Transforming the automotive software market: De-facto standardization through open source

February 2024
Sebastian Werner, Felix Kreichgauer, Falk-Sebastian Dörfler, Marcel Timucin

The automotive industry is in the midst of a profound software-driven transformation, as it pivots to meet the demands of modern consumers. However, automotive software development is proving to be much more complex and challenging than originally anticipated, with manufacturers and suppliers finding themselves grappling with four crucial hurdles threatening progress:

  1. Access to talent. The foundation of any successful software endeavor is a team of skilled developers (for example, there are 100+ million developers on Github, and 2023 saw more than 4.2 billion contributions). The automotive industry is affected by a global shortage of talented software developers, with these professionals being enticed by other industries perceived as being more dynamic and innovative
  2. Time to market. Software development has been inexorably tethered to hardware development cycles, leading to extensive software development efforts with each new hardware architecture. Additionally, with reuse potential remaining low, extended software development times further add to the problem.
  3. Cost. In the pursuit of software-driven excellence, costs have emerged as a formidable adversary. Developing an in-house operating system (OS) poses a significant financial undertaking with no guarantee of enhanced product differentiation at the end of the process.
  4. Monetizing innovation. The automotive industry’s holy grail remains the ability to deliver innovative features that truly differentiate vehicles and deliver meaningful commercial returns.

The automotive industry's answer was to set up its own software organizations and extensive standardization, as was also the case in the hardware world. However, previous standards, including those such as AUTOSAR, are now reaching their limits in the automotive software world. The establishment of software organizations also failed due to a global shortage of SW developers. As a result, many industry players chose an alternative path, with OEMs and OESs now trying to establish open source within their software development and joined open source foundations (see sidebar).

Automotive open source initiatives

  • Eclipse SDV Working Group Provides a forum for individuals and organizations to build open technology platforms and automotive grade software stacks.
  • COVESA Focused solely on developing open standards and technologies for connected vehicles; leveraging vehicle data and vehicle-to-cloud connectivity has become a primary goal.
  • SOAFEE Intends to deliver a cloud-native architecture enhanced for mixed-criticality automotive applications.
  • Automotive Grade Linux AGL is a Linux Foundation project with the goal to build a single platform for the entire industry; develop 70 to 80 percent of the starting point for a production project.

De facto standardization through open source

In the automotive industry’s rapidly evolving landscape, standardization has always been thecornerstone for achieving interoperability and consistency across vehicles. However, traditional approaches to standardization, often reliant on lengthy interface specifications, have proven to be insufficient in addressing the industry's pressing needs. Interface and architecture specifications do not drive applications and only minimally reduce the software development effort. In this new era, open-source software emerges as a transformative force, setting de facto standards with deployable code, and driving adoption across the automotive industry by selecting the best-fitting solutions (standardization due to highest developer acceptance), much like Android and Linux have done for the mobile phone market.

Current standardization approaches take up to 15 years due to their committees landscape; automotive software requires a usable solution within 3-4 years.

The current use of open-source-software in vehicles is undisputed. Automotive Android Open-source Project (AAOS) stands as a shining example of how open-source solutions can redefine and standardize an entire industry, driving accelerated development, fostering compatibility, and facilitating innovation. AAOS has emerged as the undeniable de facto standard for vehicle infotainment systems.

Open source solves key challenges of the automotive industry

In addition to the de facto standardization, which complements previous approaches, leveraging open source has the potential to solve key challenges faced by the industry.

Open-source initiatives offer entry points into expansive and dedicated communities of open-source enthusiasts who are deeply devoted to tackling digital technology challenges. Considering the broader audience their products will reach, software developers prioritize bolstering their expertise and credibility. This emphasis greatly enhances the appeal of the automotive industry for developers. Additionally, open source fosters the organic exchange of talent among numerous contributors.

In terms of technical competitiveness, open source will disrupt Conway's Law by enabling the independent development of software and hardware, leading to a more refined separation between the two. Conway's Law, which states that a system design reflects the communication structure of its organization, is reshaped by this approach resulting in an improved hardware/software separation. Eliminating hardware centricity ensures compatibility with diverse hardware platforms. This separation allows software developers to focus on application logic without needing to understand the intricacies of each hardware component. Thus, open source with its de facto standardization via deployable code offers increased potential of reusability of components within and across OEMs, starting with the implementation phase.

