Renault CIO, Frederic Vincent, tells automotiveIT International about digital transformation, the IT collaboration with alliance partners Nissan and Mitsubishi and his strategy for dealing with legacy systems.
Renault CIO Frederic Vincent runs both the IT department and the carmaker’s digital transformation unit. “You cannot do digital transformation if you don’t have operational levers,” he says (Photo: Renault)
Before joining Renault, Frederic Vincent spent 20 years working in the television industry, most recently as chief technology officer at premium French cable TV company Canal+. In 2016, Vincent became CIO of Renault, taking charge of the carmaker’s IT operations as well as its digital factory, Renault Digital.
Why did Renault opt for a CIO and head of digital transformation from a completely different industry?
The media and pay TV business where I come from faced digital transformation much earlier than the car industry. Fifteen years ago we were still selling subscriptions in traditional retail networks, but that has completely changed and now everything is sold online. Renault was looking for someone who had already gone through a digital transformation in a real business environment.
You joined an industry that has been successful doing things in a certain way for 130 years. I assume you were aware that change comes slowly in the car industry?
It is a big challenge, but I’m in a good position because I am in charge of both the IT department and digital transformation. You cannot hire someone to do digital transformation if he doesn’t have any operational levers.
But making Renault a digital enterprise and dealing with legacy systems, which is a big part of what a CIO does, are quite different areas. How do you reconcile the two?
The idea is not to keep them separate. Our digital transformation has three elements. The first is that we want to give our employees the best tools to do their jobs. I’m talking about the right workstations, the right operating systems, applications that run in the cloud, the ability to share documents via mobile devices. The second step was to radically change the IT department so it could manage new technologies such as big data, artificial intelligence, mobile apps. We didn’t have the skills to do that, so we hired lots of new people and retrained a lot of people within our own operations. And the third was to create a digital organization to shape and accelerate the digital transformation at Renault. That’s why we created Renault Digital.
Why is Renault Digital, your digital development unit, a separate subsidiary of Renault?
The idea is very simple. When we have a digital project like, for example, a website, we take people from marketing and from IT and, possibly, other areas, and put them inside Renault Digital, which is housed in a separate building. These teams incubate the project, which can take six-to-nine months. Then they go back to their original teams.
Is the IT department fully involved in all of Renault’s digital initiatives?
Everything is done within the organization that I run. But the digital initiatives are handled in a separate entity – Renault Digital - because we need to change processes and mindsets. It would have been much more complicated to do this within the existing IT operation, which is why we created a 100 percent owned subsidiary in a separate building. We bring people from business and IT together to learn about digital technologies. The building is close to our headquarters. We have about 300 people there now.
How is the adoption of the new ways of working going?
It’s been a long journey that started roughly three years ago. It has meant that the agile methodology had to be adopted by IT as well as the business divisions. We had to change their way of working. It used to be that the business side would provide specifications for a project and would come back when it was being delivered. I don’t want that. When somebody asks me to build a new e-commerce website, for example, we sit together and figure out what needs to be built and how. It’s a big change in the way everybody is working.
What kind of people work at Renault Digital?
You can divide them in three groups that are roughly equal in size: First, there are the newly hired people with digital skills that we didn’t have inside Renault. Second are Renault people we retrained to work with the new technologies. And the third category is external contractors.
Is it difficult to attract digital natives with the right high-tech skills to come work at Renault?
It’s not easy to attract people. Many are not keen to go to work in a big company that may have some cumbersome processes. But that is why we created this new subsidiary, where processes are simpler. We have higher turnover than inside Renault, but it’s acceptable and not a big issue.
How many people work in Renault’s IT department overall?
Worldwide, we have about 5,000 people, including external consultants. It’s not a big number for a company the size of Renault. The way it works is that the incubation of digital transformation projects is done within Renault Digital, but the implementation is handled by traditional IT teams.
Does Renault have a special relationship with one or more IT service providers?
We are very much a Microsoft company when it comes to office applications, but for the rest we use a range of products from different companies, including ones like Oracle and SAP. We are not really focused on one particular technology.
After two-and-half years in the CIO role, please tell us how things are going and what your main objectives are for coming years.
When we discussed digital transformation, we decided that it needed to bring value to the company. We first said we wanted to generate 600 million euros a year in benefits from the transformation, but we ended up raising that to a more ambitious 1 billion euros by 2020. And we’re on track to do that, with roughly 50 percent coming from productivity and efficiency boosts and 50 percent from the new business opportunities that we create. At least 50 percent of that 1 billion goes to the bottom line, the other half is for new business initiatives.
Can you give some examples of these benefits?
We’re creating opportunities to sell new services to customers, we’re reducing the time it takes to deliver projects, we’re breaking down the silos within the company and we’re re-using software. We’re also using the data we have available to understand our business better and make better decisions.
In big, global companies such as Renault, data is stored everywhere in the world, often in different formats. That makes it hard to put all the information to use. Where are you with consolidation of data?
Inside Renault, data was split thousands of ways, but now we have built a big data platform where we gather all data that has strategic relevance for the company. That way we can conduct cross-functional analysis. It takes several years to consolidate all data. We decide on the basis of value, which of our data projects to prioritize. It’s a step-by-step approach.
