How AUDI AG Established Big Data Analytics in Its Digital

Transformation

Submitted in partial fulfilment for the Post Graduate Program in Management at TAPMI,
Manipal by:

Working Group 3

Nandini Saxena (22F433)

Shivani Jain (22F451)

Soumya Srivastava (22F454)

Batch: 2022 - 2024

Date: 21st February 2024

TAPMI, Manipal Karnataka – 576 104

IT Strategy (ITS 6010)

 1. What are the dynamics of the global automobile industry, and what is Audi’s business
strategy?

Global industry dynamics 1

Revenue CAGR Global car sales

USD 2810 bn (2022) 4.42% (2023-2030) 67.2 mn units (2022)

 Positive Growth: The overall outlook for the industry is positive, driven by
increasing demand in emerging markets, technological advancements, and
continued urbanization.
 Shifting Landscape: The industry is expected to undergo significant
transformation due to the rise of EVs, autonomous driving, and connected
cars.
 Sustainability Focus: Environmental concerns will continue to drive
regulations and consumer preferences, pushing companies towards sustainable
practices and cleaner technologies.
 Consumer preferences: Personalization, affordability, and connectivity will
remain key factors influencing consumer buying decisions.
The global automobile industry is currently undergoing significant transformations driven by
digital technologies, evolving consumer preferences, and regulatory requirements.

Digitalization:

 Connected Cars: Vehicles are becoming rolling data centers, equipped with sensors,
cameras, and communication systems. This generates massive amounts of data on
driving behavior, vehicle performance, and the surrounding environment.
 Manufacturing Revolution: Robots and automation are transforming assembly lines,
increasing efficiency and precision. Digital tools like simulations and predictive
maintenance optimize production processes.
 Supply Chain Optimization: Digitizing the supply chain improves transparency,
reduces delays, and facilitates real-time collaboration between manufacturers and
suppliers.
 Customer Experience: Digital platforms personalize the car buying journey, offering
online configuration, virtual test drives, and seamless after-sales service.

Digital Transformation:

 Data-Driven Decisions: Companies are leveraging data analytics to gain insights into
customer preferences, optimize product development, and personalize marketing
campaigns.
 AI and Machine Learning: From predicting maintenance needs to optimizing traffic
flow, AI is automating tasks and improving decision-making across the industry.
 Cloud Computing: Scalable and secure cloud platforms enable data storage,
processing, and collaboration, fostering agility and innovation.
 Cybersecurity: As vehicles become increasingly connected, robust cybersecurity
measures are crucial to protect against hacking and data breaches.

In response to these dynamics, Audi, a prominent player in the premium and super sports car
segments, has crafted a strategic approach aimed at solidifying its market leadership and
delivering exceptional products and services to its customers.

Audi’s Strategy:

“Sustainable success is based on long-term vision and innovative strategy. A clear

commitment to electric mobility is essential to Audi's strategy. Within the next five years, the
company will expand its EV portfolio: By 2027, the four rings plan to offer a fully electric
vehicle in all core segments. Audi is accelerating its transformation into the leading provider
of sustainable e-mobility.”

At the core of Audi's business strategy lies its brand philosophy encapsulated in the slogan
"Vorsprung durch Technik" (Advancement through Technology). This ethos underscores
Audi's dedication to technological innovation, premium quality, and a customer-centric ethos.
The company is focused on leveraging digital advancements, including initiatives like big
data analytics, to reinforce its market dominance and enrich customer interactions.

Audi's commitment to data privacy and empowering customers with control over their
data, highlights the company's dedication to privacy-by-design principles and prioritization of
customer needs. Through the integration of digital services such as predictive maintenance,
personalized recommendations, and entertainment features, Audi is aligning its strategic
direction with evolving consumer expectations and industry trends.

