Mets Kramer and I talk about the recent changes in the world of dealer business systems

It seems like our sleepy little industry has gotten a lot of attention lately. There seem to be a lot of people interested in this industry now for software.

I assume they see some opportunity or money's hunting around, or maybe they're recognizing that the industry really hasn't done much. in decades as far as really trying to move forward where other industries are very cutting edge on their software. We have not done that.

So the most recent news that I saw was that powered by TrueWind, E-Emphasis purchased CDK Global's heavy equipment product. And that's my understanding of it, is that it's specifically the heavy equipment industry side of it.

Yeah, and if you talk to people out of that industry, I think you'll probably understand why the car and truck industry is decades ahead of us. They are very automated and very focused, and we have not been. So I think that makes a lot of sense. We've seen some of my old projects under Uptake get sold off to Texada, which is another Canadian company, to now merge under Texada. And Uptake Canada was formerly Can-Am, and prior to that it was Tormont Software.

Yeah, that's where I got my start. There are products in that portfolio that I cut my teeth on learning how to build dealer software. So a bunch of changes, certainly. And then there's discussions around about other players or other providers in the market that are either coming end of life or, you know, there's regime change in the organization. So I think it's going to be an exciting couple of years.

Well, where do I fit in right now? Or where do we expect to fit in in the future?

When we started our little project, we looked around and we partnered with a couple of dealers who were using older software packages in a very frustrating way. where they had spent a significant amount of money to bring in a package. Support was short and poor, and they continued to have problems over a couple of years of using it. Specifically, you know, areas of the software that they could never get an answer for why it worked the way it worked or why it wouldn't work or why they couldn't fix it. I think that's a little indicative of a lot of the software packages and what happens. And it's very natural. It's almost free of blame to some degree. It's just when you have something that was developed 30,40 years ago at its core by a bunch of guys who have since retired, that knowledge of how they put that together and why it was put together that way, and potentially even the code it was written in, which is now really old. you know it becomes a little bit untouchable and while there's great knowledge and experience in the software of how to run things if you can't manage that old code base then it just starts to age and it starts to and that's what we've seen is you know these older packages really getting layered on and you know re-skinned at times you know ibm since a lot of it's written in as400 ibm brings out new refresh packages on the UIs, but the code base in the back end is not changing. And so as much as we try and migrate them, eventually you age out. And so we started our project to really take everything we know about dealer and rental operations and rebuild that knowledge base, that experience into modern software.

We started with a clean computer text editor.

No, I think we did things. Like you said, we converted paper forms into screens. We approached, you know, you talked about this, like the first computers that came in, came in as accounting software. It's actually like the oldest category almost. And what we did is we built transactional systems. We built systems for transacting the financial aspects of the business. And that itself lends to a view on your business that is purely transactional. It's, you know, customers. Even in a lot of systems, you open up customers. You're not talking about companies. You're talking about these are the people I transact with. They're my customers. Other companies who are not my customers are not in here. There's no space for them. Because the minute I set up an account, a customer, I've given them credit or something like that. And so all of these systems were also built around that. And that's one of the other things that we tried to do. change is to represent in our environment the objects of the real world and build from that the natural progression of the transactions that come from it. So we start with real companies and real people working at real companies who own real equipment in real locations and recognize them all as you know, a virtual representation of a real thing. And then on top of that, started building transactional pieces. So and that's allowed us to like, you know, deal with a lot of transactional situations in a more natural way. And we're forced to put a fake machine in our inventory just so that we can rent it out, even though it's not ours, you know. And I think that's kind of a rethink.

I was going to say, is this where like we can now with our new computer system, we can now ship you a part that we have in stock in seven days. Yeah.

Lost it all.

I think it's probably one of the things that has gone very sideways in IT in general. This isn't just about our industry, but I started in the service shop as a service supervisor, and then I ran contract management, and I was always involved in running it. And so I got to get my head around all of the information that I needed day-to-day to run my departments, but understood. the software side. And what you see is, you know, too many people who don't really know how to describe their business, trying to tell a bunch of people who don't really understand the business, how they think they want their software to act. And so it's, you know, epic version of broken telephone. And then they, you know, and it used to be that it took a long time to get something back. Like you would say, hey, I need a screen that does this. And then three weeks later, someone would be like, I finished that screen. And you're like, it's not quite right, but I guess we're stuck with it because you spent three weeks on it.

Wow. Wow.

Yeah, exactly. Yeah.

