TRANSFORMING THE PROCESS

First, the emphasis of value is shifting from hardware to software. BMW products have evolved from purely physical components to complex systems combining processors, sensors, software, and digital user interfaces. As manufacturers seek to accelerate product innovation and efficiently meet the growing diversity of customer demand and regulation, they increasingly turn to software. One example: A BMW automobile now has on average 100 million lines of code to enable variable driving modes, various engine and emission configurations, adaptive cruise control, and hands-free commands.

Value is also shifting from product to the cloud. While smart products have enabled new capabilities, there is a limit to the incremental value that can be generated from within the product itself. But when the digital component of a product connects with the cloud, the capabilities of that product are vastly extended. Manufacturers are finding that moving product capabilities to the cloud enables operational efficiencies, improves the user experience, and accelerates innovation.