Audi's overall strategy, here are some key components of their business strategy that leverage
big data analytics:

 Customer Centricity:
a. Personalization: Utilizing data from connected cars, app usage, and service
interactions, Audi aims to personalize marketing campaigns, product
development, and after-sales service for a more targeted and satisfying customer
experience.
b. Predictive Maintenance: Analysing vehicle data allows for predicting potential
failures and proactive maintenance, preventing downtime and enhancing customer
satisfaction.
c. New Business Models: Data insights facilitate exploring data-driven business
models like car-sharing services, subscription-based access, and anonymized user
data monetization.
  Operational Efficiency:
a. Optimized Production: Data analysis guides decisions on optimizing production
processes, logistics, and supply chain management, minimizing costs and
optimizing resource allocation.
b. Data-Driven Decision Making: Insights from big data inform strategic decisions
across various departments, improving overall efficiency and effectiveness.

 Data-Driven Innovation:
a. Connected Car Infrastructure: Investments in secure and advanced connected car
technology enable collecting valuable data and offering features like remote
diagnostics, real-time traffic updates, and personalized infotainment.
b. Cloud Computing: Leveraging cloud platforms ensures scalable data storage,
processing, and analytics capabilities to manage increasing data volumes efficiently.
c. AI and Machine Learning: Implementing AI and ML algorithms fuels tasks like
autonomous driving, predictive maintenance, and product development optimization.

In summary, Audi's business strategy within the context of the global automobile industry
revolves around harnessing digital technologies, leveraging data analytics, and prioritizing
customer-centric approaches to foster innovation, elevate product value propositions, and
uphold its position as a premier automotive brand.

2. What is Audi’s IT strategy, and what is the role of Big Data in it?

Audi's IT strategy is intricately woven into its broader digital transformation efforts, with a
central focus on harnessing big data analytics to innovate, streamline operations, and enrich
customer experiences. Recognizing the pivotal role of technology in maintaining
competitiveness in the ever-evolving automotive industry, Audi has strategically aligned its
IT capabilities with business functions to drive digital initiatives forward.

Here's a detailed breakdown of Audi's IT strategy and the role of Big Data within it, based on
the information provided in the case study:

Audi's IT Strategy

Audi's IT strategy evolved during its transformation, but core elements include:

 Business Alignment: The IT strategy tightly aligns with Audi's overall digital
transformation goals, focusing on new services and innovative business models
enabled by data.
 Shift from passive approach to proactive approach: Initially, the IT department
followed business units' lead, fulfilling demands as they arose. The focus shifted to
proactive collaboration, where IT works alongside business departments to define
analytics needs and design data-driven solutions that fit strategic goals.
 Centralization of Expertise: Audi created centralized units within the IT department
dedicated to big data infrastructure, competence, and analytics. This streamlined
support for the whole organization.
 Agile Development: Recognizing that analytics projects have unique needs, Audi
implemented agile methods (Scrum) for software development in this domain. This
allowed for flexibility, faster iterations, and improved resource allocation.
 Focus on Digital Services: As Audi aims to provide innovative digital services within
their cars, the IT strategy focuses on enabling these initiatives. This includes
collecting and analyzing car data, designing predictive services, and ensuring
connectivity within vehicles.
 Organizational Transformation: Audi has embarked on a journey of organizational
change to synchronize its IT department with the company's digital aspirations.
Initiatives like the "Move IT" project aim to harmonize cross-departmental
technology-driven initiatives, including big data analytics, to effectively tackle the
challenges posed by digitization and the emergence of digital business models.
 Integration of IT with Business Units: Traditionally, Audi's IT department served
primarily as a support function. However, in response to the digital shift, business
units now actively engage the IT department in designing new car models and
refining production processes. This integration ensures that IT competencies relevant
 to digitization are seamlessly woven throughout the organization, fostering
collaboration and synergy.
 Big Data Analytics: Big data lies at the core of Audi's IT strategy, enabling the
extraction of invaluable insights from the troves of data generated by vehicles and
customer interactions. Through predictive and advanced descriptive analytics
services, Audi leverages data-driven digital solutions to enhance customer
experiences and propel business growth.
 Customer-Centric Approach: Audi's IT strategy is deeply rooted in a customer-centric
ethos, epitomized by the company's unwavering commitment to data privacy and
customer data control. By prioritizing the needs and preferences of customers, Audi
ensures that its IT endeavors, including big data analytics, are meticulously crafted to
elevate customer value and satisfaction.

