CDK Doesn’t Want to Be All Things to All People

CDK Global is pivoting toward a new path to the future, says Ron Frey, who in April joined the giant provider of dealership digital services as its executive vice president and chief strategy officer.

CDK realizes it does some things well, but other companies do other things just fine. So unlike some of its competitors who tout a 1-stop array of software products that tie together, CDK is going a different route.

Instead, it is positioning itself as “an enabler” that relies on a combination of its own products and other companies’ offerings to deliver a full digital experience to both dealer clients and their customers, Frey says.

He comes to CDK after serving as chief operating officer at TrueCar, an online price provider to customers and lead provider to dealers.

Before that, he was president of AutoNation Direct, an ambitious digital sales innovation that led to AutoNation Express. AutoNation is the No.1 dealership chain in the U.S.

Frey talks to WardsAuto about his work and CDK’s new strategy in the marketplace. Here’s an edited version of the Q&A.    

WardsAuto: As the new chief strategy officer, what do you strategize about?

Frey: I’m responsible for global strategy and thinking about the best way to serve our dealers with our product and services.

WardsAuto: Your job is basically to think about things. Take us through that. How do you do that, by sitting at your desk deep in thought?

Frey: People ask me, “What’s a strategist do?” While it’s my formal title, it’s really (drawing from) a collection of experiences in the business and trying to apply those in a way that helps us as a company figure out how to best leverage the assets we have to best serve our customers.

Is there a special formula? I guess some can say there is. Business schools have lots of theories about it. There’s no magic answer.

WardsAuto: It sounds like a 24/7 job. You could be at a baseball game and start thinking about the future.

Frey: It’s just what you do. In your business and mine and any business, you and colleagues are always thinking about how to improve. Typically, colleagues think about it around their areas of disciplines. Strategy isn’t uniquely my position. The difference for me is this: How do you sit over the top of the entire enterprise and communicate externally and internally to ensure everyone is rowing to the same North Star, and make sure people aren’t going off into their own unique strategies that aren’t aligned to the company.

WardsAuto: How’s that working out?

Frey: It’s early.

WardsAuto: But a place like CDK, by its sheer size, inherently has a lot of smart, thinking people.

Frey: That’s my point. It’s a funny question you ask. It’s not just me, but me aligning with our board and CEO. It’s just carrying the message, collecting the broad information and driving it through the organization.

WardsAuto: You put together AutoNation’s digital retailing effort, a big deal. You worked at TrueCar, a transformative company. You’re now at CDK, a huge company. Give us your thoughts on auto retailing; where it is, where it is going and where it will end up.

Frey: That’s such a big question, and the answer depends on different vantage points. Consumers, dealers, OEMs and all the other different interests will have slightly different answers. 

We’ve been at multiple inflection points. It’s an interesting time right now where you have consumer behavior that’s remarkably changed. Millennials are becoming dominant buyers. SAAR is flattening. Margins continue to get depressed. That won’t change in the near future, if ever. Technology is enabling things like never before.

You have all these things happening in the marketplace. It’s a time when dealers are looking at the horizon and rethinking about how vehicles are retailed and where the revenue streams are going to come from. They are looking at selling more used cars and more service, being more productive and taking costs out of the operation. That’s a lot of heavy lifting.

Consumers will do more shopping online. There’s no argument there. OEMs and dealers will continue to give more tools and resources to the consumer to do more upfront before they get to the store.  Dealers will look to provide an end-to-end seamless experience. It will be a win for consumers and dealers.

CDK wants to enable that process and unlock value that hasn’t been fully realized.

WardsAuto: What needs to be done exactly in terms of unlocking that value?

Frey: Today, there are so many steps towards purchasing a vehicle: researching, understanding payments, trade-in, loan approval, setting up test drives, preparing and signing documents.

There are individual service providers that offer individual products that solve some sort of particular problem for the dealer. Many are unique and interesting products. But it’s fair to say none of those things have materially changed the experience of delivering a truly end-to-end seamless experience.

Many dealers are saying, “If you are going to do that, you must stitch all the pieces together.”

And let’s acknowledge it is bi-directional. Consumers might do things online, go to the store and then leave and go back online and, frankly, maybe go to another brand or dealer.

You hear about this vision of the online transaction. That’s the wrong definition. Instead it is, how do you bring to life in a way that is meaningful to dealers and customers a transaction that is now online, in-store, bi-directional and across brands?

CDK has looked at how it plays in the marketplace. How CDK is viewed today and how it will be viewed tomorrow.

So we are making a big pivot. We need to position ourselves differently. CDK is an enabler in end-to-end automotive commerce. That’s different than how the industry might view us today.

I’m very proud of our DMS systems and all that we’ve built. Those are going to be core. But the market is changing and we want to be an enabler of that space.

Being an enabler means thinking about the business differently. Our CEO, Brian MacDonald, has done amazing work. He’s made material changes within the organization and put together building blocks that allow us to frame the company differently.

WardsAuto: You mentioned sort of a fragmented providership. Would the goal be to offer one-stop shopping with everything on a platform?

Frey: That’s a great question, because it would be exactly the opposite. That’s where a lot of people are going, creating this uber-system.

If you understand all the moving parts, the idea that any one solution provider is going to (offer) all the building blocks for an online and in-store experience – a provider that connects all the dots that truly deliver – well, there’s not enough time or money to bring that to life.

Let’s take it to the extreme. Say someone does do it. Knowing my dealer brethren, they are always going to have something else that’s innovative or different to plug into that system. So what do you do with that big “black box”?

We’re deliberate about how we think about it. CDK has not done a terrific job in telling the story of where we are going and how some of these pieces play into it. We’ll start changing that. Now, we’re ready to talk about it and make that pivot.

You have a choice of being all things or of thinking about the business differently. Think of it as a platform. Take the iPhone as an example. Many partners operate on Apple’s phone. They bring tremendous value. In void of those, it would be less interesting. Apple would be naïve if it thought it would be best-in-class in everything on its phones.

You bring it together in a way that’s integrated. When we think of all the pieces of the car transaction, we say, “There are pieces we are really good at. We’re going to double down and own those.” And there are other places where we don’t have to be. It would be naïve for us to think we have to be every one of those pieces to every dealer all the time.

WardsAuto: What are examples of where you should be and don’t need to be?

Frey: Our desking system is really good and will remain so. But when we think about the business, how do you take our capabilities and third-party capabilities and bring them together not just through data exchange, but through work flow, integration and business rules that connect the dots to make it a seamless consumer experience?

WardsAuto: Integration is hard though. It sounds easy. But when someone tries to do it in a big way, you hear all the horror stories.

Frey: We’re already good at it. We have something like 300 partners with 45,000 unique integration points that drive 5 million calls of data a day. So incorporate work flow and business rules that allow that information to go across an exchange.

Almost a half a trillion dollars of automotive commerce annually touches CDK. If you could pull partners together to bring an end-to-end auto commerce to dealers to help them sell more, service more, take costs out and delight customers, that’s a win for everyone. That’s a material differentiator and it’s how we want to go forward in the marketplace.

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