ADP 9400 vs 9200

[callbob]

If you will read ADP's Annual Report you will find that the Automotive Division accounts for about 10% of total corporate business and about 8% of the profits. While the other divisions of ADP tout there TREMENDOUS growth the Automotive Division states "we retained a higher percentage of our existing customers this year then we did last year" translated - we did no lose as much business to competiters as did the previous year. A numbe of years ago ADP stated that they wanted a 20% growth rate out of each division. Automotive Division accomplished this for a few year by buying out competitors and related vendors. With Dealer numbers stagnant or declining it is difficult to grow especially with the little guys picking your pockets, (AutoMate/Adam/Autosoft/ETC) Look at the NADA survey from several month ago. ADP did not fare well.

ADP stock is very likely a pretty good investment but not because of the Automotive Division's performance. Most likely the Automotive Division is on the Sale Block at this time - but who would by it (maybe they could throw in some Pintos/Vegas/Colts) I would imagine Anti-Trust would keep R+R out of the picture. Maybe UCS (wouldn't that be fun), My non professional broker opinion ADP stock is a BUY. Use the money you can save by switching off their DMS system and invest it in their stock. Your just wasting your money on the over priced monthly fees anyway.

[CCassaday]

Guys! How do you REALLY feel about this topic?

C'mon, don't you remember that this is a free market economy? Nobody, not ADP, UCS or R&R is putting a gun to any dealers head and forcing them to buy their products.

I'm not sure of what your perspective is on the automotive industry, but ADP and R&R seem to be the major players in the DSP business. They _must_ be doing something different/faster/better than the other DSP providers or they would not have the market share that they do.

If you think that ADP (or R&R) is over priced, then develop a product, implement it and then support with as large a staff as ADP or R&R must have and then tell me how overpriced they are.

Quit whining that it cost too much unless you can bring to the table everything that they can.

Chris Cassaday

[LBBarrow]

Chris,

I used to work for one of those major players. All I can tell you is that I sleep a lot better now.

[callbob]

Doing something right?? Review the NADA report on DMS providers and look at overall satisfaction. Also check the change in market share. You are right - no one is holding a gun to us. There are many other vendors who bring MORE to the table for far less money. I changed a few year ago and am now putting $50K a year in my pocket instead of ADP's and have more information at my disposal then I ever did. R+R was just as pricy (they don't even have a salesman in my state now). I like you wonder while other dealers continue to pay those kind of fees when there are other choices available. O'well some of them are my competition.

[CCassaday]

callbob,

Surveys and statistics....Those only go so far. They are probably just as reliable as the surveys the manufacturers send out to new vehicle buyers. You go find me 10 dealers that are dissatisfied with ADP or R&R and I'll go find you 10 that are happy. It all boils down to representation. If the sales rep is in the account making sure the dealer is happy, then it will happen.

However, it sounds like ADP might be able to pick up some accounts in your area if R&R has pulled their rep out. Doesn't sound like a wise business decision to me.

LBBarrow,

Was it hard for you to sleep at night because of the way your company conducted business, or because of the way that you conducted the company's business?

I'm glad that you have a clear conscious. Life is too short to get caught up in the crap that doesn't make life worth living.

Chris Cassaday

[LBBarrow]

Chris,

I worked 6 years for a company that I initially thought was a company that conducted business in a forthright manner. It had a reputable name in the business, with a reputation for providing good service and support. I later became disillusioned with the deceptive practices that it and its major competitor were both employing. What bothered me most was the 'discounting' game that was necessary to gain the business. My company would pad the proposal as much as possible in anticipation of a tough fight, and what we expected from the other competitor. I even witnessed my sales manager padding the 'profiler' so that a long-time customer of mine would have to pay more for an upgrade. Several years after leaving my company, I noticed that some of the deceptive practices that my competition was successful using were being employed by my former company (It worked for them, it should work for us!). As a consultant, I was able to see this more than ever, as dealers would show me information that they normally would withhold. What is transpiring now is based on a couple of companies that have been spoiled by a certain (high) level of profitability over the years. Now that dealers are more aware of newer, and more cost-effective, technology, they are switching away from these brand names. When a company becomes too big, it becomes 'top heavy', and changes are harder to implement in the organization. The smaller companies are able to react more quickly to the constantly changing needs of the dealership, and present a more viable solution for their needs. No, you are not required to have a staff of 1000's to provide a good product, nor do you have to spend millions of dollars on marketing at the annual NADA convention. My .$02.

[CaDealer]

Please note that advertisements, chain letters, pyramid schemes,
and solicitations are inappropriate on this BB.