In essence, Audi's IT strategy encompasses organizational metamorphosis, seamless

integration of IT with business functions, adept utilization of big data analytics, and an
unwavering commitment to customer-centricity. By incorporating big data analytics into its
IT arsenal, Audi aims not only to harness the transformative potential of data but also to drive
innovation, enhance operational efficiency, and deliver personalized digital services that
resonate with its discerning clientele.

The collaboration of the digital innovation hub with the data analytics and strategy unit
established within the sales and marketing department, and with the IT department, forms the
core of AUDI’s analytics as-a-service initiative for leveraging big data analytics

Role of Big data analytics-

 Product Innovation: Data gathered from vehicles and customer interactions guides
future product design. Big data provides insights into usage patterns, preferences, and
potential pain points, leading to feature improvements and even the creation of new
digital services.
 Enhanced Customer Experience: Data-driven analytics enables targeted marketing
and personalized offerings for Audi customers. Big data informs marketing
campaigns, loyalty programs, and even individual interaction.
 Operational Excellence: Analyzing big data allows Audi to understand production
processes, predict potential maintenance issues, and optimize the supply chain. This
leads to efficiency gains and cost savings.
  New Business Models: Audi recognizes that big data and digital offerings unlock new
revenue streams beyond traditional car sales. Services such as personalized assistance,
on-demand features in the car, and predictive maintenance contracts are all data-
driven business models.

The case study details Audi's three-stage process towards establishing effective big data
analytics:

Advancing Enabling Leveraging

Stage 1 Advancing

IT Role: Primarily reactive and supportive. IT fulfills tech needs defined by the sales &
marketing department and the digital innovation hub.

Focus:

 Acquiring external expertise (consultancies) to develop analytics skills.

 Building a rudimentary technology stack for analytics on marketing data.

Outcome: Proof-of-concept projects demonstrating potential.

Stage 2: Enabling

IT Role: Transition to being proactive and collaborative. IT establishes dedicated units for big
data technology and competence.

Focus:

 Upgrading technology infrastructure: Investing in big data platforms (Hadoop cluster

etc.) for handling larger, more diverse data sources.
 Internal knowledge building: IT develops in-house analytics expertise, reducing
reliance on external consultants.
 Cross-Functional Collaboration: Close collaboration amongst IT, the digital
innovation hub, and sales & marketing drove the design and delivery of analytics
solutions, breaking down silos.

Outcome: More sophisticated analytics services, IT foundation in place.

Stage 3: Leveraging
IT Role: Strategic partner, central to digital transformation. IT evolves into a consulting-like
service provider within Audi.

Focus:

 Centralization & Service Model: Audi adopted a centralized "analytics-as-a-service"

model to provide insights across all internal business units strategically.
 Agile Development: Implementation of agile Scrum methodology streamlined
analytics work, prioritizing flexibility and resource efficiency.
 Scalability: Building infrastructure for real-time analytics, handling vast amounts of
car data.
 Emphasis on digital services: IT enables data-driven features within cars, focusing on
connectivity and customer experience.

Outcome: Data-driven decision-making to propel digital services, maximize impact.

3. If you were the business unit head within Audi, answer the following
a. How would you further leverage Big Data to help Audi reach higher
positions?

As a business unit head within Audi, leveraging big data effectively can play a crucial role in
helping the company reach higher positions in the automotive industry. Here are some
strategies to further leverage big data within Audi:

Data-driven Product Innovation:

 Analyze vast amounts of in-vehicle sensor data to deeply understand how customers
interact with features, which ones create friction, which are underused. This reveals
opportunities to enhance existing products and even guide the design of future models
with features that truly resonate.
 Predictive Personalization: Build algorithms to learn individual driving habits and
preferences (speed, seat settings, music choices). This data can be used for real-time
in-car adjustments creating truly personalized experiences, or to design pre-
configured car settings for a seamless user experience.
 Maintenance as a Service: Proactive identification of potential malfunctions based on
component-level sensor data. This enables shifting from scheduled maintenance to
 data-driven, timely servicing that prevents breakdowns - a major customer pain point.
This proactive approach can improve vehicle reliability and customer trust in Audi's
products.