Even that, they're a great example. They're great people and they're doing their best to keep up with the information demands of only cat dealers and it goes to show like how much demand there is when you can have a full organization that barely keeps up with what their customers want you know they they they're just focused on delivering that and you know that doesn't even touch vast numbers of dealers um that i get to talk to who have nothing or who are who are left to you know figure out how to patch together a bunch of other systems you know, to migrate to a core system that really only helps them with their core transactions. And then they have to try and bolt on everything else, you know, and the problem is like our environment and our expectations of how information should flow has changed radically over the last 20 years. And most of these systems don't have interfaces to deal with that. So like any integration is complex and difficult, you know, or not even supported. We've interfaced with, as we've started up here, one of the areas that we've been really fortunate to get involved in is working with dealers who have dealer systems and don't have kind of an overview system or a way to collect information from theirs and other places. And so we've actually been able to use our platform to give dealers kind of a more of a holistic or a complete dealer platform database and information warehouse. And, you know, so we've had to go into a lot of these systems and try and figure out how to pull data out. And it can be radically complex and, you know, very problem or problematic with, you know, old technologies for APIs and stuff. And we typically have found ways for most of them, but it shows, you know, that people want more. And so, you know, I think it's time for our industry to really embrace the idea that the starting point of all of this is just information and people get married. You know, you talk about your guy who didn't like IBM. And so you had this other system, you know, people get married to these tools. They get married to the fact like, well, A, I've invested a lot. And B, you know, I was involved in deploying this new tool. And therefore, I am married to this tool. Like, I have never seen people so attached to something out of business than the implementation of software that they were involved in selecting and implementing. It's like they can't imagine not continuing. It's like this emotional investment. And so you see all kinds of stuff, like people who implement systems with crazy languages. I was involved in one OEM that, you know, they had this guy they really liked. He was a good developer. He picked some crazy language to build a CRM in. No one else knew how to program in it, you know. And so when we did ours, we were like, okay, what is like currently the front runner most common? language that we could find the most number of developers that a dealer could add their own developer if they wanted to because it wouldn't be hard to find one. We went with React, which is Facebook's tech and probably accounts for 40% or 50% of the modern software at the moment. The other side is Angular. So those kind of choices, like build the system in a way that it makes it accessible, were some of the starting points.

Yeah, it's not that many. There's one deer dealer up here in Canada.

Two cat dealers. And I think two Comassus. Two

They will.

That's the industry. That's how they. Software industry globally, not just our industry, has set themselves up. If you have a problem, you call the help desk and you wait three weeks and we give you an answer back maybe. If you have a bug, we'll see about adding it. It might be on a list. The funny part is that's the expectation of the software industry, and yet our expectation in the construction equipment industry is very responsive. we work in service and a customer calls and says something's down, you know, we're running out the door. If a customer calls and says, I want to see that machine in your yard tonight at eight o 'clock, someone says, sure, I'll meet you there at eight. You know, it's not like, oh no, I'm sorry. We're closed at five. We can't show you that machine. Can you try Monday? And so these are like the intrinsic expectations that we have in our industry. That's how we grow up in this industry. And yet we deal with software companies who have a completely different philosophy.

You've been watching it.

Yeah.

Well, I think you see several initiatives in the industry right now. Solving those problems from Uber approach to service technicians to parts marketplaces that are more connected. We're working with one dealer that is purely digital. As we've been talking about for the last two years, this dealer has no real bricks and mortar. Everything ships direct to customers. They still have service. They still have parts. But it's all digitally enabled. And what's interesting is there are people coming into the industry on those kinds of initiatives that aren't tied mentally to the way we've done things. And so for those kind of dealers, we're trying to provide something that's... more or less like a headless business system where, you know, all of the smarts is in a untouchable, unviewable interface, basically, so that people who understand like a modern approach and how a customer experience should be can then interface with that so that the transactional pieces still get done properly, that the information is still available. But they're approaching it in a way that's like, I'm sitting here listening to them. Like, oh, we think it should look like this and we should think the customer's experience should be that simple. And, you know, we're going to do this in the background. And I'm like, part of me must be like, no, no, no, you must do it this way. This is how we've always done it. And they're like, no, I got to listen, Matt. Just listen to what they say about the way we've done things and how do modern people see it differently? You know, and so with those kinds of initiatives coming into our space and these are all highly connected systems now. You know, we can there's a platform where we can pull parts data out of dozens, if not soon hundreds of dealers of by part number to see who's got something, you know. Even the biggest dealers struggle to do that. It only limited to their own network, you know. And so I think we can solve those problems. But that shift is coming, I think.

