Reimagining IT to Rev Up Digital Transformation

The auto industry is on the cusp of big changes, and digitization is leading the charge. Multiple major developments—the connected car, autonomous driving, electric vehicles, shared ownership, and the changing relationship between auto companies and their customers—are forcing every carmaker to think and act digitally.

At Nissan Motor Co., the giant Japanese automaker, the digital transformation effort is being led by Tony Thomas. Hired two years ago as chief information officer and the head of Nissan Digital, the 49-year-old Thomas is responsible for all of the company’s information technology. His expertise lies not in manufacturing automobiles, but in digitization; he comes to Nissan following stints at GE, Vodafone, and Citigroup.

Thomas recently sat down with BCG managing director and partner Alex Miannay at Nissan’s headquarters in Yokohama, Japan, to discuss the challenges that Nissan was facing when he came aboard and the impressive progress it has made as he guides it down the road to digitization.

BCG: Please describe the IT situation at Nissan when you first came on board.

Thomas: When I arrived, it was already quite clear that the entire auto industry was going digital, and that Nissan needed to remain at the head of the pack. But Nissan faced many of challenges that all nondigital native companies must deal with. Our platform was fragmented among both regional and functional silos, we had legacy systems and mindset to deal with, we were highly reliant on outsourcing, and we were struggling to capture and unlock the value from our data. As a result, we weren’t able to move at the speed business needs.

That in turn had led to a proliferation of shadow IT created by business functions trying to develop by themselves the capabilities they needed. Many different systems had been deployed, but often not with the level of control and scale needed. Finally, while we had a very talented group of IT professionals, many of them were busy carrying out traditional IT tasks, like managing providers. We really needed to upgrade our capabilities to move at the speed of digital.

BCG: What changes have you already implemented to unlock the value of digital and unleash it at scale?

Thomas: Our efforts so far fall into three categories: the organization, the application and technology portfolio, and talent.

First, I reorganized Nissan’s IT efforts, moving from regional units to a cohesive global organization reporting structure. Now we have regional leaders responsible for outcomes in their region, and global leaders who own the capabilities we need across all regions, such as systems architecture, data and analytics, and cybersecurity. And we are rebalancing our reliance on outsourcing from 80% to 50%.

Second, it was clear that we needed to rethink our application portfolio and how we managed it. The portfolio used to be 90% regionally aligned and just 10% truly global. I believe that for a company of our size, the mix should be more or less about 50/50. We’ve already begun to rationalize the portfolio and develop more global applications. We’ve also moved from the traditional waterfall method of software development to agile development with smaller projects delivering faster. And we are eliminating all shadow IT applications and governing those assets properly, to optimize cost and security.

Third, we have done a thorough assessment of our talent pool, with the aim of improving their digital skills and building the critical skills that Nissan will need in the future, such as data scientists and cybersecurity experts. To that end, we created Nissan Digital University as a platform to support the upskilling of our teams.

BCG: One of your signature efforts has been to build several digital hubs. Can you tell us more about your goals there?

Thomas: The first of our digital hubs is already up and running in India, with a staff of 600 only one year after its launch. These aren’t designed in a traditional outsourcing model or delivery centers; instead, they are intended as global centers of excellence driving innovation, with new-product development, data, and cybersecurity capabilities. The idea is to bring in some of the experience we need from outside, and move innovation forward from there, delivering our digital needs faster, better, and in a cost-efficient way, and deploying agile ways of working. Our first hub also hosts several global expertise centers, including a new Information Security Operating Center, Data Science, Design Thinking, UI/UX.

BCG: Can you talk about the results so far, in terms of the value that Nissan Digital has brought to the business?

Thomas: Value delivered to the business is indeed our main KPI, and we carefully measure our results across all fronts of our transformation journey. Our mission is to deliver 1% revenue growth and 1% cost reduction for the company as a whole, and to drive 20% greater efficiency within the IT function itself.

We have already succeeded in reducing costs in IT, and are reinvesting the savings in our digital transformation. We have developed several AI-based solutions, for example—one to better allocate commercial incentives across markets, and another to optimize our inventory. Both have had very tangible impacts on Nissan’s business performance.