Supply Chain Optimization:

 Leverage big data analytics to optimize the supply chain and inventory management
processes. By analyzing data related to production schedules, supplier performance,
demand forecasts, and logistics, Audi can streamline operations, reduce costs, and
ensure timely delivery of components to manufacturing facilities. This optimization
can lead to improved efficiency and agility in responding to market demands.
 Sensor data from robots used in the production line can reveal patterns that
foreshadow equipment issues, enabling predictive maintenance to reduce downtime.
 Digital Twin Simulations: Using manufacturing data, create simulations to test
production line setups, identify bottlenecks, and optimize overall efficiency before
investing in physical changes.

Dealership Insights:

 Analyze customer interactions at dealerships—foot traffic patterns, time spent at

different vehicles, conversations with sales reps. This could lead to:
 Optimizing dealership layout to streamline the customer journey.
 Identifying which vehicle features need better explanation/promotion.
 Pinpointing where in the sales process customers tend to drop off, allowing
targeted improvement efforts.

Augmented Reality (AR) Support:

 Enable technicians to use AR overlays when diagnosing car issues. This could
integrate with:
 Live, remote expert guidance for complex problems, reducing wait times for
repairs.
 Visual walk-throughs for owners explaining maintenance, potentially
decreasing the load on call centers.

Sentiment Analysis for Improvement:

  Analyze customer service calls, social media comments, and post-service surveys for
sentiment. This can:
 Identify recurring pain points, allowing fixes with high impact on satisfaction.
 Proactively reach out to dissatisfied customers, turning a negative into a potential
brand loyalty opportunity.

Hyper-targeted Marketing & Sales:

 Integrate data from customer touchpoints (dealerships, website interaction, service)

with social sentiment analysis for a complete 360-degree customer view.
 Identify customers with the highest likelihood to upgrade, purchase additional
features, or respond to certain services. This allows precision targeting in sales
campaigns, reducing wasted effort.

b. How would you integrate other IT investments, Big Data, and IT Strategy to
realize your business strategy?

As a business unit head within Audi, integrating other IT investments, big data initiatives,
and the overall IT strategy is paramount to realizing our business strategy and driving success
in the automotive industry. Here's how we would approach the integration:

 Alignment with Business Objectives: First and foremost, it's crucial to ensure that all
IT investments, including big data initiatives, are closely aligned with Audi's
overarching business strategy and objectives. By understanding the specific needs and
goals of the business unit, we can tailor IT investments to support key initiatives and
drive value creation in line with the company's strategic direction.
 Scalable, Secure Big Data Infrastructure: The explosion of car data, showroom data,
and new customer interactions will require moving beyond Audi's likely on-premise
Hadoop environment. Evaluate the suitability of cloud-based big data platforms for
handling real-time streams, security, and flexible analytics usage across the business.
 Data security and Governance: Work closely with legal on comprehensive data
governance frameworks. Customer data is Audi's fuel but also a potential liability.
Consent mechanisms, clear usage policies, and data anonymization techniques need to
be in place before widespread rollout of analytics. With heightened sensitivity over
location and personal data, IT must bake in robust security and encryption from the
start, aligning with Audi's privacy-by-design approach demonstrated in the case.
  Integrating Legacy Systems: The case study suggests Audi had older IT systems in
place. Ensuring seamless integration between the new world of real-time data and
existing customer records, sales databases, etc., is crucial to avoid data silos.
 Focus on Actionability: Big data analysis should go beyond reporting dashboards.
Build machine learning models for predictive sales insights (likely buyers, churn risk)
and feed those insights live into sales systems.
 Talent Development: Identify gaps in the IT team's own competence for the scale of
data Audi will be handling and invest in training or targeted hiring. Cloud data
engineers, security specialists focused on data protection, and those with real-time
analytics experience will likely be crucial.
 Audi cars are increasingly becoming data generators on wheels. Proactively prepare
the infrastructure to handle large-scale data ingestion from connected vehicles with
low latency.
 Performance Measurement: Establish key performance indicators (KPIs) and metrics
to track the impact of IT investments, big data initiatives, and the overall IT strategy
on business outcomes.
 Collaboration and Communication: Foster collaboration between the IT department,
data analytics teams, and business units to ensure a cohesive approach to leveraging
technology for business success. Establishing regular communication channels will
foster a culture of transparency and alignment across the organization.

