You and Your Software Provider: How the Relationship has Evolved
A long time ago in a galaxy far, far away... software companies developed complete point-of-sale systems for tire dealers. These systems included POS, inventory control, sales history, A/R, A/P, G/L and even payroll. They were your one-stop shop for business automation.
Typically they aligned with one of the computer manufacturers (IBM, DEC, Data General, Apollo, Wang, Sun Microsystems, HP, Compaq, etc.) offering a proprietary solution on that platform. They sold you the hardware, software, classroom training, on-site implementation, hot line support and software upgrades.
Life was simple. You had one phone number to call no matter what problem you encountered. Nobody could point fingers. Nobody could pass the buck. How times have changed. As computer technology evolved, software companies followed suit. As the mini and mainframe computers were replaced by PC’s, networks and cloud computing, software providers changed their product offerings.
They began to integrate with third party solutions. First to come was connectivity to the manufacturers for inventory ordering, price updates and national account processing. Then along came highly specialized services such as tire guides, TIN registrations, labor estimating, parts lookup and job quoting and appointment scheduling. Today, virtually every possible data exchange and connectivity exists.
As time marched on, software companies added the capability to allow customers of wholesale dealers to log into their suppliers system and place orders directly into their system. This saved time and money for all parties. When the Internet exploded, retail customers joined the party. They were given access to research tires and prices on-line and even place orders over the Internet.
Looking back, it seems like this has been the norm for quite some time. In reality, it’s only been a few years.
Best of breed
As the demand from dealers for more features and functions grew, software providers began to “specialize” in certain functionality. The “all inclusive, one stop software shop” mentality was replaced by integrating with best-of-breed solutions.
First to go were the accounting modules. Smart software providers decided early on to interface with industry standard accounting systems like Quick Books and Peachtree. This has so many benefits to dealers and software providers.
Dealer benefits: Dealers can select a powerful, affordable accounting system that fits their business model. Once they are operating on that platform, the have staff trained to operate it, and when and if they want to change POS systems, they aren’t throwing out the baby (accounting system) with the bath water (POS system). After all, accounting principles rarely change, so why not operate on a best-in-class solution?
Software provider benefits: Providers can focus all their R&D efforts on core POS functionality, resulting in a shorter time to market for new features and other third-party integrations. This gives the dealer a more robust POS system. It’s a win-win for everyone.
It’s worth talking about “cloud computing” at this point. Cloud-computing means the software you are operating and your data resides somewhere on a remote computer or data center (“in the cloud”). You gain access to it via an Internet connection. This means you can run your business software virtually from anywhere. All you need is an Internet connection. (Some companies require a “widget” to be installed on your device to gain access. This is primarily to increase security.)
Certainly cloud-computing has its advantages. You don’t have to manage your business server and all that entails. Someone else is backing up your data, updates are performed off-hours, and it’s typically a lower cost of operation. The obvious disadvantages include relying on an Internet connection and trusting your data to be out of your physical control.
In my opinion the advantages far outweigh the disadvantages. In fact, you can build an inexpensive safety net for Internet connectivity should you experience an interruption.
Over the years, software companies continued to consolidate. Mergers and acquisitions seem to be the norm all the way back to the late 1980s. Traditionally, these mergers stayed within a few companies. However, that trend seems to have changed in the last few years. Larger public companies are buying up some of the big players to gain entry into a pretty well established playing field. The attraction of a large customer base and recurring revenue is very appealing to the big players.
In some recent acquisition activity, large web-development companies are making a play to offer both websites and business software solutions. On the surface, these mergers seem out of the ordinary and maybe not a perfect fit. What are their business objectives? Are they trying to gain complete control of the automation needs for the dealer? As unnatural as it seems, these mergers are now a part of the business landscape.
Two schools of thought
Large tire wholesalers/buying groups seem to have two schools of thought with respect to business software offerings. One is to select a software solution for its member dealers and require them to operate on it (i.e., Tire Factory Inc., Les Schwab Tire Centers Inc.). The other is to invite multiple software providers to be preferred partners and let their dealers select from them (American Tire Distributors Inc., Tire’s Warehouse Inc., Tire Alliance Groupe). Both of these business philosophies have their benefits and drawbacks.
Some manufacturers have had software offerings for their dealers (Goodyear Tire & Rubber Co.) for many years. Others wouldn’t even consider taking on such a challenge. I don’t see too much change in this area. The one thing that seems to be gaining attention is the manufacturers’ desire to sell direct to the consumers. The jury is still out on this one. Dealers are against this for all the obvious reasons. However, I don’t see manufacturers backing down, either. I’m pretty sure they are still supplying the big box stores, despite the objections raised by dealers over that move.
What will the future bring? I can guarantee that this process will continue to evolve and change as time marches on. Just like dealers believe only they can properly service their customers, software companies need to make sure they stay focused on the needs of the tire dealer. Otherwise, they will miss the mark. In my opinion, long gone are the days of simplicity. Automation solutions are becoming more complex. As a tire dealer, you need to stay apprised of the ever-changing technology market along with all the other skills you need to constantly be improving. ■
As CEO and president of WECnology LLC (www.wecnology.com), Wayne Croswell is a “complimentary technology advisor” for independent tire dealers. Croswell can be reached at email@example.com or (603) 249-5530.
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