive/software-defined-vehicles.html
• Volkswagen Group / CARIAD, automotive software platform (representative of OEM platforms including GM Ultifi and Toyota Arene) — https://cariad.technology/de/en/solutions.html