Learning Without Scars
As a third-generation educator, it is easy to say that teaching and training are in the blood for Ron Slee. From his beginnings as a coach, through his time at McGill University, Ron developed a foundation for the work he does today. From working within dealerships, to operating a consulting company, creating a training business and running twenty groups, Ron has been directly involved in this Industry since 1969. Ron has been known as the industry expert for years, and has brought this expertise to bear through his training programs. Today, Ron provides specialized, job function based internet based subject specific classes, job function skills assessments, as well virtual seminars and webinars. These courses are designed for manufacturers and their dealers, as well as independent businesses in the construction equipment, light industrial, on-highway, engine, and agricultural industries through Learning Without Scars (www.LearningWithoutScars.com). This platform is a continuation of the work begun by Quest, Learning Centers which was established in 1996. This training is aimed at improving dealer parts and service operations through qualified people that are knowledgeable in using operational metrics and current market and operational best practice methods.
Learning Without Scars
Mets Kramer and I talk about the recent changes in the world of dealer business systems
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With the dealer business systems receiving investments from venture capitalists and mergers taking place, are changes going to be coming to business processes? With Data Analytics and Business Intelligence, open AI and Telematics, sensors to monitor machine health and third-party software for electronic parts catalogues and repair and maintenance instructions things are changing very quickly. Don’t miss the valuable information that is covered in this discussion.
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Aloha, and welcome to another candid conversation. Today we're joined by Metz Kramer from Ontario at the moment, LA, shortly. And what I'd like to do is have a discussion about what the heck is going on in the world of business system software. And there's been an awful lot of changes in the last short period of time. So, Metz, good to see you, young man. Say that respectfully.
SPEAKER_01I think I think it's why I hang out with you, Ron, because you still don't understand.
SPEAKER_03What in the heck's going on out there?
SPEAKER_01What do you what are you seeing? It seems like our sleepy little industry has gotten a lot of attention lately. There seem to be a lot of people interested in this uh this industry now for software. Any idea why? I assume they see some opportunity or money's hunting around, or maybe they're recognizing that the industry really hasn't done much in decades as far as really trying to move forward, where other industries are very cutting edge on their software. We have not done that.
SPEAKER_03How about you talk to what you've seen as changes in the last little while in Canada, US, North America primarily? But what what's been going on? Who's been doing what to who?
SPEAKER_01So the most recent news that I saw was um that um powered by True Wind, e Emphasis purchased CDK Global's heavy equipment product. And that's my understanding of it, is that it's specifically the heavy equipment industry side of it. Yeah, apparently they left car and truck alone with ADP. Yeah, and if you talk to people out of that industry, I think you'll probably understand why the car and truck industry is decades ahead of us. They are very automated and very focused, and we have not been. So I think that makes a lot of sense. Uh, we've seen uh some of my old projects under Uptake um get sold off to uh Texada, which is another Canadian company, um, to now merge under Texada and uh Uptake Canada was formerly Can, and prior to that it was Tormont Software. That's the caterpillar data. Yeah, and that's where I got my start. And there are there are products in that portfolio that I got my I cut my teeth on learning how to to build dealer software. So there's a bunch of changes, certainly. And then there's uh discussions around about other players or other providers in the market that are either coming end of life or you know, there's regime change in the organization. Um, so I think it's going to be an exciting couple of years.
SPEAKER_03So we have on the big side, we've got Oracle and SAP and JD Edwards and Infor and Exact and Microsoft has various things. And then we have traditionally the CDK was separate, e Emphasis was separate, DIS was separate, NDS was separate. All of these things now it shakes down that we've got a whole bunch of big guys, probably a billion dollars or more, each of them in sales. And where do you fit in with your software offering?
SPEAKER_01Well, where do I fit in right now? Or where do we expect to fit in in the future? Above we start with the beginning. When we started our little project, um we looked around and we partnered with a couple of dealers who were using older software packages in a very frustrating way, like uh where they had spent a significant amount of money to bring in a package. Um support was short uh and poor, and they continued to have problems over a couple of years of using it. Uh, specifically, you know, areas of the software that they could never get an answer for why it worked the way it worked or why it wouldn't work or why they couldn't fix it. And you know, I think that's a little indicative of a lot of the software packages and what happens. And it's it's very natural. Um, you know, it's almost free of blame to some degree. It's just when you have something that was developed 30, 40 years ago at its core by a bunch of guys who have since retired, um, that knowledge of how they put that together and why it was put together that way, uh, and potentially even the code it was written in, which is now really old, um, you know, it becomes a little bit untouchable. And while there's great knowledge and experience in the software of how to run things, um, if you can't manage that old code base, then it just starts to age and it starts to, and that's what we've seen is you know, these older packages really getting layered on and you know, reskinned at times, you know, uh IBM, since a lot of it's written in AS400, uh IBM brings out new refresh packages on the UIs, um, but the code base in the back end is is not changing, you know, and so as much as we try and migrate them, eventually you age out. And so uh we started our project to really take everything we know about um dealer and rental operations um and rebuild that knowledge base, that experience into modern software. So basically, you started with a clean blackboard, right? We started with uh a clean computer text editor.