Obviously LBBARROW, you skipped this message when registering on dealersedge.
I read these forums to gain insights on our industry. I do not read them to be reminded that there is a system called Auto Mate you want to sell.
After clicking the search button, and typing in your name, I came up with eight postings.
Every one of the four threads you started was pointing out some rumor about ADP or Reynolds and Reynolds.
Then, after responding to your own thread, you point out how great Auto Mate is. You even claim to be a consultant on purchasing new systems.
I don't even need to hire you to know which system you will push. I hope you work cheap.
And if this is the way your company does business, I will not even consider Auto Mate when my current lease expires.

[ryanjohn]

Quite an interesting exchange of viewpoints in this thread concerning DMS vendors.. If you look at RR's recent 10-Q they as well are selling fewer and fewer installations and are jockeying revenue toward increased support fees. Here is the link for those interested: http://www.shareholder.com/rey/EdgarSum ... 52-02-4344

The reason ADP and RR currently have such a large market share in this segment is that their systems and market share were designed years before there was a PC and dealers had very limited choice. Please consider the likes of DELL Computer and WalMart when looking for the direction the DMS indusrty will follow in the years to come. Dell eclipsed IBM and Walmart eradicated K-Mart by giving customers what they want for less.

As dealers wise up and begin making other choices regarding DMS solutions, ADP & RR will continue to loose business...

[CCassaday]

LBBarrow, (and anyone else for that matter)

Consider this for a moment:

In terms of price, it could be said that there are three primary DMS providers: ADP, R&R, UCS.

All three are similary priced and usually all three compete on the same level. When a dealer is looking for certain feature/functionality requirements - they look to these three vendors.

When a dealer is looking to spend "less" money, they tend to look downmarket at the smaller systems such as Adams, PCS, EDS, AutoSoft, DDS, Alliance, etc. These systems are also similarly priced within this particular market segment.

My question to you is this: Do you really think that even the smaller DMS providers are not going to try to maintain a high gross profit when it looks like a deal is going to go in their favor?

I assert that the same price jockeying that you cited happens even in the smaller DMS providers, but only on a smaller scale.

ryanjohn,

As I said before, this is a free market economy - the buyer will ultimately dictate the terms. One could probably argue that ADP or R&R are behomoths and react very slowly to change. My reply is that the majority of car dealers are even slower.

Consider this: While involved in a selling cycle with a large (appx 15 stores) dealer group, the IT director of the group told me that they had received many proposals from "smaller" DMS providers but that they would not even consider them. I asked this individual what the terms were and why they decided to eliminate them from consideration. This individual said that the salesperson indicated that they would give considerable discounts while they worked out some of the bugs in their software and added features that this auto group needed. The IT director could not take the risk (even at significant cost savings) of all the stores in their organization going down because of a major software bug.

This doesn't mean that all small DMS providers are "beta testing" their software, nor does it mean that the "big three" are completely free of bugs. But it does indicate that the "big three" have a reputation of reliability that smaller vendors can only dream of at this point. And that is a value proposition in itself.

Obviously there are a lot of technologically savvy dealers out there, but the last time I checked most of the larger dealers were still using ADP, R&R ( and UCS to some extent). Does this mean that they won't change? No, but I would bet that not a lot of large dealer groups are willing to take a risk on a smaller vendor that isn't proven. And hence, the chicken and the egg quandry was born...

Regards,

Chris Cassaday

[This message has been edited by CCassaday (edited 07-29-2002).]

[ryanjohn]

Chris Cassaday- Please help me with a few points in you post

Your Quote: "In terms of price, it could be said that there are three primary DMS providers: ADP, R&R, UCS.
All three are similarly priced and usually all three compete on the same level. When a dealer is looking for certain feature/functionality requirements - they look to these three vendors."

What exact features/functionality set those systems apart from PC based systems? That statement is so vague and broad.

Your Quote: "Obviously there are a lot of technologically savvy dealers out there, but the last time I checked most of the larger dealers were still using ADP, R&R ( and UCS to some extent)".

Apparently from your statement which is likely to be based on market training from your employer, you validate the perception in the market that ADP & RR are focused on large dealer groups. This is great because last time I checked Wal-Mart did not pummel K-Mart in major markets. There are plenty of dealers across the country that believe that your "Big Three" are overpriced and do not give a rats about a Chevy dealer in the boonies. But I bet 12 years ago your management team would have concluded that a kid selling computers out of his dorm room in Austin could not serve the needs of some large organization like Ford Motor Co. either. Please keep wearing those rose colored glasses.