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The Expanding Dealer Automation Space

April 20, 2016
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In my earlier article on Cox Automotive, I wrote that the subsidiaries tile our “function space.”  By this, I usually mean the F&I function space, although Cox is broader than that.  In today’s post, I will explain about function spaces and why this idea is important for software strategy.

Let’s say that you have been asked to identify all the functions performed in the F&I office, and then find software to automate them.  I did exactly this for AutoNation, back when PVR was $600.  The first thing you discover is that a simple list won’t do.  You at least have to put the functions into workflow sequence.

Tasks in sequence are a one-dimensional function space: a timeline.  This will help you to define where the credit process ends, for example, and menu selling begins.  Ah, there’s the rub.  Maybe the workflow branches out, and now it occupies two dimensions.

As I wrote in F&I Magazine, the workflow that produces a finance contract is a lot like the workflow that produces a VSA.  If you can picture the “F” workflow as parallel to the “I” workflow, this is much more useful than a simple timeline.

Function Space

Typically, when you see a diagram like this, it is already partitioned into the familiar systems: CRM, Desking, etc.  That’s the definition of “thinking inside the box.”  If you were designing an integrated system, you would want to start with the unpartitioned space.  That’s the only way to properly scope and organize your web services.

In fact, it may give you some new insights about how to pass data and control among the functions.  Should a desking system pull VSA rates?  Should the menu run OFAC?  Can you instantiate a “deal object” somewhere, and pass it by reference?

Last summer, I wrote about mapping dealer-system functions onto the consumer space.  So, that’s a third dimension based on who the user is, plus a strategic imperative that the online experience must dovetail with the dealership experience.

Pillars

What we see with Cox Automotive is an expansion of the domain covered by a single vendor.  The space dominated by the old CDK-Reynolds duopoly is a subset of this one (I will illustrate this in a later post, using a function point inventory).  The overarching function space was always there, of course, but it was filled with disconnected niche vendors.

In practical terms, this means that an increasing share of the dealer’s software budget will flow to integrated vendors outside the duopoly domain.  Since this is a strategy post, I will close with a Go metaphor.  Reynolds and CDK have been playing the game on a quarter board, and now Cox has highlighted their absence from the other 280 points.

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