SPEAKER_03I guess I age myself by saying even blackboard anymore. You know, it's it's funny. I took computer science as a minor in university in the 60s, and we learned how to code in Fortran and COBOL and an assembler. Yep. And you know, it's it's really weird looking back at that now, Mets. I used to stand with my back to the printer, a high-speed printer, 1100 lines a minute, and take the paper between my legs and read it in assembler to see what the heck was going on. And it it um, you know, to your point, Alec Schuschler coined the phrase, and I love it. We went from paper to glass. Almost every business system that started out, they took a paper form template and put it on a screen. Yeah, and so instead of just writing by hand because we had to have neat handwriting, now we could type it. And a whole bunch of guys and gals that worked the counter in parts, for instance, had to learn how to type. Two fingers, you know, here we go. And we really never did anything about process.
SPEAKER_01No, I I think we do two things, like you said, we we converted paper forms into screens. Um, and we approached, you know, you talked about this, like the the first computers that came in came in as accounting software. It's actually like the oldest category almost. And what we did is we built transactional systems. We built systems for transacting the financial aspects of the business. And that itself lends to a view on your business that is purely transactional. It's you know, customers, even in a lot of systems, you open up customers. You're not talking about companies, you're talking about these are the people I transact with, they're my customers. Um, other companies who are not my customers are not in here. There's no space for them, right? Because the minute I set up an account, a customer, I've given them credit or something like that, right? And so, so all of these systems were also built around that. And that's one of the other things that we tried to change is to represent in our environment the kind of the objects of the real world and build from that the natural progression of the transactions that come from it. So we start with like real companies and real people working at real companies who own real equipment in real locations and recognize them all as you know a virtual representation of a real thing. And then on top of that, started building transactional pieces. So and that's allowed us to like you know deal with a lot of transactional situations in a more natural way. We're not forced to put a fake machine in our inventory just so that we can rent it out, even though it's not ours, you know. Right. And I think that's you know kind of a rethink.
SPEAKER_03Yeah, it's kind of the way you say it makes a lot of sense. I used to say to people, we have to fool the system into doing things the way you want them to be done.
SPEAKER_02Yeah.
SPEAKER_03To get the information that you want. And it's uh it it's it's kind of strange. The I I became a data processing manager somewhere in the middle 70s. And I got a call on a Friday afternoon from the president of the company. I I typically I was lucky. I was put into almost everything that they had trouble with and asked to find a solution. And he called me on a Friday afternoon and said, I want to meet you at eight o'clock on Monday morning up in so-and-so's office. I said, Okay, what's that about? He said, Well, that's your new job. And I said, Well, wait a second, I'm doing things. He says, Not anymore. And then he happened to tell my bosses that I was coming. And I reported in those days, you reported the vice president of finance. He wasn't happy because I'm an operations guy, right? Which is exactly why the president put me there.
SPEAKER_00Yeah.
SPEAKER_03And it was it was really off-putting because in those days, Mets, we had a piece of a part sales order. I'm coming out of the parts department, so let me use that as the foundation. We had a part sales order that I would send a copy up to data processing. They had a bunch of ladies that key punched those things and created cards. Those cards and those documents were put in a batch. They were run in a compiler, a report was printed, that report was coupled with the forms, with the cards, and sent back to the parts department to edit. At which point we sent them up and it was processed and we got a report. And that little deal took probably five days on average.
SPEAKER_00I was gonna say, is this this is where like we can now with our new computer system, we can now ship you a part that we have in stock in seven days.
SPEAKER_03Yeah. Yeah. Versus we had a Card X that was maybe 100 feet long, three high, with a bunch of ladies on wheels that ran up and down, had their cards that they were responsible for. And we knew exactly what everything was, what the price was, when we ordered it, when it was coming, who bought it, all the rest of that stuff instantly, and we lost it all. Lost it all. So there became the first schism between computers and operations people.
unknownRight.
SPEAKER_03I don't need that stuff. I lost everything. What are you doing to me?
SPEAKER_00Yeah.
SPEAKER_03And I don't know that we've ever got it back.
