Sometimes dealers have what they want, right under their noses
Most dealerships use only 20%-30% of their information technology systems' capabilities. If they're only using that much now, they won't do much better with a spiffy new system, says Christopher Lange, president of Automotive Technology Associates in Providence, RI.
"If dealers want to stay ahead of the technological curve, they have to invest in something other than hardware," he says. "Computers don't solve business problems. Training, utilization, building an organization around the technology, around the information, and making it a profit center for the business, that's how you get up on the curve."
Mr. Lange, who ran a Chevy-Toyota store for four years in the late '80s, also says the dealer usually is the last person at the dealership qualified to make decisions about information technology purchases.
He says, "Dealers have to invest in the organizational infrastructure, get some people in who know what they're doing with this technology, learn how to use it and embrace that.
"Make it a part of the business process, not a part of the expense. Then when they make a decision to buy a system, they make an informed decision and it fits a business purpose that exists rather than trying to fit the business to a technology they've bought."
If dealers don't plan for how their systems are going to be used, and don't put in place a way to measure the performances of the systems, most of the equipment capabilities will go unused, he says.
The consultant says dealers don't readily buy that message. Such reluctance could cost them in the long run, given the importance of IT in today's auto business, he says.
If dealers were to heed his message, what should they do?
"The first thing is stop buying more system," he says. "But the dynamic of the marketplace is such that the dealership system providers have to come up with new things and have to convince the dealers that this is the bee's knees, the latest, greatest, biggest, shiniest, whatever. And they continue to sell the dealers all the new stuff. The dealers, believing in magic, buy the new stuff. But they can't use what they've already got.
"They need to start using what they've got to manage their business and make money."
Mr. Lange says dealers now are being sold new customer relationship management systems. He adds that many have CRM components in their current systems that they don't use.
He says one dealer, who asked for his help in deciding on a new IT system, threw Mr. Lange out of his office when he told the dealer he shouldn't buy anything, just expand use of the system he already had.
"They came up with a list of six things that they thought they couldn't do with the ADP system they currently owned," relates Mr. Lange. "One of my consultants, who came from ADP, said he could teach them to do those things in a day. The system they had did all of that and it has for the last five years."
Another client in Rhode Island has a large Reynolds & Reynolds implementation. "No one in the organization that knows how to Report Generator," he says. "If you don't know how to go into Report Generator and access specific reports, it's just a very expensive bookkeeping system."
Yet another dealer in Texas wanted to buy a new, $1.5 million system because the one he had was working so slowly that the store had to change the way it operated.
"I called an engineer I knew and had him dial into the system," relates Mr. Lange. "The engineer said, `Oh my God, this thing is so garbaged up. Nobody's done any system maintenance on this thing in years.'
"Here's a guy with over 100 terminals running and he hadn't done any maintenance like de-fragmenting in three years," he reports. "It had four disc drives in the system, 94% of the work was being done on one disc drive, the rest was spread over the other three."
Reynolds got the system cleaned up free of charge and it worked faster.
Another problem in dealerships that leads to a lack of info tech utilization is employee turnover. There is training when a new system is installed, but some of those people leave and the new people aren't trained properly, if at all.
"We have a nine-store client we train on a 75% full-time basis," Mr. Lange says. "They're maybe pushing 35% utilization."
A fact of life is that as a dealer's computer system gets older, and newer systems are developed, providers have less incentive to make sure the dealers are completely satisfied with the systems they use currently. But Mr. Lange says it makes sense for providers to help dealers improve utilization and their satisfaction with their equipment.
"The better a dealer utilizes the systems that they have, the better the value that they get, the more they control their business with it, the better customer they are for the provider," says Mr. Lange. "And the more secure that customer is for the provider, there is less potential for the dealer getting so pissed off that he moves the system to the curb."