By integrating other IT investments, big data initiatives, and the overall IT strategy in a
cohesive and strategic manner, Audi can harness the power of technology to drive innovation,
enhance operational efficiency, and deliver superior products and services to customers. As a
business unit head, prioritizing alignment, collaboration, data governance, technology
infrastructure, talent development, and performance measurement will help realize the full
potential of IT investments and big data analytics in achieving Audi's business objectives.

c. What conclusions would you draw about the sustainability of Audi’s strategy?

As a business unit head within Audi, several conclusions can be drawn about the
sustainability of Audi's strategy based on the integration of IT investments, big data
initiatives, and IT strategy. Audi's commitment to a data-driven transformation demonstrates
strong potential for long-term sustainability.
 Strategic Alignment: Audi's focus on leveraging big data extends beyond optimizing
marketing campaigns. Their emphasis on car-data-powered digital services
fundamentally shifts their business model, aligning perfectly with evolving consumer
expectations in the automotive market. Audi can drive long-term value creation and
competitive advantage in the automotive industry.
 Top-Level Sponsorship: The CEO's public support for big data, and the creation of a
CDO position, signal that digital transformation is embedded into the organization's
strategic vision. This translates to ongoing resources and priority, crucial for long-
term success in data-driven initiatives.
 Culture of Collaboration: Audi broke down organizational silos, fostering
cooperation between the IT department, the digital innovation hub, and sales &
marketing. This cross-functional approach ensures sustainability because data-driven
insights become the norm, not a niche project of isolated teams.
 Ownership of In-House Competence: By moving away from reliance on external
consultancies and building internal analytics expertise, Audi establishes a self-
sufficient approach. This translates to agility and knowledge retention, vital for long-
term success in the fast-changing data landscape.
 Data-Driven Decision-Making: Audi's strategy of integrating big data analytics into
business operations underscores a commitment to data-driven decision-making. By
harnessing the power of data to inform strategic choices, optimize processes, and
enhance customer experiences, Audi can make informed decisions, can adapt to
changing market dynamics and customer preferences, positioning the company for
long-term.
 Continuous Improvement: Audi's focus on talent development, performance
measurement, and iterative adjustments suggests a commitment to continuous
improvement. By monitoring key performance indicators, investing in employee skills
development, and adapting strategies based on data-driven insights, Audi can evolve
its approach over time to stay relevant, competitive, and sustainable in a rapidly
changing industry landscape.
 Audi's approach cleverly fosters a 'best of both worlds' scenario. Centralized analytics
teams provide the tools and expertise, while business units bring deep domain
knowledge, resulting in data-driven innovation aligned with strategic goals.
  Customer-Centric Approach: The emphasis on personalized customer experiences,
predictive maintenance, and product innovation indicates a customer-centric approach
that is crucial for long-term sustainability. By prioritizing customer needs,
preferences, and feedback in decision-making processes, Audi can build brand
loyalty, drive customer satisfaction, and sustain its market position over time.

In conclusion, the integration of IT investments, big data initiatives, and IT strategy within
Audi's business operations reflects a comprehensive and forward-looking approach to driving
sustainable growth, innovation, and competitive advantage in the automotive industry. By
continuing with its previous approach and being flexible with the changing market, Audi can
enhance the sustainability of its strategy and position itself for long-term success in a rapidly
evolving market environment.