SPEAKER_01I I think it's probably one of the things that has gone very sideways in in IT in general. This isn't just about our industry, but you know, I I started in the service shop as a service supervisor, and then I ran contract management. And you know, I was always involved in in running it. And so I got to get my head around all of the information that I needed day to day to run my departments, um, but understood the software side. And what you see is, you know, too many people who don't really know how to describe their business trying to tell a bunch of people who don't really understand the business how they think they want their software to act. And so it's, you know, epic version of broken telephone. Uh, and then they, you know, and and it used to be that it took a long time to get something back. Like you would say, Hey, I need a screen that does this, and then three weeks later, someone would be like, I finished that screen, and you're like, uh, it's not quite right, but I guess we're stuck with it because you've spent three weeks on it.
SPEAKER_03Yeah, and and what transpired also was there were individuals who were curious and motivated, and they learned the system very well, but they were very few. Yep. I was with a dealership recently where a fellow who is really fluent in how the system works, but he's the only one that way, and he's about a year and a half from retirement. Yeah, and there's no handoff. I mean, somehow it it just gets lost in the shuffle. When I went out to the West Coast to the caterpillar dealer, here's another iteration, if you will, of the same thing. The vice president of finance really did not like IBM, so they never used IBM. We had a data general computer system running a 50 plus store operation because he didn't like IBM. And we had a platter in a disk drive get warped, and the system went down, and we ran the parts business manually for three months. I'll never forgive the guy.
SPEAKER_00Wow, wow.
SPEAKER_03It was a and that was that wasn't that long ago, and it was a very large dealership. So the guys that started software, where I've come in is the 60s, and we had, as you say, we started with accounting, the next people were the parts department because that's transaction heaven. Yep, and then it slowly morphed into other areas. So people that got into the business, PFW is created by a John Deere dealer who wrote their own, created their own package. Yeah, IBM created dealer data processing, excuse me, Caterpillar created dealer data processing in the 1960s, 65, I think. And the guys that started that company all came from operations, none of them were computer people. Of course, in those days, there weren't a lot of computer people.
SPEAKER_00Yeah, exactly. Yeah.
SPEAKER_03And that dealer data processing over 50 years became DBS.
SPEAKER_02Yeah.
SPEAKER_03Dealer business systems, and then dealer business system I for internet. And then Caterpillar decided, well, wait a second, we put too much on this, it's too complicated, we're getting out of this business.
SPEAKER_00Yeah.
SPEAKER_03And they created, who was it, FEC or something like that, Empuria? Yeah. And that's now morphed into.
SPEAKER_01They they they even that, like they're a great example. I they're great people, and and they're doing their best to keep up with the information demands of only cat dealers. And it goes to show like how much demand there is when you could have a full organization that barely keeps up with what their customers want. You know, uh, they they they're just focused on delivering that. And you know, that isn't even touch vast numbers of dealers um that I get to talk to who have nothing or who are who are left to you know figure out how to patch together a bunch of other systems, you know, uh to migrate to a core system that really only helps them with their core transactions, and then they have to try and bolt on everything else, you know, and and there the the problem is like our environment and our expectations of how information should flow has changed radically over the last 20 years. Um most of these systems don't have interfaces to deal with that. So like any integration is complex and difficult, you know, and or not even supported. Right? We've we've interfaced with as we've started up here, um, one of the areas that we've been really fortunate to get involved in is uh working with dealers who have dealer systems and don't have kind of an overview system or a way to collect information from theirs and other places. And so we've actually been able to use our platform to give dealers kind of a more of a holistic or complete dealer platform database and information warehouse. And you know, so we've had to go into a lot of these systems and try and figure out how to pull data out, and it can be radically complex and you know, very problem or problematic with you know old technologies for APIs and stuff. And we we typically have found ways for most of them, but it shows you know that people want more. And so, you know, it's I think it's time for our industry to really embrace the idea that the starting point of all of this is just information. And people get married. You know, you talk about your guy who didn't like IBM, and so you had this other system. You know, people get married to these tools, they get married to the fact, like, well, A, I've invested a lot, and and B, you know, I was involved in deploying this new tool, and therefore I am married to this tool. Like, I have never seen people so attached to something out of business, then the implementation of software that they were involved in selecting and implementing, it's like they can't imagine not continuing. Um, it's like this emotional investment. Um and and so you see all kinds of stuff like people who implement systems with crazy languages. I was involved in one OEM that that you know, they had this guy they really liked. He was a good developer. He picked some crazy language to build a CRM in. No one else knew how to program in it, you know, and so when we did ours, we were like, okay, what is like currently the front runner, most common language that we could find the most number of developers, that a dealer could add their own developer if they wanted to, because it wouldn't be hard to find one. You know, we went with React, which is Facebook's tech, and probably accounts for 40% or 50% of the modern software at the moment. The other side is Angular. So that those kind of choices, like build the system in a way that it makes it accessible, was were some of the starting points.
