An Independent, Standard-Agnostic Software Marketplace Could Be the Answer to Automotive Software Woes

By Abu Miah | 4Q 2024 | IN-7565

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The SDVerse software marketplace is open for business. The Business-to-Business (B2B) automotive software marketplace platform is a collaboration between General Motors (GM), Magna, and Wipro, and allows Original Equipment Manufacturers (OEMs) and suppliers to engage in a more streamlined sourcing process for their software needs, with software vendors being matched to buyers according to their software needs. Sellers are able to tag their software products with attributes, certifications, and documentation, as well as other product capabilities. After the platform allows buyers and sellers to make a connection, the negotiations for pricing and other terms are made outside of the marketplace.

Additionally, the platform offers software solutions across several domains in the vehicle, including chassis, powertrain, body & exterior, comfort & interior, Advanced Driver-Assistance Systems (ADAS)/Autonomous Driving (AD), infotainment, connectivity, and cross-domain software. OEMs can filter according to quality and validation, safety and security certification, or by domain, with built-in support for procurement roadmap tracking and solution comparison. Participating in the marketplace requires an annual subscription fee, with zero fees for buying or selling products.

As OEMs transition their vehicles, designs, and production processes, and move to be more software-defined, they have run into several problems. The automotive software engineering talent shortage has been a critical roadblock, making it more difficult for OEMs to implement and maintain their own software in vehicles, and their suppliers have often met similar struggles when trying to meet their goals. ABI Insight "Addressing the Software Skills Shortage in the Automotive Industry" details several approaches that the industry has taken to combat this issue, and one of these is utilizing third-party and open-source development to maximize software reuse, increasing the productivity of the existing developer population. This is what SDVerse enables, by opening up OEMs to a more easily accessible market for non-brand differentiating software.

The marketplace is positioned as an independent and standard-agnostic platform to allow it to benefit a higher range of stakeholders globally, and in addition to the founding members mentioned above, has been endorsed by another group of stakeholders that includes FORVIA, FEV, HL Mando, NXP Semiconductors, TTTech Auto, and Valeo, among others. With this network of buyers and sellers of embedded automotive software, SDVerse has the potential to accelerate an OEM's development cycle, decrease costs, and increase the quality of its software, as well as enabling software sellers to scale up and reach potential customers in a cheaper, quicker, and less complex fashion than the traditional Request for Quote (RFQ) process.

For the automotive industry to realize the potential benefits of a vehicle software marketplace, several factors should be recognized by the different stakeholders involved. For OEMs, a subscription to the platform should be considered carefully. Some have entrenched supplier relations with vendors that are meeting their current software needs and are adeptly keeping pace with software transformation, while others may need more help in identifying good partners. A comprehensive assessment of their software ecosystem, including roadmaps and internal development, in addition to their supplier performance, can identify which domains are better suited for a renewed software sourcing decision, and these decisions should take into account their Tier One partners' fluency in software as a decision-making partner.

Tier One suppliers can engage in this marketplace as one step toward embracing the gradual change in their role as an OEM partner; a trend discussed in ABI Research's The Evolving Role of the Tier One Supplier in the Automotive Digital Cockpit presentation (PT-2783). Implementing new software partners into an OEM's development practices is a skill that requires a Tier One's system integration expertise to enable them to meet the typical Software-Defined Vehicle (SDV) goal of faster innovation cycles. Further, in markets like China where SDV is moving quickly, non-domestic OEMs have had trouble and lost market share over time, and concluded that their suppliers are at fault. If they want to meet their OEM partners' needs and be more dynamic, Tier Ones can engage in this kind of marketplace as a key step to allowing OEMs to compete with Chinese automakers.

For Tier Two software suppliers, this platform can be a promising way to increase their exposure to more OEMs and Tier Ones for partnership opportunities, but this is dependent on their existing customer base and its similarities with the platform's OEM and Tier One subscribers. SDVerse's ecosystem currently includes two OEM groups; GM and Renault, and several Tier One suppliers, including FORVIA, Valeo, and Bosch. Smaller software vendors, in particular, would find success in such an ecosystem if their solutions can compete with and innovate on what these groups are used to buying.

For SDVerse, expanding this ecosystem should be a priority, as participation of these two groups of stakeholders will directly correlate to a Tier Two's subscription decision. Similarly, OEMs and Tier One suppliers will be motivated to participate if the number of vendors offering solutions on the platform is significant enough to allow comparison between all the relevant solutions, and materially accelerate the critical sourcing and RFQ process. The catch-22 of needing more OEMs/Tier Ones to attract software vendors and vice versa is combatted by GM's significant size and endorsement of the platform, but fully realizing the potential of SDVerse hinges on expanding the partner ecosystem.