Editor's note: An earlier version of this story misspelled Aaron Wallace's name.
Aaron Wallace is a fourth-generation car dealer, not a software developer. He's the guy, he says, "with the marker and the white board."
But Wallace also was the guy with an idea. Today, that idea — A2Z Sync, a software platform that enables a one- person, one-price dealership sales model — is a standalone software business that last year exited beta testing and is now being shopped to dealerships across the country.
Creating a technology company wasn't what Wallace set out to do. Originally, he was trying to solve his own business problem — scaling a new customer-friendly finance-and- insurance model beyond a single BMW store in his family's Schomp Automotive Group in the suburbs of Denver.
Wallace isn't the only dealer dabbling in software to find solutions. Dealers and retail consultants say it's necessary for dealerships to embrace technology to evolve with a transforming industry. Some of the improvements dealers are pursuing include reducing costs, speeding up processes and competing for customers by offering a better car-buying experience.
"With compressing margins, increased negative customer sentiment, this move to being transparent online but not being transparent in the store ... for me, it's a point of doing the right things to make sure that we can as an industry continue to thrive," Wallace told Automotive News. "At some point, there's a critical mass — that if we don't change the way we have done things forever, then the Teslas and the whoever will try to go around the dealer body."
Some dealers who step into software are motivated by a need to improve a particular part of their business and can't find an existing solution on the market. So they draw on their deep knowledge of auto retail to develop one, said Ron Frey, an industry veteran who now works as a strategic adviser to dealerships. Others simply are interested in building technology for the sake of it.
Meanwhile, he added, larger groups might look to new software tools for a competitive edge. They may innovate faster than the market and are more likely to have resources to build something in-house. While software innovations may begin as an individual solution, some wind up growing to the point that they're acquired by a larger player.
"Historically, a lot of auto retail let the solution providers dictate what they needed," said Frey, a former executive at software giant CDK and megadealer AutoNation. "Dealers are starting to ask different questions and look for different solutions, and many of these providers aren't able to provide it holistically. Now you're beginning to see them look at how can I put pieces together to create a broader experience on their own."
Costs are frequently underestimated, Frey said, and it can be difficult to scale a software tool since it's always evolving and never truly finished.
It makes developing software an expensive prospect, both in money and time. That's proved true for dealers such as Wallace, who helped launch A2Z while also managing his dealerships.
"The goal wasn't necessarily to build something that we were going to make into a business," said Wallace, who wears dual hats as owner of the seven-store Schomp auto group and chairman of A2Z Sync, created in 2015. "Four years and a lot of money later, we're on market, [and] we've got some interest and a learning curve on being a software business daily."