Mercedes target F1 cost cap with SAP collaboration

German software company’s AI and cloud solutions will target efficiency and forecast costs, plus potential added benefit of shorter lead times.
  • Software being utilised specifically to target F1 financial regulations
  • AI and cloud solutions will target efficiency and forecast costs
  • Potential for shorter lead times around car components

The Mercedes Formula One team have penned a multi-year deal with German software company SAP.

Beginning in 2024, the partnership will look to leverage artificial intelligence (AI) and cloud solutions to influence decision making, optimise resources, and futureproof the team’s IT infrastructure.

“We are delighted to announce SAP as an official team partner of the Mercedes-AMG Petronas F1 Team,” said Toto Wolff, chief executive and team principal of Mercedes.

“We have a shared heritage and commitment to innovation and improvement which will meaningfully contribute to our on-track performance. SAP is a global leader in its field, and we could not think of a better partner to help us improve our efficiencies in 2024 and beyond.”

The Brackley-based team will utilise numerous resources from SAP to boost their on-track performance, including SAP S/4HANA Finance to allocate, save, and use resources more efficiently.

SAP Business AI will enable the team to forecast costs, predict final budget requirements, and optimise both the supply chain and stocked items accordingly.

To help with their overall operation, SAP S/4HANA Cloud will be rolled out for a secure and future-proofed cloud environment, while SAP Build and SAP Business Technology will create a transparent enterprise architecture, which can lead to shorter lead times for car components.

“Formula One is one of the most technologically innovative sports in the world, where incremental gains yield significant results,” said  Julia White, chief marketing and solutions officer and member of the executive board at SAP.

“Given the extreme conditions under which Formula One teams operate, motorsports provide a global platform to showcase skill and engineering excellence. But beyond the race day performance, there's a lot going on behind the scenes. SAP is proud to partner with the Mercedes-AMG Petronas F1 Team to make sure its operations are as fine-tuned as its cars.”

The cost cap has limited Mercedes’ spending power significantly, with a profit of UK£89.74 million (US$112.48 million) in their 2022 financial results the best on the grid, so this partnership will seek to redirect the team towards the front.

BlackBook says…

Efficiency is the name of the game in Formula One and the advent of the cost cap in 2022 has required a more focused approach from teams. Red Bull fell foul of the regulations that year, highlighting the importance of following these new rules.

This is the first partnership in which a Formula One team has stated they are actively targeting the series’ financial regulations. AI partnerships are not new in Formula One – the deal between Ferrari and Amazon Web Services (AWS) springs to mind – but these have a particular focus on machine learning and data analytics.

It is no coincidence that the team currently dominating Formula One has an extensive agreement with Oracle, which has rolled out the most comprehensive use of the technology that Formula One has ever seen. On track, this takes the form of Monte Carlo simulations that predict the probability of certain outcomes, something that most teams can produce for their own cars.

Red Bull, thanks to Oracle, are capable of producing Monte Carlo simulations for their main rivals at the very least, with designs on having a system in place that can function for all 20 cars in Formula One. This technology has become the biggest performance gap between teams in the cost cap era.

Mercedes will hope this agreement with SAP can produce similar results, but the former world champions are already playing catchup in Formula One’s newest technological playground.

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