Volvo’s IT leadership fuels race to the connected car
Image: Volvo Car Group
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Volvo’s IT leadership fuels race to the connected car

I-CIO editorial team – January 2013

Klas Bendrik, Volvo Car Group’s CIO, says IT has to take the initiative in an industry being transformed by digital technology.

“The vision statement is very simple,” says Klas Bendrik. “To make IT a competitive advantage for Volvo Car Group.” Fortunately for the Swedish automotive manufacturer, its CIO learned to set — and deliver — such clear, precise objectives at an early stage in his career.

When he was called up to do his military service in his late teens, his love of sailing led him into the Navy; but instead of opting to serve the minimum time, he decided instead to join his nation’s prestigious Naval Academy, where he quickly rose to the rank of lieutenant captain. As a result, he told I-CIO, “I learned a lot about putting teams together, getting them to understand what the objective is and how they are going to get there.” However, the call of business was too strong, so Bendrik combined his military service with studying for a degree in finance and logistics at Sweden’s Gothenburg University, then joined engineering giant ABB in 1995 as an IT management trainee (and was indeed the first person with a strictly business, not technology, background in the company’s history to do so).

Bendrik is deploying those skills in his current leadership position, breaking down his vision into four key areas: customer relevance (ensuring IT plays a full role in delivering the right products and services to Volvo, in the most profitable ways); strengthening the organization’s support of its dealership network; significantly reducing time to market by boosting the IT capability of its internal R&D function, particularly with regard to its world-leading safety technology; and increasing operational efficiency.

“I’m 100% certain that IT will play a more and more vital role in Volvo’s product offering.”

Indeed, Bendrik sees the latter as the essential foundation on which the rest must be built. “You can spend a lot of time spotting innovations and opportunities,” he says. “But if something doesn’t work from an operational aspect, your credibility as a CIO disappears. It’s important for a CIO to be sensing what is happening on the core product side, because if you don’t, and you’re not proactive, the whole organization might miss out on opportunities.”

Some observers credit his work in customer relevance as best demonstrating his dynamic, business-focused approach to delivering IT services. That’s particularly important in a market sector being changed so rapidly (and fundamentally) by digital technology. For example, rising energy prices and a burgeoning demand for more fuel-efficient, environmentally friendly vehicles is reshaping the automotive business. Plus, a generation of “digital natives” is now entering the car-buying market, with expectations that the vehicles they drive should be constantly connected to the rest of the world, just like their phones, PCs or other electronic devices. Forward-thinking manufacturers in Bendrik’s world have realized that competitive advantage no longer lies in factors like engine size or performance statistics, but more and more via technology-enabled fuel-efficiency and the digital services that can be on-boarded (the “connected car”), such as real-time traffic information and Internet-streamed in-car entertainment to the ability to book a repair at the nearest dealership.

“As soon as you talk about cross-collaboration in the value chain, it requires IT.”

“This is potentially one of the biggest changes in the automotive sector for many years,” says Bendrik. “I’m 100% certain that IT will play a more and more vital role in Volvo’s product offering.”

And he is determined Volvo will be at the forefront of this new era. For example, Volvo is one of only two companies in the world (the other is Google) to have successfully tested driverless cars on public roads. It is also developing a smart recharging system for its future range of electric vehicles, where owners can hook their car up to any regular domestic power socket, even a neighbor’s, but the cost of the recharge will be charged back to them direct.
Focus on value

Bendrik sees an opportunity for automotive companies like his to be providers of digital-enabled services that allow owners to adapt, personalize and “update” their vehicles during their lifecycle. But, “It’s not the IT in itself that generates the value,” he warns. “It’s when technology adds value and simplicity to you as a user of the car that value comes in.”

Such innovation requires strong partnerships, Bendrik emphasizes: cross-functional ties within the business, particularly with R&D, marketing, sales and customer service, but also externally, e.g. telcos, utilities, governments and so on. That means it’s the CIO, he is convinced, who is ideally positioned to help the business develop the new right skills required to ensure such collaborations flourish.

“We need to extend our partnerships to other value chains,” he points out. “But as soon as you talk about cross-collaboration in the value chain, it requires IT.”

Indeed, it was during his early years in the military he says he first saw this in practice: “I learned the importance of being able to adapt quickly when things change. In the Navy, like in business, you have a clear goal, but then that becomes impacted in terms of what other people or organizations are doing, or the environment around you.

“You have to keep the initiative — and that is a valuable lesson for a CIO.”
Platform for the future

Bendrik should know: when he took on the Volvo role three years ago, he was told by his new bosses that he had one single, precise objective: to secure a successful IT separation from Ford Motor Company, the US automotive giant that had owned Volvo since 1999 but was in the process of selling it to Chinese vehicle maker Geely.

To achieve that goal took nine months of planning — and nine months of execution. During this time, the challenges were many; for example, more than 400 applications had to be moved, replaced or cloned; 500 new servers had to be deployed; and the car servicing applications used by Volvo’s global network of more than 2,300 dealers in 100 countries had to be migrated… during a single weekend. “Even simple things like the email system had to be replaced,” says Bendrik. “And all at the same time as our volumes were growing at 20%!”

What’s more, there was a complete halt on any process improvements during the separation period. “The objective was to separate — and also build a platform on which, afterwards, we could improve.”

With the separation successfully completed, Bendrik now runs a fully independent IT organization and has been able to turn his attention to setting the company’s IT strategy for the future — and, in particular, to ensure that his team is able to maximize the opportunities presented by the “connected car,” as well as other key challenges, like supporting rapid growth in China and making the very most of its big data opportunities.

Despite that tough introduction, Bendrik in Volvo is full of enthusiasm, though acknowledging it is still early days in terms of understanding how tech is remaking his entire sector.

“We are just at the start of the journey. Not even at the first destination,” he says with a smile.

 

First published January 2013
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