Until recently, automotive retailing information technology was simply considered a cost of doing business, not a driver in helping to sell cars, making customers happy or increasing dealership profits. It was pretty cut-and-dried. Today's more progressive retailers, however, are finding new ways to increase sales, satisfaction and profits through the more effective use of all that technology offers.
Today's dealership contains a wealth of wires, hook-ups and connections. A retailer has a dealership management system (DMS) as well as ancillary systems and applications dealing with everything from finance and insurance to document management and customer relationship management (CRM). A typical dealership also has numerous connections to car companies' networks, the Internet and web-based CRM applications.
If a retailer were to map out all of these systems and connections, the drawing would look like a tangle of spaghetti. It can be mind numbing. Moreover, what retailer has the time to deal with such networking issues? None — they are concerned about selling cars and adding to the bottom line of their businesses.
As retailers increasingly take advantage of and rely on remote information systems, a reliable, secure and high performance network becomes essential. Why? It's simple. If part of a network or Internet connection goes down, so does the retailer's ability to serve customers quickly and properly. Also lost with the connections are possible leads from the Internet or CRM applications.
Another big hit on the bottom line: costs associated with the management and problem solving of these networks, as well as the cost of the actual connections. Many retailers are paying for each and every network connection entering and leaving their dealerships. These multiple connections can cost a retailer up to $1,000-2,000 each, if they're high-speed T1 lines.
Proper networking and the Internet are important — and potentially costly — components of today's dealership. And it's only going to get more complicated.
Today, the Internet is driving a revolution in the world of automotive retailing. Consumers are armed with information and data drawn from the Internet that helps them with buying decisions.
The major car companies are rolling out applications more tightly linking the retail processes with the manufacturing processes that are network-centric and Internet-based. Information systems providers are rolling out new and valuable solutions to car dealers to improve sales, customer relations and service management — virtually all facets of the car dealers' operations.
A large number of these solutions are now network-centric with web-based applications rapidly bringing new solutions to the marketplace.
Yet, come back to the image of the spaghetti chart. We realize the importance of a good network. But do we really expect retailers to figure all of it out? Couldn't there be a simple way to organize the networking into something that makes sense to someone who isn't an “IT master”?
The lack of an all-encompassing network serving automotive retailers is a key issue facing the marketplace as new offerings appear and as new information is collected. Complicating this lacking are the car companies' varied and often redundant proprietary networks. Most car dealers operate multi-franchise facilities. They're forced to maintain multiple, independent networks, causing an inefficient use of bandwidth and adding multiple layers of cost to the dealership.
What can the automotive retailing industry do collectively to resolve these problems?
The industry needs a single network interface that's affordable for all retailers, a network that would provide the necessary connectivity and security to car companies, DMS providers, the Internet and consumers.
This consolidated network would replace the array of multiple proprietary networks. With current technology, proprietary data can be partitioned and easily protected in a single shared network.
This type of consolidated network would vastly improve efficiency and security in dealerships while avoiding unnecessary cost. How do we get to this point of having such a consolidated network available? The first step is support.
Individual participants in the automotive retail industry need to pull together and agree on a joint, retailer-focused network solution. Such a network would provide benefits to everyone involved, including lower costs, broader connectivity and a robust, secure connection.
Car companies and information systems providers have been meeting to discuss the development of consolidated networks. The idea is proving favorable to those in the automotive retailing industry.
Make sure your voice of support is heard. Retailers and dealer councils: raise this issue with your car companies. Urge them to abandon the existing proprietary networks and partner to adopt a consolidated network. It's in the best interest to all of those involved.
Tom Baird is vice president of New Ventures for The Reynolds and Reynolds Company. He's responsible for development of “white space” opportunities and pursuing ventures outside of Reynolds' traditional business lines.