Automotive News - March 17, 2008 - (Page 26)

26 • MARCH 17, 2008 information technology Brockman: Reynolds Conquest sales, Asia growth boost ADP focuses on service Bob Brockman, chairman of Reynolds and Reynolds Co., heads the largest supplier of auto dealer management systems, the information technology systems that allow dealers to run their business. At last month’s National Automobile Dealers Association convention in San Francisco, Brockman spoke with Staff Reporter Ralph Kisiel about the economic climate and progress he has made in merging Reynolds and his own company, Universal Computer Systems Inc., in Houston. Universal Computer bought Reynolds, of Dayton, Ohio, in October 2006 and took the Reynolds name. Headquarters are in Dayton. ADP Dealer Services has turned up the heat on its chief rival, Reynolds and Reynolds Co. At this year’s National Automobile Dealers Association convention in San Francisco, ADP said it is gaining five customers who are leaving Reynolds for every one it loses to Reynolds. ADP President Steven Anenen spoke with Staff Reporter Ralph Kisiel at the convention about the 5-to-1 claim and other topics. What does the 5-1 ratio mean, and how did you accomplish it? That number does not include bankruptcies or people that go out of business. I’m just talking about share points that move one direction or the other. Don’t get so excited about it, however; you don’t move the market dramatically in any given year. Maybe it’s a net of 400 or so points, but that’s out of 22,000. What it really says is, your applications and solutions, the way you conduct business and the way that you want to be perceived in the marketplace is gaining traction. How has changing your pricing strategy helped? We’ve changed our pricing methodology over the last several years, which moved it from application pricing to user-based pricing and some bundles that go with it. So to the extent that you are a smaller dealer, perhaps not interested in all the bells and whistles, there are packages and price points that hit there. There are other dealers that are looking to accelerate, and they may be looking to take advantage of the full application suite. We can go all the way up and down the ladder in a smooth, scalable manner, and I think that’s really helped us as we position our solution set. What kind of growth do you anticipate this year? We look to try to grow double-digit. It’s a tough market. There’s sluggishness in the market. Our overall organization isn’t just concentrated in North America, although the lion’s share is in North America. We have done a lot to push it outside the boundaries of North America and onto an international front, and that diversifies the portfolio a little bit. So you end up being able to balance it with some fast growth, especially in Asia. We’re enjoying some of the growth that the makes are getting out there. Many dealers will tell you they are struggling Q&A Q&A How is this weakening economy affecting your business? We’re hiring steadily. We probably won’t add more than a couple hundred this year. So you’ve chosen not to participate in the downturn? I’ve been through five of these cycles. It’s always been my choice, through the previous cycles that I’ve been through, to continue to build. Build steady. And that means you keep on looking for good folks to hire, you keep on working on programming projects. I’ve got a to-do list 16 pages long. We keep working the to-do list, rain or shine. This is a people business. You continue to build human capital steadily. What progress have you made in merging operations? Our sales forces are now completely merged. Our product planning is merged. Our hardware support is merged. We’ve been through the personnel issues that you always have when you put two companies together. We’ve thrown out SAP (software). We now run on the same accounting system that we’ve been selling to dealerships for the last 25 years, what we call the Power accounting system. The payroll and human resources management systems used to run on SAP; we converted off that the first of July. It’s the same payroll and HR system we sell to dealerships. What about software development? Our head of software development is a gentleman I’ve been working with for 31 years. He is now over all software development in both organizations. We’ve brought the No. 2 and No. 3 persons out of the Houston software development group and we’ve moved them to Dayton, and they now run software development. We’re bringing the software development processes that we used successfully in Houston all these years to Dayton. What kind of processes? In Houston, historically we’ve had a private office for every programmer, 10 by 10, soundproof, indirect lighting so there’s no glare on their video screen and everybody has their own thermostat. In Dayton, there are big open offices, cubes everywhere, programmers sprinkled all around. We scraped out a whole floor in one of the buildings. We put up walls; we put up doors, and moved all the programmers in one place. So for the programmers, it is now quiet — not like a tomb, but really, really quiet. Do you foresee a time when a lower-cost provider with fewer bells and whistles, like Mi- Reynolds Chairman Bob Brockman: “We keep working the to-do list, rain or shine.” crosoft, can come in and grab a significant share? There are probably a dozen of them out there that provide lesser functionality at lower cost, and a lot of those have been out there for quite awhile. It’s not a new phenomenon. So there’s certainly a market for a lower-cost system that’s got lesser functionality. There are dealerships whose needs are served by those kinds of vendors. That’s basically a size issue. Smaller dealerships can do quite well with AutoSoft or Dubuque, or somebody like that. But when you get into a larger-scale operation, the needs are not simple. In the Power software there’s 60 million lines of code. That is a very substantial piece of intellectual property, but by no means the most important. To actually sell it, install it, support it and continue to maintain the software requires a whole pile of people that have got a lot of experience in this business. Could Microsoft’s entry into this market wipe out any of the small, lower-cost players? Probably not. This business is as much of a service business as a software business. And, frankly, as time goes on, as things get more and more complicated, it’s more of a service business than a software business. I think the smaller dealership management systems provide a very important level of service, and I think they’ve got deep customer relationships. Therefore, I think they will probably hang in there. c ADP President Steven Anenen: “We look to try to grow double-digit. It’s a tough market.” this year. Do you say ADP has been able to grow in a questionable economy? It’s leveraged off of international where you are able to do it because you’ve got to be able to balance what is sluggish here. Reynolds was going to install the General Motors Integrated Dealer Management System in Saturn dealerships. But Reynolds has now bowed out of that program. What does that mean for ADP? We now provide the services for Saturn. We acquired that business (from EDS), and I think we’ve done a good job of managing it. What we’ll try to do is embellish the product the best that we can to meet whatever needs General Motors decides. We’ve got a lot of our applications that we can help to feather in and integrate in as they want. It’s really predicated on their advisory boards and what GM wants to do with the Saturn piece, not us. We’re there to serve. How important are the noncore applications that you offer dealers? The traditional DMS business is not growing all that much. But if you look at all the surrounding applications, the solutions that we provide, whether it’s digital advertising and marketing, phone telephony or computerized vehicle registration, that’s all new revenue sources, which are all good for the dealer. What sorts of dealerships are buying GM’s Integrated Dealer Management System? We get more traction with single-point stores looking at that, as opposed to the others. But even the others are starting to come around to it. I think it’s become more adopted in the nomenclature, how people think about where GM is trying to go. I think it requires education on both fronts, us as well as GM, to the dealers. Can you make money on Integrated Dealer Management System sales? I think we wouldn’t be in the business if we couldn’t make money, but I think it’s a fair deal for all parties. We had to go a couple rounds in order to get that to the right number, and it ended up being good for everybody. c OEConnection links to ADP RICHFIELD, Ohio — OEConnection and ADP Dealer Services have completed the integration of the former’s Web-based tools with ADP’s dealership management system. In 2000, the Detroit 3 and Snap-on Business Solutions created OEConnection here to make it easier for auto dealers to find parts from each other and to sell more parts to independent collision shops. This integration helps streamline work flow by automatically passing customer and part details directly to the ADP system. Dassault renames unit DETROIT — French software supplier Dassault Systemes has changed the name of its suburban Detroit unit from Delmia Corp. to Dassault Systemes Delmia Corp. The office serves as the North American automotive business unit as well as the world headquarters for the DELMIA digital manufacturing brand. The name was changed so customers can better recognize the integration of the entire Dassault software portfolio, which also includes the CATIA, ENOVIA and SIMULIA brands.