Yep.

Yes, strangely.

We don't we don't we ignore the building, the 50,000 square feet of building and AC and part. And we ignore that. That truck is really expensive. That's why we need a higher rate in the field.

It has to change. It's like, you know, we as people, I think, are often very quick to forget how young things are. You know, like we think, like we've always driven around in cars. The car will never go away the way we know it today. And like, well, the car is just about to hit like just like 100 years old or just did. You know, we in the age of humanity. We haven't been driving cars that long. You know, we think our dealer structures are just the way that it has to be in a way it's always been. Well, how old are the oldest dealers? You know, also not much more than 100 years. So why is it to say that it has to stay the way it looks? And if most people look back a generation or two, even in their old dealerships, it looked radically different. So why would you assume that it's going to stay? especially with every other market force that we see and people's expectations. Often we say, oh, our machines are so complex to configure. But you take a modern software developer and give them the variations of a machine and tell them to build a website where someone can configure it. And in modern software, they would do it in like a week or two. And that used to be... a couple of years of hard work in old ASP or something to try and do it. But now it's like, no, you know, we do it now too. New dealers want new websites. And I'm like, okay, we can build a new website. Like from scratch, not like a WordPress website. And we can do it in two days. You know, give us a basic design. Boom, websites up, you know, and it'll, it'll grow and do things that old tech-based websites will never do. So, and I think this is part of the challenge. And I find that the most curious thing about the software industry in our, the software business in our industry is why are we so tied to the old stuff? Why are we so scared? And I guess that's where my opportunities come. I haven't been scared to just say, we know a lot about this business. I've worked every part of the business. We know what the information requirements are. We know what the transaction requirements are. And in modern software, we can build it in under two years.

Three. Three. Yeah, three mobile apps.

Yeah. Don't

I don't know. I don't. No,

Yeah. I mean, I think maybe to some degree that the change over the last two years may even accelerate some change. You know, I'm walking through my neighborhood this morning and everyone's out cutting the lawn on a Monday afternoon. Like, why are there so many people cutting their lawn? Like, oh, they all work from home. They all put like, oh, I have a meeting and I'm outside cutting the lawn. And like that habit is also breaking. You know, people are thinking even more differently now. Like, why does it have to be the way it had to be?

Yeah.

They definitely reassessed and realized that they could live on a lot less money than they used to. Yes. You know, all those people that left service industries, they're like, I thought I absolutely couldn't afford to leave, but I figured out that if I left, I could survive long enough to go do something else and actually eventually make more money.

I think tragically, yes. You and I talked about this during the pandemic. It is

It is really going to change people. I haven't seen a lot, I mean, aside from the couple of initiatives that I've seen. People have kind of held on. I think part of the problem is that a lot of dealerships were deemed essential, you know, and so a lot of dealership people were back in the office a lot faster than other industries. Like I had people in my old place that probably only spent six months at home and then they were allowed to come back to the office while other companies were still forced to work from home. So maybe that didn't give us enough time. Or maybe it's just because they run old dealer systems and they have to be in the office to access them because there's no other way to access them but installing something on your computer in the office. Yeah.

I mean, I think you can budget it in that sense, but I don't. One of the things I try and teach dealers is that, you know, purely viewing this as an expense is a really bad habit. It really puts off the value of what you should be doing. And I think that's what you see. I'm like the very large dealer. they're not too shy to spend money on information to try and improve the business. But certainly at a lot of dealers, they still see it purely as an expense. The payback, they don't really understand. The money that slips through their fingers in small losses and poor decisions and wasted parts and wasted man hours is never measured. And so I don't think... viewing information systems as an expense is a great start. You know, if we all sit in the office every day staring at our computers, then something should tell us like, hey, the thing we're doing on those computers is really important. You know, if we all walked somewhere every day and there was no road, it wouldn't take us long to decide that it would be a lot more efficient to spend a lot of money and build a road. We do it all the time. And yet somehow, On the information side, we have people running spreadsheets all day long to try and run the business, and no one measures the cost of doing it that way because they're too worried about it being, you know, oh, I've got to spend more money on software.

