I recall an episode of the original “Star Trek” series in which Kirk and Spock traveled back to 20th century Earth around the time of the Great Depression to prevent some time warp disaster. Accomplishing the task required Spock to construct a computer with the relatively primitive technology that was available at the time. Frustrated by his slow progress, Kirk chides Spock and implores him to move more quickly.
Irked by Kirk’s reproach, Spock says, “Captain, you are asking me to work with complex technology using tools little more advanced than stone knives and bearskins.”
The memory of that episode struck me as I read an article published by this magazine in December 2004. The article “Software — aging and not so gracefully,” written by George Thanasides and Gary Vandervoort of G2 Systems, points out some facts that support the notion that many, if not most, aftermarket practitioners, especially distributors, are using technology tools that are little more than “stone knives and bearskins.” The article should serve as a wake up call for the aftermarket and shock us into action. But as George and Gary are gentlemen (and as such are not like me), they made their observations with the proverbial gloves on. Having ruminated on their remarks for several weeks now, I think it is appropriate for me to pick up on what they observed and rub the aftermarket’s nose in it.
In summary, the authors observe that:
- Most practitioners are running their business on older text-based technology.
- Most aftermarket software is proprietary rather than open.
- Investment in upgrading systems and software is all but nonexistent.
- The combination of too many solution vendors and too little capital investment in systems is retarding innovation.
Most of us understand that the benefit of implementing technology is to lift the burden of remedial and redundant tasks from people and assign those tasks to machines. Investing in machines can reduce head count, improve accuracy and generally improve our profitability.
Service industry paradigm shatters
In my own business career, I spent nearly 20 years (from the late ’70s to the mid ’90s) laboring in the Dilbert cubical environment called the “service sector,” a benign name that has been given to businesses such as ad agencies, accounting firms, architects and consulting companies.
It’s interesting to reflect back on those years, as they were a time the basic service industry paradigm was shattered. In those 20 years, the invasion of the PC on the business landscape profoundly impacted technology. I watched as head count was reduced by 30 percent and services — previously purchased outside — were brought in-house, creating highly profitable streams of income. It was a textbook case for technology implementation.
While the aftermarket was quick to embrace technology in the 1970s and ’80s, it has not kept pace. The software applications distributors are using to manage their businesses are growing old — as old as 20 years or more. A good friend who spent much of the late ’80s and early ’90s out in the field selling the leading aftermarket distributor system told me that the systems were represented to customers and prospects as having a six- to seven-year usable life. The problem is that 15 years later, many of them are still out there.
Staring at pre-PC green screens
The prevailing distributor technology model is a text-based system, many of which are centralized at the WD level. Text-based systems use the classic “green screen” format that has limited (if no) ability to display graphics. With the WD-centric systems, jobbers and installers connect via dial-up to the WD system and depend on it for much of the logic and processing. This architecture dates from a time before PCs, when the customers had dumb terminals and needed the distributors’ “mainframe” to serve them. The use of the antiquated dial-up connection dominates this world, with only an estimated 30 percent of the market using broadband. Bluntly put, this means that most distributors’ children have more computing power in their bedrooms at home than their parents have at work.
Further exacerbating the problem are software applications primarily based on proprietary, rather than open, technologies, with limited or no significant enhancement in years. It has been estimated that among the 14 software suppliers that serve the distribution segment of the aftermarket, there are around 25 different operating platforms. One aftermarket software company supports as many as seven different platforms on which their software runs. As such, their development staff can do little more than perform maintenance and fix bugs on the multiple platforms, rather than create innovative enhancements.
Most legacy distribution systems have no graphic capability. Few have the majority of the fields required to accommodate the Product Information Exchange Standards (PIES). And most don’t communicate with the outside world without the aid of a fee-based propriety communications link.
How did things get this messed up? It has to be the systems providers’ fault, right?
It’s not that simple. Developers just didn’t decide it was a good idea to have seven operating platforms any more than a fleet manager would decide it’s a good idea to operate a fleet of vehicles that use multiple forms of fuel. Think of the mess of trying to maintain a fleet mixed with gas, diesel, natural gas and electric powered vehicles. The complexity and variation would make standard parts and processes impossible and the job of maintenance unnecessarily complex. Yet, that is precisely what many system vendors face. Their customers have hung on to antiquated systems far past their effective life and demanded that the vendor continue to support them.
