Integration Solves Dealer Frustrations

2014 is shaping up to be an eventful year in the automotive retail systems market. A recent story in Automotive News pointed out last week, there has been a “frenzy of merger and capital-raising activities among auto-retailing vendors”. Last week, ADP announced its plans to spin-off its Dealer Services business into an independent public company later this year. TrueCar announced plans for a $125 million initial public offering of common stock. DealerTrack Technologies completed auto retail’s biggest acquisition for the year so far with the purchase of Dealer.com for $1billion in cash and stock. And Bloomberg has reported there are plans to sell Cars.com.

Selling More Cars

Motive Retail’s business, dealer systems integration, is fundamentally technical and exacting. When working to implement complex, technical integrations it is easy to forget that, at the end of the day, all of our efforts are only worthwhile if our customers are selling more cars. In one way or another, directly or indirectly, all dealer systems integrations are intended to sell more cars.

GM’s new strategy for IT

GM recently announced that it would reverse its IT outsourcing strategy and bring 90% of its IT spend in-house. A new IT “innovation” center has been announced in Austin, TX with others to follow in the Detroit area and other yet-to-be-identified locations. While this is certainly good news for the US job market, GM’s reasoning is not based on patriotism, but rather business interests. GM CIO , Randy Mott, has stated that in-house IT staffers will have a better understanding of the automotive business and GM’s needs than outsourcers. The new GM strategy will “deliver IT that drives down the cost of ongoing operations while continuously increasing the level and speed at which innovative products and services are available to GM customers,” according to Mott.

Managed Service vs. Professional Service

When it comes to rolling out new integrations with dealers, some automakers have turned to their IT services partners for support. Certainly this works well for the design and development of the back-end systems, communications infrastructure and the Web Services that will be used to implement the integration with dealers. The expertise and business model of IT professional services firms is well suited to this sort of work. Ensuring that these integrations are efficiently and correctly implemented by dealer system providers, though, is a different matter.