Renault, Nissan and, more recently, Mitsubishi have a close alliance and cooperate in many areas. How do you work together in the IT space?
There are big differences between IT at each of the three companies. At Renault, we have focused on a strong evolution of our IT and you just cannot be efficient if you have to deal with three companies at the same time. I was hired to focus on Renault. Of course, we have some projects where we coordinate, but my first priority is to make sure we have the right teams in place for Renault.
Nissan CIO Anthony Thomas is doing the same at Nissan where he’s taking a lot of steps that are similar to ours. But each company first focuses on its own operations. In the next stage we then can work together and create synergies. But of course we have a very close working relationship.
Are there particular areas where you already collaborate today, for example by using the same service provider or the same technologies?
We use the same workstations, have the same Windows configuration in our offices and everybody uses Microsoft Office 365. We’re also on the same network because we need to work together every day. We’re using the same tools to manage HR processes and, because of our joint purchasing with Nissan, we use the same software there, too. But there are also differences; in manufacturing, for example, we’re not using the same software, for historical reasons. In general, though, we try to converge.
Hasn’t convergence between Renault and Nissan been high on the agenda for years already? IT was one of the areas targeted for convergence years ago.
That is true and in many areas we are converging. But it’s not that simple. Take engineering software, which is used for digital mockups and the design of our cars. Renault has for many years used Dassault Systemes’ Catia software. Nissan, on the other hand, uses Siemens PLM. It’s very difficult to change that, because, in a switchover, you have to retrain a lot of people.
Are you just accepting this situation, which is making it difficult to share architectures and plants between Renault and Nissan?
The two companies use their respective software systems quite differently, but all teams have to work together because we share hardware platforms. The IT department has to make sure that the two systems can talk to each other, which is why we are creating convergence platforms that let us exchange information in a matter of seconds. We need to make sure that, when we build a Nissan car in a Renault plant or vice versa, the right interfaces are in place, so the systems can talk to each other.
That means you’re constantly converting a lot of data?
Digital transformation is all about creating new software and new platforms and using new digital technologies. It’s key that these new systems can talk to legacy systems, because most of our data and most of the business we are doing today is on legacy systems. We run legacy systems that will not be changed, because it would take 10 or 15 years and would involve millions of lines of source code. We want to open these systems so they can talk to other systems using APIs. Our legacy-systems strategy is not to replace them but open them up using APIs. That way, we make sure that the information that is managed by these legacy systems is available on our new digital platforms. That’s the reason I want my legacy-system specialists to be part of the digital transformation.
Are you, then, embedding your legacy systems in the new, digital corporate IT architecture?
A lot of applications are still running on mainframes today. Some are 30 years old and have been customized frequently. You cannot quickly change that. We don’t have the money and don’t have the time to do that. But there are very interesting technologies that allow you to have APIs on mainframes. You can even do DevOps on mainframes. You can work in a digital way using these legacy systems.
Connected plants and connected cars raise increasing security concerns. How are you addressing those?
Security is very high on my priority list. When we do digital transformation, we open our systems to the internet, so we are creating much more exposure to cyber risks. It’s a tradeoff: If you just work with mainframes in plans, you have less risk, but you don’t realize the value you could get. You have to connect your systems and make applications available on various devices. We are spending a lot more money on cyber security every year; we have no choice.
Are you involved with protecting the connected car as well?
Our primary focus is on protecting our IT systems and the systems we run in the plants. We’re updating our software and make sure we have the latest software patches. Connected cars introduce even more – and more serious – risks, because we’re talking about the controls of the car. We play a coordinating role, but cyber security for the car is handled primarily by our engineering department.
Where does your responsibility end and where does engineering take over?
It’s quite simple: When we talk about embedded software, we consider this an area for engineering. When we talk about the world outside the car, it’s ours to deal with. With the connected car, you’re obviously connected to the cloud, which means we are involved. We provide rules and policies for the teams working on embedded software, because we have this expertise.
When you look at the automotive landscape as a whole, which technologies will reshape the industry the most in the next 10 years?
The most obvious change is the car itself. We’re putting much more software in the car, to the point where the car is becoming an IT system itself. That raises questions of architecture, of how to update it over the air, how to protect it. We are just at the beginning of this change. The second big transformation I see is how we build the car. We are using predictive maintenance and big data to make manufacturing more efficient. We are using software for real-time communication with suppliers so we can synchronize production. We are giving workers new technologies to become more efficient. And the third area is engineering, which is tasked with building much more complicated cars in less time than before. With autonomous cars, you’ll have to drive billions of kilometers to test your algorithms. You can’t do that physically, so you record all data and replay them with new algorithms, using high-performance computing systems.
And what, finally, is the CIO perspective on the way cars are sold today?
We are still mostly doing business the old way. We build the cars, give them to the retail network and they sell them to the end-consumers. We don’t know much about the end users and want to have more information about them. We don’t want to replace the retail network; you cannot sell cars without it today. But we could share much more information on both sides and digital technologies can provide mutual benefits. E-commerce is quite a new approach and we’re already selling cars online in Brazil, for example. That’s just the beginning.