Jim Franco has been working in the automotive industry in one capacity or another for nearly 47 years. After working for many years as a parts retailer and distributor, he bought Autologue in 1985. In the ensuing years he has grown the company exponentially, acquiring several other software companies including Southeastern Express Systems, The Parts Genie division of Computer Systems & Solutions, Auto Inventory Systems (AIS) and Datatron LTD.
What's the No. 1 technology setback you encounter in the aftermarket?
I believe the number-one problem is the aftermarket has always been slow to adopt. That's because it's a big aftermarket, and very fragmented as far as there not being a real gigantic player. There are thousands and thousands of independents. When I say slow to adopt, I mean everybody wants to watch everybody else for a while. It's been like this for 20 years, and not just around technology.
It frustrates me as a technology provider that some companies don't even seem to get it. They don't want to spend the money or the time to even try some of the new technology. I've got this new tool called ePaperless Office. It's designed for the little guy. All the big guys have been doing this for years, where they're creating [advanced shipping notices] and sending out invoices.
But there are thousands of stores that won't even try this beautiful tool. It runs on any system. You have all of your invoices and statements online for your customers and for your office personnel. They don't have to go to a filing cabinet. I'm putting it out there with no up-front money. Try it for three months. They are just saying, "No, I don't want to spend an extra 30 cents a customer to get this stuff online."
The aftermarket is often accused of under spending on IT. What kind of ramifications will this sort of behavior have?
I believe that the number one problem is the aftermarket, as a whole, is not growing like it was back it the '80s and '90s. When you have an industry that's not growing rapidly, there's not the money for expansion.
Along with that, we get beat up a little bit because we have these old green screens. But when you really look at it, this is 15 to 20 years of sophisticated programming. Believe it or not, most businesses in our world are running just fine on their "old" green screens.
Look at the banking industry and the airlines. Banking industry software is 30- or 40-year-old COBOL stuff, but it's so big and so expensive and it works so well, that all they basically did was put GUI front end on it for the users.
Go behind an airline counter today and you're looking at an old-fashioned green screen. Why haven't they gone to Windows or a GUI? Because it's not as reliable as what they've been running on for years and years.
But if you adopt inexpensive technology and lay it on top of those enterprise systems, we can now put new GUI front ends on our systems. We can have all of this wonderful Internet connectivity that makes us look just like one of the big guys — whether it's ordering parts or doing invoices and statements online, or controlling your delivery trucks.
We've been working on gross profits and turns and lost sales for decades now. But what the Internet gives us are new tools to cut down on internal expenses like filing and personnel and mailers and envelopes. We can improve on gas and insurance and productivity with drivers, because you can know exactly where they are and what they're doing at all times.
Are we underspending a taste? Yes. But on the other side of coin, what we have out there today is pretty robust stuff.
In 2006 you announced a "coalition-based" approach to determining the direction of your products and technology. Can you tell me more about that effort? How does feedback from your end user community affect your product updates?
The coalition approach was a way I could get some of the heavy-hitters together to give me ideas, and I learned a lot when I did that. What I learned was that even the big guys with 40 stores doing $75 million a year are saying, "If you had a brand new, state of the art, all GUI-based enterprise system in perfect shape, taking me far beyond what I have today with my character-based system, I wouldn't change."
You know why? First, they don't want to go through the pain of training all of their personnel. That's a big reason people don't want to change systems. Upgrading is fine; changing systems is what's devastating. Number two is, why would I give up the reliability? One guy told me, "I've been running on this platform for eight years and never had one hour of downtime. I'm going to trust my whole system to Windows technology? How many times have you re-booted your Windows desktop this week?"
But we developed ePaperless Office and the eDelivery Tracking Systems out of that process.
It seems that a lot of warehouse/distributors and jobbers often don't upgrade their technology system deployments. They are unable to take advantage of more advanced functionality, but there's an economic argument against this type of investment. Do you encounter much resistant in your customer base to upgrading and maintaining information systems?
I've got upgrades out there for a whole new processor for under $1,000, and I can't get [my customers] to move. I hate to say it, but the media has a tendency to put a gray cloud over the world as far as where we're going. People hear that things are slowing down, we're in a recession. They buy into that, and consequently they say, "I'm not spending any money; I'm not looking forward; I'm just going to hold on and hope I'm here the day after tomorrow. That's not a good place to be. If you can't move a business forward, then you're going to go away.
I try to tell my customers that if you use these tools you can cut down on expenses and they can help you progress forward. This is also [customer relationship management] at its finest. My customers' customers are saying these tools are helping us so that we don't have to call you, and we can get the information we want when we want to get it, 24/7. One of my guys told me this was the best marketing tool he ever had. He provides more benefit to his customers, and that gives them more reasons to do business with him.
Our number one goal out here, guys, is to get the customer to not go back to the new car dealer, but to use the aftermarket. Whether it's the installer, the jobber, or the distributor, the aftermarket is what we're trying to preserve.
A lot of companies in the aftermarket are looking at the glass as half-empty instead of half-full. They don't understand that every single day they're going to do about the same thing they did the day before. We don't have a business that goes up and down in these cycles. It's pretty darn consistent. When the economy is really great and money is flowing, people are buying new cars. In the aftermarket, they are spending money to fix them up and make them look pretty. When the economy gets tough, they stop buying new cars and start fixing up the old cars.
Don't get so busy sitting there answering the phone and digging and trying to handle that one job. Step back from the business a little bit and ask: "What can I do for my business to make everything better?"