Enhanced reusability directly affects cost effectiveness on a per-unit basis, coupled with expedited unit amortization. Reusability also results in shorter development times characterized by higher release frequencies, which also increases the innovation power of the automotive software industry. The shared codebase reduces barriers for innovative suppliers and start-ups, fostering the creation of an open ecosystem. Expanding partnerships remain the sole pathway to cultivating an ecosystem capable of generating novel revenue streams.

Open source's de facto standardization has proven transformational in various industries and domains. A striking example lies in the mobile handheld industry, where proprietary solutions were rapidly overtaken by comprehensive de facto standardized OS stacks that included drivers and operating systems (see figure). This transition occurred within a remarkably brief timeframe. The use of open source in the handheld industry not only opened up ecosystems but also fueled innovation, ushering in new revenue streams.

Google is one of the first players in the open-source area. The reasons why big players are contributing to open-source communities are, among others, (1) standardization around open source that results in advantages in the market by influencing it, (2) branding, and (3) access to open-source community/enablement to hire and get the best of the best. – Former director of engineering at Google and open-source expert

The successful use of open source is more than just community participation

Tapping into the immense potential of open source is a promising endeavor, but it does come with its own unique set of considerations and challenges. Hence, to achieve a successful organizational transformation through open source, it must be approached holistically, acknowledging the dependence of product, organization, and process.

Product excellence

Starting with the product, the use of open source requires groundbreaking decisions as the strategic implications become more layered and complex. Achieving product excellence in this context involves a multifaceted examination of various aspects:

  • Product sourcing strategy. A critical decision revolves around the sourcing of each software component. Next to the classic make or buy, open source offers a third option: share.
  • Publishing strategy. Companies must determine which existing proprietary software assets should be unveiled as open-source projects, a strategic move that demands careful consideration.
  • Contribution strategy. Defining the level of engagement in open-source projects adds another layer of complexity. Rewrite: The greater the commitment, the more influence can be obtained.

For companies with complex, software-intensive products, evaluating different components within the system is crucial to determining the most suitable sourcing strategy. This requires a holistic perspective, one that considers multiple factors, including market relevance (differentiating or commodity), as well as optional criteria such as availability, cost, criticality, competence, resource load, complexity, and marketing. In the software industry, the following scheme has proven to be a starting point often accomplished by an extensive SWOT analysis:

  • Make. If the software component offers differentiating functionality or a unique selling proposition, building it from scratch is the strategy of choice.
  • Buy. Standard functionality, provider solutions, third-party offerings, or ecosystem enablement suggest integration as the optimal approach.
  • Share (integrate and contribute). When dealing with non-differentiating software or collaborating on a commodity basis, reusing open-source components becomes the logical choice.

It's worth noting that many companies may mistakenly believe that passive consumption of opensource fulfills their needs, overlooking the potential benefits of active participation in open-source communities. To maximize the advantage of open-source software, companies must understand that their level of engagement in open-source projects directly influences the level of control they have over these projects.

Furthermore, an organization must also determine their contribution strategy based on factors such as business impact and technical complexity. Contribution strategies may range from passive intake and bug fixes to active involvement and taking a lead role in a community, marked by frequent releases with innovative improvements.

Establishing process excellence

In the realm of open source, alongside the product itself, process excellence plays a pivotal role in ensuring successful utilization. Establishing robust code management practices is essential to address vital concerns when using open source, including licensing issues, security vulnerabilities, and branch decoupling. The study of the software industry has revealed four elementary components of process excellence:

