Group Management Report

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Information Technology (IT)

The NEW AUTO strategy is playing a substantial role in driving the Volkswagen Group’s transformation into a software-oriented provider of sustainable mobility. We see technology and data competence, both in the vehicle and within the Group, as the key to this. Digitalized supply chains, automated production processes, data-driven sustainability and a seamless customer experience are examples of how innovative IT is the driving force behind the future of mobility. Against this backdrop, the Volkswagen Group established the IT Board position at the beginning of 2022. Based on an in-depth review of the situation, we defined the vision for the NEW IT functional area strategy, which focuses on the following topics:

  • Delivering highly automated enterprise processes and systems by means of a high-performance IT infrastructure with a cost-effective cloud-first approach that is designed to be resilient to cyber threats and ensure data protection.
  • Through agile development the customer-centric development of IT products and digital services with a short time to market will facilitate continuous improvement and refinement.
  • The systematic use and provision of data across the entire organization to optimize products, processes and corporate governance. Data is set to become a value driver for innovations, new business models, personalized customer contact and better corporate management across all brands and companies.

The new strategy NEW IT is intended to gear the IT and data organization to the requirements of the coming years, thus making a systematic contribution to the strategic direction of the Volkswagen Group. By forging ties between the Group Board of Management IT division and the chief information officers (CIOs) of the Volume, Sport & Luxury and Premium brand groups plus Volkswagen Financial Services AG, we aim to ensure a uniform, strategic focus and to help promote the leveraging of synergies and economies of scale. Systematic identification and Group-wide sharing of use cases will enable effective knowledge transfer within the Group, conserve resources and result in greater speed and efficiency. Due to the global spread of the Covid-19 pandemic, we had already taken extended measures in previous years to protect the workforce, such as increasing the use of remote working. In this context, the availability of the IT infrastructure for all brands and companies is a high priority. The provision of state-of-the-art IT applications for digital collaboration and the expansion of options for conducting business on mobile devices are designed to improve productivity in the long term. Building on the rollout of Microsoft 365, additional functions for simple, digital collaboration throughout the Group were implemented in 2022.

Software development

Group IT has the expertise to swiftly develop software and IT solutions for the Group based on the Group’s needs. Part of this development work takes place in the Software Development Centers (SDCs) around the world. The strategic goal is to safeguard and successively increase the proportion of in-house services relating to software products for the business processes.

The optimization of processes and the definition of standards for software development remain at the forefront of our activities. Among other things, this entails international, data-driven management of activities in the SDCs, strategic alignment of the business-critical enterprise systems in accordance with NEW IT and safeguarding intellectual property in the form of software product source codes.

Use of digitalization and IT solutions

At Volkswagen, the Board of Management continuously monitors and supports the digital transformation. The Group Board of Management Committee for Digital Transformation addresses the digital transformation of business processes across brands and business units in the Volkswagen Group. It manages the Group’s IT project portfolio, supports the digital cultural change as well as innovations and fosters synergies from the digital transformation between the Group and the brands.

Volkswagen embraces digitalization in the Company; its in-house Software Innovation Centers (SICs) are just one example of this. They act as centers of innovation and expertise, piloting new technologies with their know-how to fulfill the requirements of the different business areas in the Group, developing applications relevant for the Company and making these available for productive use within the organization. Here, Group IT, research institutes, educational institutions (such as universities), technology partners and policymakers work closely together on future trends in information technology. The SICs also use their network with start-ups to adapt innovative solutions to Volkswagen’s needs. This allows the experience and strategic expertise of a large company like Volkswagen to be combined with the pragmatism, the innovative ideas for new areas of business and the speed of young start-ups.

Highly specialized experts at the SICs in Munich and Wolfsburg are working, for example, on exploiting the potential of quantum computing for areas that have a commercial application. The focus here is on the optimization of traffic flows, such as ride pooling (a transport service for several passengers taking a similar route) and optimizing the order of individual steps in a process (for example a painting sequence) to reduce production times and improve the use of resources. Volkswagen is also investigating the optimization of the chemical composition of batteries through the use of quantum computing.

