New chief brings tech chops to CDK

Brian Krzanich, unlike his predecessor, became CEO of dealership software giant CDK Global Inc. with no auto industry experience. But he might have just the skills that the company needs.

Krzanich had spent his entire career at chipmaker Intel Corp. until he was ousted as CEO in June. While he brings the baggage of having been publicly dismissed over an affair with an employee, his technology background may be more useful than his predecessor's long track record at General Motors, Isuzu Motors and Ally Financial Inc.

Brian MacDonald, 52, stepped down as CEO on Wednesday, Nov. 7, with little explanation from CDK, other than that he will assist in the transition. Krzanich, 58, started that morning; he also will have the title of president and serve on the company's board.

Krzanich said there are "many parallels" between Intel's history and today's auto industry. "CDK is in a strong position to lead the auto industry's technological transformation," he said.

The company's top priorities, as spelled out on a conference call to discuss the leadership change and quarterly earnings, are to win new business and retain customers and improve their experience.

CDK lost 409 clients worldwide in the last year, according to analysts at Barrington Research.

One of CDK's biggest challenges with customer retention is software integration, said John Darmento, director of Gillrie Institute, a Wesley Chapel, Fla., dealership consultant company.

The software management expert said he's hopeful that Krzanich will be able to address shortcomings in the company's Fortellis open network development platform, which aims to allow third-party vendors and services to be integrated directly into a dealership's system.

CDK and rival Reynolds and Reynolds have been losing business to smaller rivals such as Cox Automotive's Dealertrack and Auto/Mate, whose business models are predicated on snatching customers from the giant counterparts with lower prices and less restrictive data access.

"Dealers will give up some functionality and integration for lower fees. That seems to be becoming the norm for the industry," Darmento said.

CDK tried to purchase Auto/Mate in March but was blocked by the Federal Trade Commission.

Krzanich also comes to CDK with reputation baggage beyond his dismissal for having an inappropriate relationship with an employee.

After security flaws were discovered in two Intel processors last year, Krzanich reportedly sold a substantial amount of his shares in the company before the information was made public. Intel defended his stock sales, but it faced multiple lawsuits over the flaws.

CDK's shares fell 7.6 percent on Wednesday to close at $52.95 and continued sliding to a more-than-two-year low Friday, Nov. 9, despite the company announcing a $260 million buyback of shares from Credit Suisse Capital. 

Vince Bond Jr. and Bloomberg contributed to this report.