  • Code management essentials. Code management entails understanding vital aspects of your codebase and making informed decisions within an environment that incorporates code from diverse sources. In the case of automotive software there are core management regulations to be considered: UNECE regulations, ASIL, and FUSi demand a reproducible build process, a versioned/qualified toolchain, and thus well-documented library dependencies for a long time.
  • Mitigating legal risks. To minimize legal risks, meticulous tracking of used open-source components and licenses is imperative. Manufacturers must implement routines and tools to ensure compliance with open-source licenses, a practice known as configuration management or inventory tracking.
  • Managing branch decoupling. Branch decoupling is a notable concern when using open source, potentially leading to migration challenges when transitioning to newer versions. Manufacturers must establish policies to track and regularly update open-source software dependencies, striving to maintain as close an alignment as possible between their branch and the master branch. This proactive approach enhances control over versioning and minimizes the risk of branch divergence.
  • Configuration management for security. A well-established configuration management system also contributes to quickly and reliably addressing security issues. To further minimize risk, major tech companies validate the risk of using open source through a dedicated security team who conduct risk assessments. This security tracks all packages and published vulnerabilities, enhancing security vigilance.

In essence, process excellence in open-source utilization is pivotal for organizations looking to leverage the full potential of open source while effectively managing licensing, security, and versioning concerns.

Organizational excellence

In the automotive industry, one of the biggest challenges lies in shaping an organization where open source assumes a pivotal role. Open source signifies a paradigm shift in software development, accompanied by a unique set of principles, rules, and cultural norms that demand adaptation within the automotive sector. A significant mindset shift requires companies to relinquish full control over their products. The perceived drawback of losing control must be weighed against the manifold advantages offered by open source, particularly the collaborative potential it unlocks. Establishing a company-wide open-source mindset is pivotal, starting with the highest levels of management. Developing a formal open-source software strategy, road map, policy, and processes is crucial. Adopting technology-driven strategies allows companies to control and guide open-source communities, leading to commercialization and standardization of technology while maintaining the advantages of timing, cost efficiency, and innovation over competitors. This enables organizations to strike the right balance between reaping the business benefits of open source and effectively managing the associated risks. In the software industry, a global open-source governance structure, such as an open-source project office (OSPO), is typically employed. The open-source officer's primary responsibility is to foster the organization's open-source maturity across both engineering and business facets. Additionally, the OSPO bridges the divide between risk-averse company leadership, legally uninformed software development teams, and reactive legal entities. This multifaceted role encompasses the maintenance of open-source policies, the governance of open-source practices, and the provision of guidance and decision-making on matters pertaining to open source. In conclusion, pioneering organizational excellence in the open-source era is a complex endeavor that requires a holistic approach. Embracing the open-source mindset, establishing governance structures, and cultivating a strategic orientation toward open source are pivotal components of this transformative journey in the automotive industry.

Leveraging de facto standardization

Open-source software (OSS) has undergone a significant evolution, moving beyond its origins in entertainment to become a transformative force in the automotive industry. Historically, automakers had limited options when it came to software stacks and technologies, but today they face a burgeoning landscape of OSS solutions, APIs, and proposals. To navigate this new terrain, industry leaders must not only understand but also embrace, manage, and strategically direct OSS in their IT road maps to maximize its business value and mitigate associated risks. OSS is driving adoption across the automotive sector, setting de facto market standards akin to Android and Linux in the mobile phone market. By leveraging these de facto standards through open source, the automotive industry addresses the key challenges it faces by establishing code-based standardization. However, these opportunities come with their own set of challenges, notably related to security and license compliance. Nevertheless, the immense potential of open-source software remains undiminished. Open source is at the forefront of some of the most innovative technologies, including AI, edge computing for AD, and machine learning, all poised to revolutionize the industry, and we have seen numerous successful examples, such as with Android Automotive and the mobile phone industry, which clearly demonstrate the power of open source in driving innovation. As the automotive sector marches toward the future, further expansion into domains such as body, gateway, and drivetrain is essential. The ADAS/AD domain plays a special role here. To accelerate the development of self-driving vehicles, the automotive sector must chart new territory with open-source software. The transition to self-driving vehicles will ultimately hinge on whether or not manufacturers are able to make full use of open-source solutions. Open source has evolved from a shortcut for quick gains to a business-driven approach with the power to reshape market dynamics and capture value in new ways. As software continues to transform industries, open source is poised to be the driving force that reshapes the automotive landscape. In the words of Adrian Bridgewater, "If software is eating the world, then open source will chew it up (and swallow)." This sentiment encapsulates the profound impact open source is poised to have in shaping the future of the automotive industry.

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