In the field of machine learning, work is being carried out on smart management of energy use to generate sustainable savings, for example in compressed air control systems. Artificial intelligence methods are being used in quality assurance too; for instance, audio analyses to support the quality assurance process in transmission manufacturing.

In addition, the SICs are used to transfer knowledge throughout the entire Company on topics such as advanced data analytics (process for the systematic analysis of data in electronic form) and block chain (distributed ledger technologies) to make these new technologies available to the Group. Advanced data analytics are helping to optimize the storage of replacement parts in the after-sales business, for example. Likewise, numerous bot projects are being implemented to automate business processes (robotic process automation).

Production processes are also safeguarded by artificial intelligence and camera systems (computer vision). The systems and equipment in the factories are linked together in an integrated overall system. In conjunction with the different departments, Group IT is also contributing its expertise to the field of research and development, one example being EU projects. For instance, digitalized work tools such as the “virtual concept vehicle” make the product development process faster and more efficient by replacing physical components with virtual components generated on the computer, among other things.

IT security

Safeguarding data and information throughout the Volkswagen Group worldwide is one of the main tasks of IT and was continued in fiscal year 2022 with the Group Information Security Program. The objective of the program is to create uniform processes and solutions across the Group to further enhance information security. The main focus is on topics that could one day pose information security risks for the Group and that need to be specially safeguarded as part of the Group’s digital transformation strategy, including cloud security and industrial cybersecurity. The program’s content and orientation are reviewed annually and updated if necessary.

We are one of the first vehicle manufacturers to require our suppliers to have passed TISAX (Trusted Information Security Assessment Exchange) certification. This sends out a strong signal regarding the security of cross-company information and data. TISAX certification is an assessment method developed by the German Association of the Automotive Industry and is based on the international industry standard and the requirements of the automotive world. The aim is for sensitive data and information to be dealt with securely by our suppliers. CAR2X technology offers our customers protection by warning them, for example, of traffic hazards. CAR2X technology enables direct communication from vehicle to vehicle and from the vehicle to the transport infrastructure. This TÜV-certified technology, implemented in accordance with European standards, has already been installed in over 700,000 vehicles, which should increase the level of safety for our customers.

The task of automotive cybersecurity is to avert cyber attacks on our vehicles throughout the entire product life cycle, as well as on the digital vehicle ecosystem. The Group policies in the Volkswagen Group based on the legal requirements of the UNECE (United Nations Economic Commission for Europe) regulation have been implemented. Brand-specific organizational guidelines are being specified and implemented on this basis, taking the organizational circumstances into account.

The Protected Customer program addresses the requirements of the UNECE regulation. To protect our customers against cyber attacks, and to implement our solutions in conformity with national and international legislation, we are establishing integrated, cross-brand, cross-regional security management systems for information and cybersecurity. These were validated through UNECE CSMS certification in 2021. Safeguarding of the complete life cycle of our vehicles and digital mobility services was transferred to standard operations after the program ended in 2021, where it continues to be pursued.

Key central information security processes have been audited in line with the international ISO 27001 framework and were recertified in 2022. This is the most important cross-sectoral standard for information security and is our basis for building an appropriate information security management system for handling all sensitive information in the Group.

In recent years, the introduction of the data protection management system and the data protection management organization has thus established the infrastructure for implementing and complying with data protection requirements at Volkswagen AG in the long term. Increasing digitalization and interconnectedness of business processes, new legislation in the planning with data protection relevance and the sharp rise in the extent of international data protection legislation continue to require a high level of attention if ongoing compliance with data protection requirements is to be ensured. Continuously raising awareness among the workforce and further standardizing and automating processes remain the focus of activities. Compliance requirements are already being integrated into the design of IT solutions and infrastructure decisions.