Volkswagen and Amazon open their “Industrial Cloud” to eleven other companies. This is a great opportunity for the German car manufacturer: It’s about who sets the standard.

Vehicle drives as if by magic: In Volkswagen's production

VAs a first step, olkswagen has opened its industry platform, which will be used to network the Group’s 122 factories around the world, to eleven mechanical engineering and technology companies. “In the future, we want to integrate other companies such as suppliers into the cloud,” said the manager Nihar Patel, who is responsible for strategic projects at VW, when presenting the plans in Wolfsburg.

The aim is to make the cloud built together with Amazon and Siemens “an app store” for the plants. With the help of the cloud, the automotive company wants to noticeably increase the efficiency of its factories. The partners who use the cloud, in turn, “can scale their applications and thus optimize their own business processes. That way everyone benefits, ”said Patel.

Among the eleven suppliers who are now participating in the launch of the cloud are internationally well-known names such as the automation technology group ABB, the automotive supplier Dürr, the software company Celonis and the database specialist Teradata. Volkswagen and Amazon launched the common cloud for all plants of the Volkswagen brands in spring 2019 as a partner network.

Become standard

A little later, Siemens was added as an “integration partner” to efficiently network the machines and systems in the factories of the group brands in the cloud and thus organize production more efficiently. VW boss Herbert Diess had repeatedly criticized in recent years that Volkswagen is slower and less productive than other companies in its factories and administration compared to the competition.

The range of software applications that the new partners are now adding to the VW platform include an artificial intelligence algorithm that calculates and efficiently distributes the need for driverless transport systems in the company’s internal logistics, and software for optimizing the maintenance intervals of Machinery. At the start of the cloud, 18 European locations of the group are to be connected in a first step by the end of the year.

“The data that we merge with the Industrial Cloud can only be more efficient through intelligent algorithms and software applications,” reported Patel. With the number of partners that VW finds for its cloud, the number of solutions that the plants can then access – like in an app store – grows. The platform is “not a closed club,” said the VW manager. “We are always open to cooperation – with our suppliers and any other company that has something to contribute.”

What are the advantages of the partners who provide their software applications in the cloud? Sarah Cooper, who oversees the project at Amazon Web Services, said digitization poses very similar challenges for many industrial companies. “For system suppliers this means: If their solution in the industrial cloud proves to be the standard, the interest of other customers will also grow.”

With similar arguments, Amazon founded its own cooperation with VW a year ago. “We learn from each other every day,” Cooper said now. Volkswagen contributes in-depth knowledge of industrial processes and excellent solutions, while Amazon has experts for digital processes. “Together we solve challenges that none of us could tackle alone.”

High economies of scale

The Volkswagen platform is based on Amazon technology, which has been expanded to meet the special requirements of the automotive industry. The companies that work as partners in the cloud also have access to VW’s data. “It’s give and take,” said Patel. “If we expect companies to develop solutions for us, then we also have to share the necessary information.”

The partners could achieve high economies of scale by working with the Wolfsburg-based group, because their solutions in the “Internet of Things” are not only used in one plant, but potentially at more than 100 Volkswagen locations.

For VW factories, opening up the cloud has the advantage that the locations can quickly use a growing range of software applications. This also accelerates the development of the cloud as a whole.