Oxlo Observer

Open Secure Access Moves to Next Stage

You may have heard recently that the leadership of Open Secure Access (OSA) has transitioned from Allan Stejskal to Greg Collins.  In its short existence OSA has made an impact in automotive retail.  It has helped the industry focus on some critically important issues and pushed for an industry discussion of those issues.  Looking ahead, OSA has both great opportunities and great challenges.

OSA began as a single-issue consortium of automotive retail vendors. Its mission was to maintain a dealer systems environment in which there was open, competitive access to DMS data for the purposes of data integration and data analysis.  It appeared to some at its public inception that OSA was nothing more than sour grapes from competitors opposed to Reynolds’ RCI program.  I believe that OSA could have easily succumbed to this low calling.  Fortunately though, OSA has taken a more principled and less partisan stance.

Certainly OSA focused heavily on demanding that Reynolds allow dealer-approved vendors free access to the data stored in its dealer systems. But it also sent a clear message to the data integrators that they needed to clean up their shops.  OSA not only acknowledged Reynolds’ legitimate points about the reckless nature of dealer data access today, but took action to put in place an institution for validating that data integration vendors (aka hostile integrators) took responsibility for securely handling the data.  After an open comment process OSA published security guidelines for the industry and will soon offer a certification program. 

Though Oxlo is not a data integrator, we nonetheless are in a position where we manage and distribute dealer data.  We consider the OSA security credential an absolute necessity for our business and so should the data integrators.  It’s simply a matter of professionalism.

A great deal of the credit for driving this progress goes to Allan Stejskal.  His skilled diplomacy allowed him to talk with everyone in the industry in a way that was uniformly respected.  He created dialog between parties that otherwise wouldn’t have connected.  Automotive retail is better for his efforts.

Where does OSA go from here?  Now that it has created a standard and a credential for Security, will it also attempt to rate the Openness of vendors?  While STAR has defined a number of data integration templates for integration between dealer systems and automaker systems, it has yet to address integration between the various systems and services that run a dealership.  This is definitely an area where OSA could add more value for the industry, but it will have to sort out its relationship with STAR.  In any case, we wish Greg well, and look forward to working with him to build a better dealer systems market. 

Automotive News: Letter to the Editor

To the Editor:

The article, “Small computer vendors still out of the loop” (subscription required, Ralph Kisiel, June 25^th) struck a chord with me, and I think there are other dimensions to the DMS cost/capability problem worth noting to your readers. 

Yes, DMS systems other than ADP and Reynolds are much more affordable.  Yes, some manufacturers won’t work with smaller vendors. Yes, ‘standards’ are making some in-roads. 

While saving dealers money and time is noteworthy, having a competitive DMS market that’s level for all vendors is only a part of the benefit this industry stands to gain from open automakers.  Some automakers recognize this and are acting on it.  Here’s why:

Integrating DMS systems with dealer business partner systems—such as automakers, but also lenders and insurers—saves all parties time and also enables the dealer to deliver a great buying experience for their customers. 

Creating ‘the dealership of the future’ means that not only do computer systems have to talk to each other seamlessly, but they have to do so quickly, securely and over the internet.  Quickly, because the customer needs to know if a lender is going to accept their credit application while they’re sitting in the F&I office, or if they’ll get a part from the distribution center, or claim payment while sitting in the service bay.  Securely, because dealers don’t want just any vendor getting access to sensitive customer information.  And over the internet, because modems and 20-year-old technology only make it harder for everyone involved.

The evolution of dealer systems also means that dealers and automakers have to think about systems other than the traditional DMS.  The proliferation of CRM, F&I and other specialty systems means that more types of integration are now possible between automakers and dealers.  For example, coordinating the sales process for a new customer should mean system-supported incentive matching.  This sort of approach would help both automakers and dealers effectively match customers with the right incentive every time.  The result is happier customers, more profitable dealers and less overall incentives spend from automakers.

Winners in this ultra-competitive market will be determined by not only fantastic manufacturing efficiency or lowest labor costs or great products alone.  Automakers that are open and innovative in the way they work with vendors will win.  Now is the time to demand that retail systems and processes take giant steps. 

Doing What It Takes

This blog is intended to provide readers—you—with insights into how we think and operate here at Oxlo.  It also provides a less scripted, more stream-of-consciousness view of Oxlo and our perspectives on automotive retail.  I hope that readers have seen both in the DCS series of posts. 

But rather than always following such a strongly thematic series, let me share with you a personal observation on the culture of Oxlo.