It's a hard thing to get people to understand. Like, you would think that here's, I guess, the measure. If more people understood opportunity cost, our CRM would be way busier. Because they don't look at all the potential information they have and decide that they're going to figure out how to drive their sales strategy to find their opportunities through using tools that really aren't that expensive comparatively. You know, they miss all kinds of opportunities. We've joked about this, you know, the EDA report that's used by the sales manager. Like, look at the deals you missed. And like, I have a couple of dealers who like we are mining that data automated through algorithms to generate predicted opportunities and placing them right in front of the sales rep. And when people kind of get their head around it, they're like, whoa, like I'm going to spend my time calling the people that are most likely to want something. not just the guys I know and like.

But that right there is why the modern world has solved so many of those problems. I mean, how can you get your groceries this afternoon from one online system delivered to your door faster than you can go buy them? and we can't apply similar lessons to a dealership operation. That's why I have a lot of faith in what I'm seeing in the few people who are really going digital. They're like, I don't want people taking phone calls. I got a call from an old customer, someone I did a lot of work for like four years ago. And like, remember when you started that parts website? And we didn't go with it. I'm like, yeah, we want that back because the owner spent a week filling parts orders because the parts guy was sick. And he's like, this is a lot of time. I'm spending a lot of time filling a $25 order. Why am I spending time filling a 25? Like, I got to write down the order. I got to fill it in in the system. I've got to, you know, run an invoice. Like, why am I doing all this? Like, this could all just be done. Like, yeah, there are platforms that you can, we can set this up for you in a week. And now all your parts orders will just flow.

interesting, right? But it's our view, right? I think there's always – there are people in our industry who are like absolute professionals, and they'll always bring value. Some of our parts people are probably some of the brightest. people I've met that are customer service oriented and they can find and solve problems, but they don't need to do 100% of the orders. And I think we had Stephanie Smith on here that one time and Stephanie comes from outside the industry and just saw information and customers a completely different way. And now they drive an intense percentage of their sales purely on digital marketing. In fact, you know, to things like watch us turn on the tap. You want a couple of leads? One sec. Dial this knob and look at the emails come in. Okay, we're busy for the rest of the day. You know, to that kind of. And so I think it's going to take a few more believers to come from outside the industry to come and sit on a parts desk and be like, whoa.

Robots and artificial intelligence?

Now, there's a strange irony in our industry. I learned a lot. over the years that I was really closely tied to the OEMs. I got a lot of factory tours. I learned a lot about lean manufacturing. And this is why it's funny. It's like our OEMs have people in place that are really good at being proactive and working with continuous improvement to always make the production smoother, faster, higher quality. And yet, once we switch over to the dealer side, We very much struggle to retain those kinds of people in the business that can continue to drive the dealership forward. Now, one of the things that I've learned in doing this and with the dealers that we work with is we have to take the role of like that lean manufacturing project manager. We have to be the ones that schedule weekly meetings with the dealer because they don't have people that think this way. you know, and we have to, you know, show them the next step or work with them to find the next step or ask them the right questions to find out where they're struggling because dealership people are great in that we like to fix problems. We like to run out and fix machines. And then we, you know, we have to invoice it. Sure. But like, that's our focus. We want to get it done. That's, you know, who we retain heavily in the dealerships. And if you're going to, actually move your dealership further and actually improve these information-driven things. You need people who will think like the OEM factory, lean manufacturing, continuous improvement type people and really move these projects forward.

Do we have a solution?

Yeah. Like you said, we retain people who are more reactive. We struggle to find to attract new people to the industry. Probably, you know, a double edged sword that because of who we are, we struggle to attract them and retain them. But that's and so we're understaffed often, very focused on, you know, margin per person and all these some of these metrics that have been introduced by consultants. They've also, you know, somewhat driven out the goal, like you say, like, why aren't we hitting 80% parts market share? Well, you know, because we're busy enough at 40% and we make enough money at 40% that why would I employ more people, bring my margin per person down for a little while to try and recapture that parts margin? That parts market share. Why do I not have more text? Well, text are hard to find to begin with. And I know I'm only getting 30% of all the service work, but we're all busy and I'm making money. What's my incentive to really capture everything out there?

exactly.

Well done.

Don't be scared. Like so many people so captured that they think they can't make the change and it can be, you know, difficult, but don't be scared. I mean, it's holding up all aspects of your business from actually moving forward. And it's frustrating the heck out of your people.

And they're quiet and they're silent and they sit there and just get their job done so they can go home. But, you know, I it's been really fulfilling to sit with people who have been in all kinds of systems and and they sit down in front of our modern interface and they're like, this is so easy. Like, I just figured out how to do everything. Like, yeah, you didn't need training. Just like it's intuitive. It's modern. And that's satisfying. And it shows that people want, they're held back.