‘Next new thing’ hindered by old systems
Focusing on supporting the old systems keeps vendors from developing the next new thing. Currently, there is a lot of action in the market with some people trying (and using) some very innovative technology tools.
For example, I know a couple WDs that have outfitted their delivery vehicles with GPS (global positioning satellites) technology. This enables them to track vehicles and manage drivers like never before. Yet, there is no way for them to manage the data from that activity with their enterprise system. If their system could capture that data and analyze it in the host environment, it could expand the impact of the GPS investment exponentially. A properly programmed system could track improving customer service levels, suggest changes to regular delivery routes to promote efficiency, change deliveries on the fly to accommodate emergency situations and even track and chart drivers’ performance.
Another example is CTI (computer telephony integration), which is common in other industries, but to my knowledge has yet to appear in aftermarket distributor software. CTI integrates the telephone with caller ID and can recognize a specific customer and route the call to his preferred customer service representative. Once the call reaches that rep, a customer-specific history appears on the screen. The brands the customer prefers, core return reminders and billing details would all be easily accessible by the counterperson.
These are but two examples of features that should be finding their way into our market but aren’t. In part, this is not happening because of the sluggish sales of aftermarket systems. Last year, Thanasides and Vandervoort conducted a study of aftermarket resellers to see how much purchasing activity had been in the system market. They reported that system sales hit a 25-year low with only about 40 systems purchased by aftermarket distributors with sales over $5 million.
Think about that. A $200-billion automotive aftermarket and we bought only 40 systems in 2003? And further, it was a 25-year low. I realize that consolidation has shrunk the size of the potential market, but 40 systems? With each solution provider closing so few new deals each year, the capital infusion is barely enough to cover maintenance and support costs. How then can we expect innovation from them?
Clucking over spiraling sales
Distributor software has become a chicken and egg issue. With fewer systems being sold, technology firms are less likely to invest in the development of new products. With fewer innovative applications coming to market, businesses are less likely to upgrade.
As such, sales continue to spiral downward, creating a bad trend for our marketplace. The more distributors retain old systems, the more providers must devote time to maintaining them, and the resulting vicious cycle is hurting the entire market.
But distributors aren’t the only culpable parties in this mess. I have actually witnessed CEOs of aftermarket companies brag about how “under control” their IT budgets are. It seems to me that bragging about how little you spend on IT is similar to bragging about how infrequently you see the doctor and thus how much money is saved.
A quote in the Thanasides and Vandervoort article from Scott Luckett addressed the very issue of investment in technology. He said, “It’s alarming that with all the efficiencies made possible by new industry standards and solutions that aftermarket executives appear to be trying to lower the IT line item in their budgets to the minimum possible.”
I couldn’t agree more. At a time when our industry associations are pioneering new standards, like ACES, PIES and IPO, aftermarket manufacturers should be investing more to ramp up and integrate these critical standards into their IT fabric.
An informal survey of the leading third-party eCats (including Wrenchead and Activant) revealed that a low of 1 percent and a high of about 12 percent of manufacturers are submitting their data in ACES format. Is 12 percent of manufacturers complying with the industry’s new standards for catalog data the best we can do?
Although everyone likes to complain about how long it takes to get the data to parts counters to sell new parts, this information seems to show that few companies are doing anything about it. When manufacturers don’t invest in getting their data into standard formats, and distributors don’t upgrade their systems to use the Internet to receive updates, neither has very solid footing to be throwing rocks.
As an industry, just how bad is our problem with under-funding technology? We need to quantify the problem to better address it, which is why I was delighted that AAIA had decided to undertake a study of manufacturers and resellers to determine the current state of technology. Their idea is to gather data that will allow us to benchmark the aftermarket against other similar business categories such as hardware, plumbing, industrial or HVAC.
Like so many other situations we find ourselves in, the best path is to work together. Perhaps the AAIA study can act as a catalyst in that regard.