Doing what it takes.  What it takes to _______ (you the reader - fill in the blank) excellently.  This is what people at Oxlo do.  What you won’t find here is a “that’s not my job” attitude.  Jim, our CEO, also refers to this as an ownership mentality. 

Whether it’s working on a weekend or outside normal business hours to refine and improve on a deliverable, whether it is going the extra mile to listen to, document, follow through and then review how we did on a basic customer commitment, or whether it is simply picking up around the office—there are countless examples by every person at Oxlo that have created a company that does what it takes.

This doesn’t mean that everyone does everything.  It means filling your role expertly, and contributing unselfishly where there are gaps. 

Doing what it takes also means being supportive of colleagues, because one person can’t do it all on their own— it takes a well-coordinated, cooperative division of labor.

The last characteristic of Oxlo’s do what it takes culture that I think is worth mentioning is that quality and substance matter a great deal.  Quantity of effort alone won’t cut it, although make no mistake, quality often takes quantity.

The result? We’re seeing that our customers, partners, investors, advisors and colleagues all get a remarkable experience and remarkable value.  Most importantly, our customers get responsive, high quality, substantive results by working with Oxlo. 

Do what it takes.

Dealer Communication System – Technical Framework

In this installment of the DCS series I want to frame Oxlo’s infrastructure approach for readers with technical interests.

Oxlo addresses dealer communication for lots of companies in automotive retail through our centrally managed and hosted Dealer Integration Network.  Connecting systems in support of the business activities and processes of dealers, automakers, lenders and the like, requires a robust infrastructure of hardware and software.  From our earliest days when we were just starting the business, to our latest refinements and scalability improvements, Oxlo has implemented what, in part, can be referred to as a B2B Enterprise Service Bus (ESB) for automotive retail.

Make no mistake, a simple hosted ESB would not solve the myriad problems and challenges involved in integrating automotive retail.  That’s why Oxlo’s core ESB framework is one layer of an overall service oriented architecture (SOA).  The broader SOA encompasses a great deal of support capabilities, configuration and management services, business intelligence services, and even self service capabilities for business partners.

But today’s focus is the ESB component of Oxlo’s SOA.  There are a lot of authoritative sources that describe the concept and capabilities of an Enterprise Service Bus.  Wikipedia has a good summary of core capabilities, which are largely in line with how Oxlo handles our ESB component:

Category	Functions
Invocation	Support for synchronous and asynchronous transport protocols
Routing	Addressibility, content-based routing (Oxlo also addresses validation here)
Mediation	Adapters, protocol translation, data transformation and translation
Process Orchestration	Business process definition (& execution)
Complex Event Processing	Event interpretation, correlation, pattern matching, publish/subscribe
Other Quality of Service	Security (encryption and signing), reliable delivery, transactions
Management	Monitoring, audit, logging, metering, admin console, BAM

In addition to this generic definition, the way Oxlo has implemented our Dealer Integration Network has been specifically focused on automotive retail, which means we’ve accommodated for STAR Standards, as well as a lot of the proprietary dealer communication protocols already in use in this industry.  In other words, we’re not generically supporting say SAP iDoc or generic STAR WS, but rather message formats and protocols that are specific to each particular automaker.  Even with standards everyone implements differently.

In addition to the message-based communications that our ESB handles, dealer communication in this industry often involves a portal that is hosted by the dealer’s business partner.  Automakers are the best example here—such as Toyota’s Dealer Daily, GM’s Dealer World, or Chrysler’s Dealer Connect.  These portals provide dealer users the ability to add information when a message-based process needs additional data (plus a dealer portal can support other types of dealer communications, such as training materials and document archives).

The reason I make mention of this complimentary portal infrastructure is because I contend that a robust ESB approach can reduce the need to operate an expansive portal presence.  (Not eliminate.) Oxlo’s executed our ESB approach because our fundamental belief is that dealer integration should not only increase responsiveness to point-of-sale needs, but also decrease cost for dealer communications.  The time and resources needed to develop, maintain and expand an extensive portal presence are costly.

Since we’re talking about a technical framework, for those in IT at an automaker, lender, insurer, remarketer or other auto retail business, here are some of the most obvious benefits of ESB:

• First, you can respond quickly to business customers’ needs and dealers’ needs, and in fact take a leadership position by enabling additional value for existing applications and information
• Second, you can add new applications more easily, and quickly connect users (dealer personnel)
• Third, you can reduce software development and maintenance costs.  This is particularly true in Oxlo’s case (pardon the blatant commercial) because we host the ESB as part of our broader SOA.

