VW relies on Telekom: T-Systems is building a global cloud for Volkswagen

Volkswagen is breaking new ground in its digital transformation and is relying on European sovereignty in its IT infrastructure. In a large, financially unspecified deal, the Wolfsburg-based automotive giant has commissioned the Deutsche Telekom subsidiary T-Systems to set up the so-called “Group Private Cloud 2.0” and operate it worldwide. This IT infrastructure is intended to serve as a nervous system for applications from all group brands – from Audi and Porsche to Skoda and the core brand VW. New IT applications will now run directly in this new environment. The long-term plan is to migrate a large part of the classic IT landscape into this cloud environment.

VW IT board member Hauke ​​Stars describes the goal behind this step as follows: It is about strengthening the car manufacturer’s digital resilience through a combination of technology partnerships and its own infrastructure. Through more data processing on its own within the European legal area, Volkswagen wants to make itself more economically and technologically independent.

T-Systems boss Ferri Abolhassan emphasized that digital sovereignty does not have to be expensive. According to the IT service provider, the product base used should not only guarantee independence and high security standards, but also undercut many public cloud offerings from major US hyperscalers such as AWS, Microsoft Azure or Google Cloud in terms of price. This will also give VW direct access to the AI ​​infrastructure of T-Systems in Munich in order to advance industrial AI applications.

Focus on data security and European law

From a technological and strategic perspective, the project certainly offers advantages for the car company. A private cloud combines the flexibility, scalability and automation of modern computing clouds with control over the underlying infrastructure. Because business-critical applications and sensitive vehicle and customer data are processed in a dedicated, closed environment, European requirements such as the General Data Protection Regulation (GDPR) and regulatory requirements can be implemented better than in a shared public cloud infrastructure. Protection against cyber attacks and industrial espionage can theoretically be better achieved in an exclusive environment.

But the system change also raises questions. Both companies emphasize their newfound independence. But in reality, Volkswagen is to some extent just exchanging one dependency for another. Instead of a “vendor lock-in” with non-European cloud giants, VW is entering into a long-term interdependence with T-Systems as the sole operator of this business-critical infrastructure. A failure or delay in the project could paralyze the digital strategy of the car manufacturer, which has been struggling with software problems in vehicle development for years.

Price and innovation question

In addition, T-Systems’ promise to beat the prices of hyperscalers has yet to be fulfilled. The US giants have enormous economies of scale and global data center capacities that a European service provider can hardly offer to the same extent. When operated worldwide, private cloud infrastructures often tend to have higher maintenance and update costs compared to public clouds.

Last but not least, the challenge of migration remains: The transfer of thousands of historically grown legacy systems from all corporate brands to the new cloud is an open-ended IT project that experience has shown to use up a lot of resources and is prone to errors.

(NO)