Table of Contents Feed for the Digital Edition of Automotive News - March 17, 2008

Leases grow as alternative to long loans Toyota dealers balk at upgrades Up for grabs: China importer Testing Chevy's Camaro Escalade first vehicle to get full LED headlamps Hoops fans take a shot at China Toyota will cut Tundra, Sequoia production F-150's risk-reward strategy: Ramp up before the revamp As UAW, American Axle talk, CEO Dauch in Fla. Ex-GM purchasing executive indicted Court allows higher Plastech credit line Saab sticker prices rise as sales fall; will U.S.-built 9-7X offset losses? VW plant capacity in U.S.: 250,000 units Bad cruise control switch haunts Ford Continental plans to bring r&d in-house Rieter expects to increase its global footprint Stadler: Audi considers U.S. plant Another General charges into electric cars Toyota sees its first checkered flag as sign NASCAR's paying off A pickup may figure in Kia's future Analysts: Lampert no threat to AutoNation More likely to be spent to keep suppliers alive in '08 2 suppliers plan Alabama plants UAW seeks job guarantees to end American Axle strike Revolving door continues to spin at Nissan GM, top marketers to share research Electric power steering is grabbing the wheel Delphi completes sale of interiors unit to Renco Mercedes again is true-luxury king How electric power steering works It's time for dealer-factory collaboration Ford must close stores but remain open to diversity The small print Here's a question for Obama, Clinton Didn't you ever hear of a halo? Hurray for affordable performance cars Politics can age a car overnight Good for planet, good for GM What 'scientific consensus'? Lutz may be right but said it wrong Lutz had the courage to tell the truth Big Apple isn't very green 23 finalists in running for PACE honors Canada sales up 14.5% in Feb. RV shipments drop 7.1% in Jan. Wagoner: No sure thing on state air rules Conquest sales, Asia growth boost ADP Brockman: Reynolds focuses on service OEConnection links to ADP Geneva goings-on Judge: Dealer suit over transfer of GM franchise can proceed Honda will build Ridgeline in Alabama So who's running the show at Chamco? GM seeks Plastech tooling Federal-Mogul reports gains Chrysler sells plant to Fiat BMW's new sales boss Odell is named COO at Ford of Europe Strike dents GM truck output Tony Stewart blows a gasket Illingworth leaving — and staying with — Toyota A note to eager auto execs: Invaders sometimes get icy reception in Russia Hush, hush: Baby Nason on board For rent: Ford's PAG palace on the West Coast Chrysler cuts Calif. studio

Automotive News - March 17, 2008

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