Interested in more expert sources on ESB? Try these:

IBM: http://www-306.ibm.com/software/info1/websphere/index.jsp?tab=landings/esb

Oracle: http://www.oracle.com/appserver/esb.html

BEA:  http://www.bea.com/framework.jsp?CNT=index.htm&FP=/content/products/aqualogic/service_bus/

Microsoft: http://www.microsoft.com/biztalk/solutions/soa/esb.mspx

SAP: http://www.sap.com/usa/platform/netweaver/index.epx

Tibco:  http://www.tibco.com/software/enterprise_service_bus/default.jsp

RedHat:  http://www.redhat.com/about/news/prarchive/2006/jboss_esb4.html

DCS Part III: Integrated Business Processes

This installment in the Dealer Communication System series focuses on the superiority and imperative for using a DCS to truly integrate business processes. 

What does it mean to integrate business processes in automotive retail?  I’m talking about supporting how retailers work with their business partners to sell more products—new cars, used cars, parts, finance and insurance, repair and maintenance services—in a way that has the computerized parts of the process taking place in parallel to the actual interaction of dealer personnel with customers. 

It’s imperative for dealer business partners to use a systematic approach that supports the entire selling (or servicing) process, here’s why:

-          Integrated business processes eliminate opportunity cost and personnel cost.  By integrating the dealer system with the business partner system, dealers don’t have to have personnel focus on separate systems that replicate effort and information. This avoids unnecessary administrative time and overhead, plus personnel can focus on the customer, not the computer.

-          Integrated processes also fit into dealer & business partner operations in a way that mirrors the flow of customers in dealerships, rather than waiting overnight. Truly integrated processes are just faster.  By being “on-demand” customers get more responsive sales/service from both the dealer and the dealer’s business partner.

-          Integrated business processes are secure and reliable because they use supported system interfaces to both dealer systems and business partner systems. 

Let’s look at incentives, which is a great example from a dealer and an automaker we work with.

Here’s an overview of the unintegrated process at Dealer X.  I’ll describe this in moderate detail, because the benefit of the integrated approach becomes that much more obvious.

-          As new incentives are introduced by an automaker, the dealer prints them all out.  These pages are full of incentive information for vehicles not in inventory or for incentives that may not apply to any potential customers. 

-          When a perspective customer comes to the store some information about them is logged into a CRM system. 

-          Once the salesperson spends a little time with the person they match them with a vehicle.

-          Some additional customer information is captured so the salesperson can search a lender system to determine the tier/credit score of the person. 

-          With this body of information the automaker’s incentive system can be searched.  The information is entered into this separate system (not the same system that the sales person has used to capture the customer/credit score/tier information). 

-          Once results are returned, the salesperson communicates possible incentive matches to the customer to aid vehicle sale, which is particularly helpful for customers shopping payments. 

-          As the sales person learns more about the customer, more information can be entered into the incentive search—maybe the person is a veteran for example—which may turn up new incentives that could apply to the customer/vehicle.  (Keep in mind that this is all happening when the sales person is talking with the customer, and may also be juggling other customers on a busy Saturday afternoon.) 

-          Once a specific vehicle is selected, and an initial agreement is reached, the salesperson forwards the customer to the finance/insurance person in the store.

-          Now the F&I person will log into the incentive system and perform a search based on the notes or verbal comments of the sales person.  Sometimes the sales person has printed their previous incentive search and will highlight what was communicated to the customer. 

-          On the day the vehicle is actually being sold—which may be the next day or the next weekend—the system is searched again and the accounting department inputs the complete customer and incentive information into their dealer management system to generate final contracts.

-          Additionally this information is submitted with the retail delivery report for the automaker, but is also manually reentered into the incentive submission system of the automaker, which is separate from the incentive searching system. 

What would an integrated incentive process look like?

Without stepping through the entire process, by integrating the dealers’ sales system (CRM, DMS and/or desking software) with the automaker’s incentive systems and with lender systems, customer information could be submitted to a credit bureau or captive lender to get immediate credit score/tier information that then could be securely submitted into the incentive system to return meaningful, complete results.  This level of process automation enables retail personnel with a current view of all incentives, not a dated print-out.  Plus the complete customer/incentive picture becomes available for quick look-up at all subsequent stages of the sales process.  Now the F&I manager won’t have to repeat the process, but instead just pulls up the existing information to verify the appropriate incentives at the time of physical delivery.  The same benefit is realized by the accounting person. 

