With little of the hype that usually surrounds the automotive dot-com scene, the Internet is changing the way dealerships and entire retail groups use their computer systems.
Dealer management systems, once viewed as little more than a back-office necessity, are being retooled with Web technology that will allow retailers to understand customers and communicate with them in ways never dreamed of before.
'The Internet is changing everything,' says Buzz Waterhouse, president of Reynolds and Reynolds Co., a dealer management system vendor in Dayton, Ohio. At stake is nothing less than the dealer's relationship with the car-buying public. New dot-com shopping services - many with plans to wedge themselves between the dealership and the customer - pop up every day. And the dealer's local competition, the big retail chains and manufacturers, are all weaving Web plans to link directly to the vehicle buyer and owner.
What's a dealer to do? Go on the offensive. Use information technology as a competitive weapon. And, to help do this, in the weeks and months ahead, computer vendors will be putting new Web-wired tools in the hands of dealers.
Universal Computer Systems Inc., of Houston, for example, has been talking to dealers quietly about a new product called the Internet Business Connection. The IBC, slated for introduction later this year, will have about 30 different applications designed to communicate over the Web, says Trey Hiers, Universal Computer Systems' marketing manager.
With IBC, dealer customers with access to a Web browser will be able to go online and check the status of a repair job. When the service department finishes the job, an e-mail notification automatically will be sent to the vehicle owner. Using a license plate number as a simple password, the dealer customer also will be able to access a vehicle service history through the IBC system. The dealer also can use the customer's e-mail address to pitch special offers and communicate service reminders.
'This moves us from a mass market down to a personal attention market,' Hiers says. 'That's the main thing.'
The new IBC system automatically updates customer profiles and other databases while gathering information in the normal course of dealer operations. That relieves dealership personnel from the tedious and error-prone task of typing information into computers by hand. For example, a completed repair order automatically will update the parts inventory. Thus, a wholesale parts customer with access to the dealer's stock would have confidence that a needed part is on hand. And a vehicle sale automatically would trigger an update to a dealer's car and truck inventory, giving Web shoppers a real-time picture of what's available.
The entire dealer management system business one day may move dealers to the Web. Electronic Data Systems Corp.'s Automotive Retail Group in Troy, Mich., is testing a new browser-based system that resides at a central computing office. To connect, dealers tap into their systems and their customer databases over a secure Internet link known as a virtual private network, says Marketing Manager Matt Parsons. Dealers, essentially, would rent their software by the month.
EDS has been showing dealers demonstrations of this new technology and expects to bring it to market in the next 12 months. But, Parsons says, there are dealer concerns about the reliability of the Internet.
'They want consistent, guaranteed up-time and throughput,' Parsons says. 'And we think that will have to happen over a virtual private network.'
Under current pricing practices, a mid-sized dealer (selling 600 to 1,200 new and used vehicles annually) might invest about $80,000 to install a dealer management system for a few dozen users, Parsons says, then add another $100,000 during the life of a typical five-year contract for service and software upgrades.
The Web-based system likely would be more expensive, perhaps costing $200,000 during a five-year period. But that dealer wouldn't have to invest in hardware, could scale up the system easily as business grows and wouldn't be locked into a long-term contract.
'It's month-to-month, literally,' Parsons says.
Still, dealers likely will not move en masse to the Web anytime soon. Some dealers are receptive to new technology; others are getting by with clunky old 'green screen' terminals that work passably well but are archaic by current standards.
Developers of dealer management systems need to offer a broad array of products and services. Otherwise, retailers may feel as though they are on a 'technology treadmill,' says John Gray, senior vice president of development and marketing for ADP Dealer Services Group, of Hoffman Estates, Ill., a division of Automatic Data Processing Inc.
'It's about choice,' Gray adds. 'This is a heterogeneous industry that has its own niches, and we need products for all of them.'
But several important trends are driving dealer technology toward the Web, he points out. Manufacturers are pushing dealers to adopt common systems that can be tightly integrated with the factory. Consumers want more say in the shopping experience, which naturally leads to the Web. And the pressure to cut costs across the board will lead to more Internet links with dealer business partners.
Like UCS, ADP also is developing a product that will allow manufacturers or dealers to set up a Web-based 'personal service page' for vehicle owners. A new Internet lead-management program is also in the works at ADP.
The idea of running entire dealer groups remotely over networks may seem like an impossibility to some, but AutoNation Inc., using ADP software on computers in Fort Lauderdale, Fla., is managing the computer systems for its 18 stores in the Denver area. Some 1,200 AutoNation computer users are connected, ADP says.
For the most part, dealers - not manufacturers - traditionally have decided which computer systems they would buy. The result, in many places, has been a technological grab bag that has complicated efforts by manufacturers to communicate with dealers and to roll out new computer-based programs. Throw in a half dozen or more Internet and network links to various manufacturers and other business partners and - voila - a dealer has to become a computer department manager.
Earlier this year, Reynolds introduced a new service called Managed Connections that allows dealers to outsource the management of their telecommunications systems. If anything, that job likely will get more complicated for dealers in the future. And a dealer with a crashed network, or a broken phone link, is a dealer in trouble.
Reynolds also recently introduced a Web-based service reminder product. Eventually, the dealer customer could use this technology to access chat rooms, schedule repairs and find news of vehicle sales incentives, new product announcements, service bulletins and recalls.
Waterhouse, who joined Reynolds from IBM in May, envisions an automotive 'value chain' tightly linked by computer and software. In such a system, information on consumer buying activity would flow rapidly and efficiently in all directions. Dealers will be linked more closely to manufacturers, lenders, insurance companies, assorted Web businesses and even parts suppliers. These businesses eventually may be linked by a virtual private network similar to the Automotive Network eXchange currently used by manufacturers and parts suppliers.
It won't be easy or cheap. And it won't happen overnight. But under this Web-powered scenario, Waterhouse predicts, the big winners will be consumers as efficiencies flow through the automotive production, distribution and sales chain.
'That will help get us to the Holy Grail of a true interconnected value chain,' he adds. 'Everybody has something to gain.'