The automotive aftermarket, as a whole, traditionally had a reputation as a laggard when it came to new technology adoption. That has gradually changed as more companies have embraced industry data standards (PIES, ACES), electronic catalogs, and e-commerce initiatives.
But there are still companies in the industry that have continued to resist updating their basic business platforms. While there's no good estimate as to how many stores, jobbers, and warehouses out there are still on legacy platforms, what is clear is that there are still many companies in the aftermarket using DOS- or UNIX-based "green screen" solutions. And for a variety of reasons, they have resisted upgrading to more modern, Windows-based systems.
"Because businesses have come to rely on certain specific functionality over many years, and because of the tremendous investment solution providers made to convert to modern platforms, many legacy products are still in operation," says Bryan Murphy, head of eBay Motors. "While they might not all share the ‘green screen’ look today, having had a GUI (graphical user interface) front end grafted onto a legacy back end, they still leverage the basic code that was generated 30 plus years ago."
Clinging to these systems is often detrimental to the companies. "These legacy systems operate on old hardware that is prone to failure and often impossible to find replacement components for," adds Brian Allibon, president of MAM Software. "Modern Windows based management software receives timely updates and uses easily accessible, off-the-shelf hardware."
But there are plenty of reasons they won't upgrade. First, of course, it can be costly to rip and replace these systems. It's also disruptive; and if you're a busy warehouse distributor, you don't have time to oversee what can often be a complex and time-consuming technology deployment. There are also some less logical reasons like fear of change, or apprehension about the steep learning curve associated with moving from old to new technology.
But business realities are pushing these laggards into technology upgrades, says Tony Alderdice, director of sales for North America at Epicor. "They have a hard time keeping up because the databases they are using do not let them get access to the information they need very easily," Alderdice says.
Consolidation and cost-cutting initiatives may also lead companies into a technology upgrade, along with pressure from customers, who increasingly expect to do more business online.
"E-ordering is quickly gaining popularity," Allibon says. "In addition, program groups such as Mighty are now encouraging users to upgrade to an e-commerce capable solution."
The Cost of Not Converting
Not converting to a modern technology platform has a cost, and that cost has gotten steeper as competition increases online. "It’s happening on a daily basis, with businesses that don’t have the tools they need to maintain their customers because their solution may be losing sales every day," Murphy says. " It can be as simple as sales personnel not having the information they need to make the sale, losing not only a sale but an important account. If this happens frequently, the results are predictable."
Older solutions typically use flat file-based or proprietary databases, which can be unwieldy and difficult to support. "With a modern solution you should expect some type of relational data base that is ODBC compliant," Murphy says. "The main benefit here is the ability for your software provider to modify data elements easily as the need arises, and for the users to potentially have open access to download specific data sets without a costly development effort."
Newer platforms provider greater flexibility, more advanced features, improved scalability, and the ability to take advantage of Web-based services, such as integrating e-commerce tools with eBay listings.
"Due to the modular nature of modern computer hardware and the popularity of Microsoft operating systems, newer infrastructure greatly helps to future-proof businesses to some degree," Allibon says. "In addition, a greater emphasis has been placed on communication in recent years, both internally between store locations and throughout the supply chain."
Having a modern technology system in place can also help attract and retain younger employees, important in an industry with an aging workforce. "I hear this from key clients," Alderdice says. "The new blood they are trying to bring into the company have a very good understanding of the aftermarket, but they don't want to work for companies that are still using green screens."
Modern platforms also provide accurate, consistent data and catalog content, while reducing costs. "Improving efficiency across the board is the key benefit," Alderdice says. "That is front and center. How do we do more with less? Modern systems … provide a tangible labor savings."
Costs, Fear Delay Upgrades
So why do some companies still delay the transition? Because this can represent a huge change for the business, both technologically and culturally. "The leadership team needs to be fully aware of what is going to be required in terms of time, commitment and leadership for these projects," Alderdice says.
That's because these upgrades are often not just a matter of pulling out one software system and implementing; workflows and business processes may have to change to accommodate the demands of new technologies, e-commerce capabilities, and more graphically intensive applications. "A lot of owners have a hard time understanding why the implementation and professional services costs are almost as big an investment as the actual software," Alderdice says. "That's been a change for us and our entire client base."
The advent of hosted (SaaS) and cloud-based solutions have helped reduce some of these costs, while accelerating the return on investment (ROI). These deployments are rarely problem-free, however, so companies should realistically evaluate the pros and cons.
"While it is important to know what you are gaining in the conversion, it’s even more important to understand what you might be losing," Murphy says. "Take the time to qualify that and understand from your solution provider how they will address those issues now and in the future. Also learn from similar organizations about the impact of the conversion on their businesses, both positive and negative."
At smaller and medium-sized businesses, there may be a concern about the learning curve of a new technology, particularly for businesses where a succession plan is not in place and there is some doubt as to where the company will be five years down the road. Alderdice says that many companies are afraid that key, long-term employees may leave the business if faced with learning new technology. "Will people quit?" Alderdice says. "We've had very earnest conversations with customers who know they need to make this change, but they are worried they'll lose people because those folks don't want to learn new technology."
Payoff is Worth the Effort
Despite those challenges, the ROI for these upgrades is readily apparent through improved productivity, reduced costs, time savings, improved customer service, and the ability to attract new employees. The improved visibility enabled by these upgraded systems can help improve inventory turns, re-balance inventories and improve margins.
Whether the motivation to update business systems comes from a desire to expand the revenue base by acquiring new accounts, or pressure from competitors and customers, leaving the green screen behind has a clear, quantifiable ROI in most cases.
"In the end, if the business is to survive and grow it will have to make an investment to improve the overall business process," Murphy says. "Implementing a modern system that addresses these issues should be an integral part of the overall plan."
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