Integrated incentives would easily cut 30 minutes out of the process according to Dealer X, which is time the customer wouldn’t be standing around.  Also, from an accounting perspective, this efficiency eliminates re-submission of incentive requests beyond date of sale—because something was missed—and it eliminates submission of incorrect incentives that may have expired.  “Mismatches happen all the time,” because incentive programs are constantly evolving.

Integrated business processes mean saved time, saved money and happier customers—for both dealers and their business partners.  Compelling, isn’t it?

DCS Declaration

As suggested in the previous posting, it’s time to share some of the issues, perspectives and experiences gained from our work as a dealer communication system and with other dealer communication systems. If you sell through dealers—regardless of your product or service—you need a DCS. And, based on our experiences in this area, there are a set of principles that are essential to effectively selling and servicing through this core piece of automotive retail infrastructure. So think of this blog entry as a declaration of DCS principles.

DCSs are not just for automakers. DCS infrastructure enables the selling, servicing, financing, insuring and ultimately remarketing of cars and trucks. So any company that does significant business in automotive retail should have one in order to support interaction with the computer systems that dealers use to run their business—whether DMS, F&I, CRM, Desking or any other.

DCSs must be real-time. Customer satisfaction demands this, and makes the difference between getting product sold or not. Relying on a batch, overnight process doesn’t give dealers an opportunity to respond to a customer standing in front of them.

DCSs must support bi-directional communication. It’s not enough to see what’s happening at the point-of-sale/service if you can’t take action with a meaningful reply that supports the specific situation in the dealership.

DCS must support application to application integration. This is essential for two reasons. One is that unsupported (aka hostile) interfaces can’t effectively support real-time, bi-directional communication. And the second reason, particularly in a multi-franchise world, is that dealers can’t afford the wasted time and effort to work between their systems and a hodgepodge of their business partner systems.

DCSs must be internet-based. The internet is inexpensive and ubiquitous—even for small stores.

DCS must support dealer choice of systems. Competition among dealer system providers drives innovation and lowers costs to dealers. Plus some systems are undoubtedly better suited to certain dealer business needs than others, and dealers are best to judge those business needs.

DCS must be flexible and extensible. This is essential to support all the business processes needed in the automotive retail environment. Simple parts orders and credit applications aren’t enough. Competitive advantage will go to the dealer business partner than can support complex DCS business logic and workflow for incentive selection and submission, vehicle order management and e-contracting for extended service plans and other insurance products.

DCS must deliver business intelligence. By layering business analytics and real-time monitoring on to integrated business processes, business intelligence becomes a competitive weapon for automakers, lenders, insurers, online and auction sellers, parts suppliers and certainly dealers.

This is Oxlo’s DCS Declaration.

Dealer Communication System Series

Oxlo has learned a great deal about dealer communication systems at automakers, so it’s time to share some of the issues, perspectives and experiences that can be applied to the evolving retail marketplace, as well as other types of dealer communication systems that integrate other dealer business partners with the point of sale and service. 

Here’s the context: An OEM’s DCS is the backbone of a retail sales and service support infrastructure. A DCS links back-end OEM systems with dealers in a number of ways, handles business process execution, and also delivers a lot of other information to dealers, such as training. These have been developed and managed by OEMs traditionally, with heavy involvement from a consulting firm or an enterprise software company, not to mention a lot of IT staff. DCSs have been expensive for OEMs—expensive to build and expensive to support due to their complexity. In many cases there is a heavy reliance on some sort of web portal, which often works independently of any integration to dealer computer systems. We’ve found that many focus on basic business processes, as opposed to more complex processes. And, most OEM DCSs have a significant reliance on batch processes. Finally, integrating with dealer systems is a highly difficult and time consuming process.  

This largely represents the challenge and perspective of the automakers. Compound this with the impact on dealer system providers and DCS becomes even more cumbersome. And, stepping into the dealers’ world only exaggerates the challenge of creating a system that balances retail and manufacturer needs. 

As the automotive industry becomes increasingly competitive, the current approaches to DCS are no longer adequate. It’s too difficult to win customers, keep them for service and win them again with subsequent purchases. The fact is that automakers need tighter integration with the point of sale. They need to begin looking at DCS as a source of competitive advantage. Other dealer business partners like insurers, remarketers, lenders and other service providers also need this. And evermore sophisticated dealers and dealer groups need all these parties supported by dealer communication systems because it is the service and additional products sold after the initial car sale drive dealer profits. 

