Volkswagen creates common data services in pursuit of car industry pole position

Volkswagen’s common data services approach is crucial to the IT-enabled transformation of its five businesses.

Volkswagen is pursuing a data management strategy that allows each of its five brands to modernise while developing distinct identities.

“When you look round the industry, the competition falls into two camps: the mainframe, ‘stuck in the past’ companies that can’t face re-engineering their IT and those who who standardise on the lowest common denominator,” Volkswagen UK CIO Nick Gaines said.

Volkswagen’s larger brands include VW, Audi, Skoda and SEAT. Its goal is to be the world’s No. 1 car maker by 2018 by any measure. “We have a big programme of change,” Gaines said, “and only IT can give you these transformational changes. We can make incremental changes with our products, but for real innovation IT provides a lot of that, especially in getting to a 360-degree view of the customer.”

That is where better data management comes in, as a piece of a wider programme that has seen the IT group replace separate infrastructures and processes, designed in the 1980s and used by five different brands with a single platform. Volkswagen replaced and re-engineered all its core systems including sales, distribution, funding and CRM.

The company began the change in earnest in the first quarter of 2008, released it to Seat and Skoda in 2009, and went live to all brands in 2010. Prior to that, its data was diverse and disparate.

Gaines runs a “massively outsourced” IT operation, with 25 staff in-house. T-Systems is the main partner, Tata TCS is the infrastructure partner, and there is involvement with IBM, Hewlett-Packard and specialist automotive IT suppliers. “I spent as much time focused on communications and engagement with all the partners as most would normally spend on the project management of the IT.”

“Data management was a real area of difficulty for us,” said Gaines. “We had five brands and data about our customers spread out over many systems. Because our systems were discrete, we were missing opportunities. Customers might have a fleet of VW vans in their business [but] drive an Audi, for instance.”

Volkswagen's systems have evolved over many years, going back to when the first Volkswagen Beetle was sold in Britain in 1953. Cars also generate a lot of data over their lifetimes, Gaines explained. “And even the very best systems are not designed to share data.”

One example is that Skoda, with its older systems, could not see the state of all of its stock. “By the time you found where it was, it had moved! Optimising the use of stock is very important in our business.

“And so we needed common data services that the sales system, the CRM system and others could invoke. The traditional way to do that is to have massive mainframe systems in which all the functionality of the business is integrated. It is very expensive and constraining to do that. So we took best-of-breed technologies but integrated to create common data services. This gave us both a migration and an abstraction challenge.”

Gaines and his team made a determining architectural decision that all their systems should present their interfaces as Web services via an enterprise service bus, “progressively abstracting the functionality away from bespoke systems and toward common service layers.” They worked with different partners to achieve the necessary abstraction of customer data. Gaines reported that Volkswagen has predominately SAP-based architectures: “It’s only natural that we should have good German IT to go with the German engineering in our cars!” However, IT also has mainframe and Java systems, WebSphere and some Siebel to effectively integrate.

Although the system integration was a UK project, the core idea was “to bring a mixture of solutions for the UK and solutions designed for global and bring them all to the next generation of sophistication and maturity so that they could be templates for our global business.”

Now that the integeration is done, what does the company know now that it didn’t before?

“We are now getting a greater volume of data from after sales events," Gaines said. "In the past, sales and after-sales and used-car data were not brought together.”

IBM’s Data Power integration devices proved to be a useful technology.

“That was a good one that we used to implement the WebSphere architecture. It’s reliable, easy to configure and elegant," Gaines said. “When we build a new system, now it is easier for our architects. Common data services have made it easier to build a common business intelligence platform, pulling together data sources.

“The real challenge was that we had many BI systems. We are now progressively eliminating these separate reporting and analysis suites and bringing together one master source. We have more requirements for innovative ways of looking at data than we could have imagined. My team of data junkies is very busy!”

The wider IT change programme was acclaimed at this year’s Real IT Awards, from The Corporate IT Forum, in the partnership category. Gaines said that particular value the award recognised was that “for the first time many people in our business were able to see all of it. It was a massive educational activity that generated a greater sense of team and togetherness. Most had learned the job on the job. That was a huge unintended benefit. It put a smile on the face of our board directors!”

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