DAYTON, OH - The new president of Reynolds & Reynolds Co. has a vision for the future of automotive retail. And, considering he is a 26-year veteran of IBM Corp., it should come as no surprise that he's focusing on the Internet.

"I think it changes everything," says Lloyd G. "Buzz" Waterhouse, who signed on as president and COO of R & R in late April. "I've seen it in other industries. It changes the consumer-facing side dramatically. It already has."

He says the volume of people that shop on the Internet before they enter a dealership soon will pass the 50% mark.

"And by the way, those 50% happen to be more-affluent buyers and happen to be where the most profit margin is for dealers," says Mr. Waterhouse. "I wouldn't be surprised if by next year it represents 60% or 70% of all the margin. This is a sea change.

"The consumer buying experience is changing dramatically. Retailers have a wonderful opportunity to grab that and use it to their advantage."

Although Mr. Waterhouse insists that dealers will be part of the automotive distribution and retail system of the future, he says it will turn into much more of a service-oriented business than it already is.

"I would be utterly surprised if the dealership model that's in existence today is the one in existence in 10 years," he states.

"It'll combine a lot of related retail activities with the car-buying experience itself, like apparel," Mr. Waterhouse predicts. "Apparel for cars and Harley-Davidson appear in malls all over the country. Why not marry those concepts?

"Maybe the dealerships of the future will be in malls. I think it'll become more of a true retail experience, much more service oriented. I think Saturn-like plus."

One of the many ways he says Reynolds can help dealers in the ever-changing automotive retail environment is managing the increasing amount of data available about consumers.

He says, for example, that Reynolds can gather and manage information about customers at various points of contact, including those who visit web sites.

"The best way to describe it would be as a full-service provider," says Mr. Waterhouse. "The advantage we can offer to dealers of all sizes is the combination of expertise, knowledge and skill.

"I think we'll be able to provide services on an out-sourced basis that are affordable to the average retailer. At the same time I think we can become a major player in helping them change what they're doing."

Dealers, notes Mr. Waterhouse, can save money by printing brochures on dem-and rather than producing slick pieces in bulk. They also can save money by using e-mail for service reminders and other marketing.

Because of Reynolds' relationships with the various manufacturers, he says his company can play yet another role in the future, that of some kind of intermediary.

"A secondary way we can help the industry is by playing an important sort of brokering role," Mr. Waterhouse says. "There's probably no company better positioned to work with both the manufacturers and the dealers and the consolidators and the parts suppliers than Reynolds."

Two months after joining the company, Mr. Waterhouse formed an eBusiness Group. That unit focuses on leveraging the Internet to enhance Reynolds' position in the automotive and document services markets.

He says, "We plan to be the e-business leaders in the markets we serve, providing our customers with the added business horsepower associated with Internet-based solutions and services.

"We have pockets of expertise all over the company that we're pulling together to focus on helping the dealers deal with change."

Mr. Waterhouse says the industry's major deficit is in computing and reaction speed.

"The market is changing so quickly," he explains. "I don't think we or the automotive industry at large have really been on the speed kick yet like some of the other industries. It's obvious to me that the industry needs a shot of speed."

Reynolds just expanded its automotive Service Marketing Program to the Internet. This is the first of many similar e-business endeavors being developed by the company's new eBusiness Group.

The web-enabled service marketing process will allow progressive automotive retailers to perform service marketing through direct, on-line interaction with their customers.

The benefits include 24-hour, 7-day-a-week availability, automatic gathering of critical information on customer Internet behavior and more convenient and responsive customer care.

It also gives customers the ability to personalize the e-business relationship and allows dealers to target their advertising and marketing with precision.

Before he joined R&R, Mr. Waterhouse had been general manager of e-business services for IBM, one of the company's fastest growing business units with revenues of more than $2.7 billion.

He also served as IBM's strategy director and was president of Asia Pacific Services Corp., an IBM subsidiary in Tokyo.

Mr. Waterhouse draws on such experience to move Reynolds forward.

He says, "Our value proposition, our strategy, is really focused around the dealer and the retail experience.

It's helping dealers understand the process of handling a lead from the Internet and helping them set up different approaches to doing business.

"We can do a lot of the dirty work, the hard work. We can even help from a customer relationship management point of view. Doing data mining from the Internet, profiling. There's a lot of services we could provide."

The automotive industry is lagging behind the rest of the world when it comes to e-commerce, says Lloyd G. "Buzz" Waterhouse, new president and COO of Reynolds & Reynolds Co.

He says the progression of e-commerce usually is accomplished in three phases:

* Awareness

* Adapting to technology

* Full integration

Mr. Waterhouse says the auto industry is in the first phase.

"The first step is everyone gets on the web to advertise," he explains. "More than half the dealers are doing that.

"The second step, once you're secure with security and privacy and some of the technology issues, is actually providing services and support, interactive information, possibly some forms of transactions on the Internet," says Mr. Waterhouse.

"To do that you've got to really think about it from the business point of view. You've got to think about processes. You've got to think about the overall retail experience."

The last stage is fundamentally transforming the business based on electronic business processes. Integrating back-office processes with salesmen. Coordinating the Internet buying experience with promotional activities.

"If you look at those three phases, the value goes up as you go across," says Mr. Waterhouse. "Most of the world is still in the middle phase. Automotive, I would say for the most part, is in the first phase."