Over the next few weeks I’ll be taking a closer look at DCS strategies and the actions and plans of various automakers. I’ll discuss DCS concepts like straight-through-processing, dealer choice, and new, high-value integrated business processes. By thinking strategically about DCS, automakers can not only reduce costs and headaches, but improve business performance through more direct support for the selling, financing and servicing of vehicles. 

SaaS for Automotive

Software as a service in automotive is today’s theme, and the central message is that this unique blend of software and service delivery is here to stay—for good reason.  To many large enterprises software as a service—or SaaS—can mean less packaged software purchases that require volumes of consulting services to make it all work.  To IT executives it indicates an important trend that is supportive of more flexible architectures.  At Oxlo it means leveraging a common infrastructure to drive real-time, efficient interaction between business partners in automotive retail. 

This is not a new idea. 

In automotive there are a few cases that share some interesting parallels.  Covisint is a great example.  Originally founded in 2000 as AutoExchange by DaimlerChrysler, Ford, General Motors, Renault and Nissan as a high-profile online marketplace for automotive suppliers and manufacturers, they coordinated procurement and supply chain activities.  They originally struggled with resistance from suppliers in the early days but have more recently flourished – and Compuware purchased them in 2004.  DealerTrack on the other hand has taken this strategy to F&I on the demand side of the industry, focusing on message-based services that support the lending process.  Originally supported by major banks, DealerTrack is now publicly owned and is expanding into more hosted applications.  Oxlo started with a balance of fixed ops, service, F&I and other demand-to-manufacturer message-based services and is growing into business intelligence services in addition to more robust business process support services. 

There are other SaaS examples in automotive, but these three, particularly because they are broadly recognized and successful, suggest the particular power of a business-to-business integration hub in automotive.  The point here isn’t to pat ourselves on the back, but rather think about the reasons that this particular type of SaaS approach works in this industry, and where this type of service is headed. 

What’s common?  All focus on message-based services.  All connect many to many.  All alleviate an operational burden from their business partners.  All have honed services to fit the very unique business processes at work in their markets.  All are expert at security and reliability.

So where else can automotive benefit from a message-based service?  Remarketing or used vehicles?  Incentives?  Motorcycles, trucks or heavy equipment?  Aftermarket suppliers to retail? 

All … obviously. 

Automating Vehicle Ordering

As you’ll hear from just about anyone in automotive, it’s all about “the product.”  From my perspective there are lots of products at a dealership.  Parts and service are certainly products.  Scheduling service appointments – ordering service if you will – has been automated through online scheduling tools integrated to dealer systems.  Parts ordering, particularly stock parts ordering, has been automated through analytics and sophisticated bi-directional communications of inventory and order history with dealer systems.  So why not automate ordering of THE product in automotive—the automobile?

OK, this product happens to be the most complex and have the most dependencies.  But, today the dealer communication systems of automakers allow user interaction with order management systems.  Why not extend that capability to the systems in dealerships so dealers can spend more time with customers and less time toggling between a disconnected OEM system and a system in the store? 

Oxlo is taking a first step in this direction by feeding OEM vehicle pipeline information to dealer systems.  Now a dealer can see the entire inventory picture—from what’s on the lot to what’s coming in the pipeline—all in the dealer system. 

Yes, customers buy a product and drive it home, but their experience at a dealership is also part of the overall product experience.  By finding ways to automate the vehicle ordering process dealer personnel will spend less time with computer systems and more time with customers, putting them in THE product faster and with better results. 

Security Audit

We perform an annual security audit at Oxlo.  The automakers, lenders and dealer system providers that work with us need to have 100% confidence in our security.  This is why we’ve set a high bar for this part of our business.  Running a business that connects to the point of sale in automotive requires nothing less considering the sensitivity of information—and vitality of information—to the parties that support this massive industry.

Aside from all the obvious stuff—looking at policies for firewalls, routers, DMZ and the like—we also dive into data protection.  GLB (Gramm-Leach-Bliley Act) mandates a special sensitivity to safeguarding non-public personal information.  You know you’re serious about handling security at this level when you not only factor in NADA, STAR, automaker and federal government standards, but also play out a breach scenario that entails contacting the FBI. 

The good news is that Oxlo is tight.  This is good for our many partners and customers because by using our services they can lay claim to a level of security they might not otherwise have achieved. 

So who do you think should be leading our industry's debate on security?  Reynolds & Reynolds? ADP? NADA? OSA? The automakers? Oxlo?