Though simple technologies such as scanners and telephone ID systems have been used at grocery checkout counters and pizza delivery shops for years, they have yet to reach most car dealerships. It is not that dealers choose to be inefficient. Dealerships lag behind other retail businesses in adapting new technology because most lack computer systems with open architectures.
The typical dealership has depended on one large vendor offering proprietary hardware and software to supply all its software and hardware needs. The practice has kept dealers from trying new software offered by outsiders and has driven up computer system expenses.
The National Automobile Dealers Association is working with dealer computer vendors to develop standards that will pave the way for open systems. But as NADA consultant Paul MacDonald of Hays, Kan., told Staff Reporter Donna Harris, dealerships' reliance on proprietary systems has taken a toll on operating efficiencies and customer satisfaction.
What do you mean when you say 'open system'?
This means that data can go back and forth from one computer to another. If a personal computer is hooked up to a network, you can bring data from the network to the PC, do a spreadsheet and send the data back to the big box, or server.
All the dealer computer vendors claim they have open architecture, even the larger ones with proprietary systems. Are all the systems really open?
The Unix-based server (such as the ADP Dealer Services Group's and Reynolds and Reynolds Co.'s dealer management systems) can be hooked up to a PC and transfer data out of the Unix box and into the PC, but you can't get the data back to the Unix server.
For example, if I have an ADP system and I want to clean up my customer name file, I can't do it easily. I can bring it to my PC and work with the data, clean up the list. But if I want to send it back to the ADP system, it won't do that. It is not open architecture.
Why won't it work?
You have to have the software codes to understand how the program is written. If the vendor does not release those codes to a third-party software vendor, the program won't communicate with the server. ADP and Reynolds have custom-written codes. If their programs were based on Microsoft codes - the industry standard - the data would transfer easily.
Reynolds and ADP are not the only Unix-based systems. Aren't some of the smaller vendors - that say they have open architecture - Unix-based? Would they run into the same problem?
Some of the small guys are Unix-based. A third-party vendor cannot get data back into their system without the right codes. The Chrysler DCS (dealer communication system) is an open system, for example. If a vendor meets the Chrysler codes, it can provide DCS for Chrysler dealers.
When did dealers first see a need for open systems?
The Generation Xers and (baby) boomers are computer-literate, and they are now dealership managers. These younger managers have started asking questions (about computer systems and prospects for integration). This has happened over the past four or five years. Many dealers are 55 or older, and they have not been computer-literate.
But dealers are becoming more educated, and they are the ones pulling the trigger on the money and the decisions. The younger managers are asking, 'What are we doing it this way for?'
And the dealers are saying, 'I don't know. Let me find out.'
Are there other factors driving the need for open systems?
Dealerships are getting absorbed by big companies. Instead of Reynolds selling to 400 (individual) dealerships, they are bidding against other vendors for AutoNation's computer business. The number of available sales is going down on a per-outlet basis. The big chains are using databases to consolidate data. Because of the size of these companies, it is worth it for ADP and Reynolds to rewrite programs they have to get business with a 400-dealership chain.
What impact has the lack of open systems had on dealerships?
This has got us years behind the rest of the business world in technology. That's why dealers are having trouble with data management. Their systems are too cumbersome. But, because of competition, we are going from closed, proprietary systems to open, integrated systems. Before, you couldn't hook up a PC to a Reynolds or ADP machine. But now you can.
Specifically, how has the lack of open systems hurt dealerships?
There is a lot of technology that is unavailable to dealerships - like telephony. Look at Domino's Pizza. Their phones have caller ID, and they are hooked up to a computer database. When the phone rings, the computer calls up the customer's file, and the name, address and last order come up on the screen. Domino's has had that technology for five years. When you call a Marriott Hotel (which also has telephony technology), they answer it, 'What can I do for you, Mrs. Harris?'
Bar-coding is another area where dealers are behind. Dealers could have a scanner read bar codes on parts to check the price. This is all done manually. If parts were scanned (at the time of sale for inventory-control purposes), that could also tell the manufacturer instantly that it has been sold and the dealership needs another one. It would be a quicker way to retail parts.
Dealerships could bar-code cars. The code could include the customer's name, vehicle identification number and equipment purchased. If a customer needed a specific trim piece, dealership personnel would know if they had it in stock, and if they didn't, they could easily order the right trim piece. This technology is available in other industries, but we don't have it.
What is NADA doing to create open standards?
NADA has an industry standards project for the retail computer business. It is trying to get the industry to agree on standards so that data can be transferred to a common format, so that if I am in Unix and someone else is in Windows, we can transfer the data back and forth. NADA wants to mirror the medical industry, which was having a problem (transmitting data between computers) with the insurance companies. The medical industry came out with standards and published them so that everyone who comes to the industry knows the standards and has to meet them.
It can take a lot of prodding. Some people have to be dragged to the table. There will be winners and losers.
What progress has the industry made on retail computer standards?
We have a long way to go. It is an uphill push, but the industry is apparently moving in the right direction, and NADA has a leadership role.
For the first tackle, you have to have the standards. The next tackle, you have got to get everybody to agree to them. NADA has everyone on paper agreeing to do this, but getting them to do it is another thing. The big guys don't want to give up territory.