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).

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.

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.

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 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.