Embedded Software is changing how companies operate

Twenty years ago, we bought mobile phones for their hardware. Since then, a lot has changed, and now, embedded software delivers the primary value – offering entertainment, navigation, augmented reality, productivity apps, and so on.

However, such software does not work alone. It requires the phone’s hardware (connectivity, cameras accelerometers, etc.), and a cloud ecosystem to download new apps and share data. But it is the software – the operating system and firmware on the phone – that runs the show.

As a result, consumers now have sky-high expectations of technology. And if industrial companies can’t deliver products with a similar software-driven user experience, they will lose these customers. Manufacturers of cars, planes, trains, satellites, solar panels, cameras, home appliances, and so on are all undergoing a similar shift driven by embedded software.

That shift has huge implications – not just for the product itself, but for the company designing it.

Ever more products become software-driven

Let’s start with the product. Take a car or a plane – products that are increasingly software-driven. Both are developing software for automation and route optimization on the one hand, and to improve user experience and entertainment on the other.

They are not alone. Trains need one type of software with smart signal controls for optimal route planning, and another type that allows users to order food from the buffet car on their phone. Satellites must make real-time decisions about trajectory, data capture, and energy management. In-home batteries must control energy in and out, and track what they sell back to the grid.

Embedded software drives a change in organizational thinking

Embedded software is not entirely new in these industries – cars and planes, for example, have long had bits of control software. But its scale and sophistication are now skyrocketing.

A Capgemini Research Institute (CRI) survey – of 1,350 $1bn+ revenue companies with goals to become software-driven – found software accounted for 7% of revenue in 2022, but was expected to rise to 29% by 2030. That same report also found that 63% of Aerospace & Defense organizations believe software is critical to future products and services, with industries from automotive to energy making comparable claims.

But getting there will mean some big changes at these organizations.

Unlike a phone – which was designed to be a single integrated device – cars, planes, satellites, drones and other industrial systems were originally designed with multiple ECUs (electronic control units), each running multiple pieces of software. Each ECU was developed separately by different parts of the organization.

But now there is a need to integrate everything. For example, autopilot won’t work if its underpinning software can’t communicate seamlessly with the separate control units for sensors, steering, and brakes.

The importance of transversal software

Doing this in the current siloed way would create unmanageable complexity. Software needs to be ‘transversal’ – ie. developed consistently across the organization, rather than in silos. There must be a centralized team defining strategy, and managing and developing embedded software as a product across the organization. This must all be done with the same standards to facilitate interoperability, scalability, upgrades and reuse – whether it’s a landing control system, energy management system, in-flight infotainment, or smart cockpit. This transversal operating model makes software teams the backbone of software-defined organizations, continuously developing software solutions across the company.

That doesn’t mean all software must be connected to the final system, or that everything will be developed in the same way. Software can be very different. For example, rear-seat entertainment software can offload some data-heavy functions to the cloud, and developers can launch beta versions to get user feedback. On the other hand, high-integrity software for braking must do everything on board, work every time, and be separate from any hackable entry points into the system.

There are separate development tracks for different software components, so that less safety-critical software can quickly get to market, while more safety-critical parts can be carefully managed through verification and validation (V&V), and certification. But all development tracks should be within a centralized software team, which works together, sharing a consistent system architecture, standards and learnings, and creating products the entire business can access once complete.

A positive example

Consider Stellantis, which owns multiple car brands, including Opel, Peugeot, Dodge and Fiat, among others. It has invested in developing three core software platforms: one which is the backbone of the car (STLA brain), one for safety-critical assisted driving (STLA AutoDrive), and one for the connectivity and cockpit services (STLA SmartCockpit).

It implemented centralized software standards that are systematically used across all brands and models. This is similar to a trend we’re seeing across all markets – ‘platforming’. The platforming approach leverages generic components (computer vision, voice command, navigation services, etc.) that are applied to several projects, products and use cases – sometimes used with customizations to different brands and marketings – all without needing to build, test and certify everything from scratch.

Innovate or fail

All of this requires a major shift in thinking from organizations. But they must make this shift to survive.

And largely, they are. The auto industry is taking the threat from Tesla (and its advanced on-board computing) seriously. They may soon be pushed to move faster by software-driven Chinese competitors, like BYD and Nio, whose car interiors can transform into immersive cinemas at the push of a button. Industries from aviation to energy are no longer complacent – all recognize that embedded software is critical to their future. And all know they must undergo radical organizational change to turn legacy hardware into future-proof, software-driven products.

See how embedded software is helping industries transform their business – and how Capgemini can help along your journey.