Volkswagen’s Woes Remind Us That Combining Hardware With Software Is Hard
The Volkswagen Group bet big on a new software division called Cariad, committing billions to building the software meant to power in-car experiences for Audi, Porsche, VW, and other group brands. Software delays hit the launch of new cars, and Cariad lost $2 billion in 2022. A “structural and personnel realignment” sees new leadership for Cariad and closer ties to Cariad’s customers: the car makers. Digital is key to how cars will be designed, built, operated, and maintained, but the physical product still matters. Like most manufacturers, Volkswagen is trying to combine hardware engineering strength with new software skills without wrecking the company. Forrester calls this the shift from grease to code, and we can help.
But Volkswagen Isn’t Alone
Also this week, Volvo and Polestar announced that availability of their new electric vehicle models would slip from the second half of 2023 into the first half of 2024. The reason? Integrating complex software with complex hardware. It’s a common refrain, and traditional engineering firms all struggle with it in one form or another. Some pour money into building their own teams, as Volkswagen did. Others get into sometimes-uncomfortable relationships with digitally savvy partners and must then grapple with culture clash, proper division of responsibilities, and a loss of the control they’re used to exerting over everything.
These internal machinations matter, and companies need to get better at them. But the bigger threat is to customer experience (CX) and a customer’s relationship with your brand. At a trivial level, the fact that the screen on my expensive washing machine insists on cheerily telling me that the washing has “compelted” (sic) drives me to distraction several times a week. More seriously, prospective buyers of those new car models may get bored of waiting and buy from a competitor. And most seriously of all, poorly integrated hardware and software has safety implications that no one should ever ignore.
Modern products combine physical engineering and software engineering. Modern makers of those products need to get an awful lot better at doing the same.