SPEAKER_03Yeah, you mentioned that you know, just to get the jargon for everybody, API stands for application program interface that allows two different business systems to talk to each other automatically, transferring information. And I'm I'm gonna separate myself a little bit from Mets because I don't think we have a lot of information. I think we have a lot of data. And people typically, my opinion, don't understand the data they've got because we are so transaction-oriented, we don't really know what to look for if we look over the wall. So here comes data analytics, and like you say, trying to extract that data from all these arcane places is pretty complicated. And to create one uniform hub, if you will, of a database, which is almost an alien term because we never really had one, other than we had software for databases, it it doesn't like who owns a particular data element in a database. We haven't ever gone there or haven't completely gone there and haven't had the discipline to control it. So, you know, for instance, the description and a part number come from the OEM. But everything you're talking about, Caterpillar, Komatsu, Deer, and Volvo, put the four majors, the big guys up there, the big machinery guys up there. How many dealers are there now for those guys in North America? Are there 200?
SPEAKER_01Doubt it. Yeah, it's not that many. There's one deer dealer up here in Canada. Two cat two cat dealers, two cat dealers, and I think two kamatsus.
SPEAKER_03Two Folgo dealers, yep. Two kamatsus. So there's sixteen. Yeah. Is that right? No, it's less than that. Two, four, six, maybe seven.
SPEAKER_02Yeah.
SPEAKER_03That's that's amazing. And yet, we've got Kaboto dealers and Bobcat dealers and carrier transicold dealers and Cummins dealers and Daimler dealers, and they're all smaller guys, but nobody pays any attention to them.
SPEAKER_00They will.
SPEAKER_03Well, like I I agree, but I'm I'm dealing with and I most of the large software companies have been clients of mine over the years. And I remember sitting in a meeting in Chicago with one of the really big ones, and I was the only one in the room that didn't have a master's degree, and we were connected to Germany, and I'm complaining that the system that they have is so humongous that people don't understand what they're dealing with, and they're Answer to me was look, hardware is so cheap it doesn't matter how big the software is. Right. I said it matters for the people that are working with it because they want to understand how it works. Yeah. Oh, that's we have consultants to do that. Yeah.
SPEAKER_01Yeah. That's that's the industry. That's the how the software industry globally, not just our industry, yeah, has set themselves up. You know, if you have a problem, you call the help desk and you wait three weeks and we give you an answer back, maybe. Uh, you know, if you have a bug, we'll see about adding it. It might be on a list. Um, which it, you know, which the funny part is like that's the expectation of the software industry. And yet our expectation in the construction equipment industry is very responsive. Like when we work in service and a customer calls uh and says something's down, you know, we're running out the door. If a customer calls and says, I want to see that machine in your yard tonight at eight o'clock, someone says, sure, I'll meet you there at eight. You know, it's not like, oh no, I'm sorry, we're closed at five. We can't show you that machine. Can you try Monday? You know, it's like and so these are like the intrinsic expectations that we have in our industry. Um, that's how we grow up in this industry. And yet we deal with software companies who have a completely different philosophy.
SPEAKER_03Let's let's transition that into where we are now with open AI and Chat GPT and data analytics and sensors and electronic catalogs and repair and maintenance instructions and right to repair and the world we're living in today, that's going to create a big hiccup. We've we've got OEM manufacturers that basically assemble machines from a bunch of part suppliers that are all around the world. Yeah. And we found out how tough that is during the pandemic when supply chains became a real mess.
SPEAKER_02Yeah.
SPEAKER_03And dealers who are happy with the fact that their sales volume has gone up. And take Canada as an example, the sales volume of Finning and Tormont both have gone up. Well, surprise, because there used to be 10, now there's two. It better have gone up. Yeah. And somehow the dealers, like economies at the country level, have recognized that productivity is measured by work units per person. So I'm going to load more work on each person to have more profitability and think everything's okay. In the meantime, customer service now sucks. Yeah. So bad people have stopped complaining. We used to say that in the 90s. It hasn't gotten better. You've been watching it, I know. Well, it's, you know, unfortunately, I've been living it. I you you've heard me every almost everybody's heard me. I'm like a mule brain in a tin barn. I make a lot of noise, but nobody pays any attention. We're coming close to, I think, a switch point. The relationship that the OEM has and the dealer today, the price of machines on the big side are so large that the dealer doesn't have enough money typically to be looked after, which is why most of the caterpillar dealers now are a billion dollars or more. But we still have people working with shovels. We still have construction jobs that if the machine goes down, the water in that city doesn't get processed, or the sewer doesn't, or the electricity doesn't come on. And it it that kind of urgency and responsiveness, the customer service providers haven't recognized it yet. Oh, Myanna's okay. Yeah. Island time is a different time than the mainland time. Yeah. So how how do we how do we transition to the place where, God forbid, I don't have to have a relationship with an OEM. I can provide all the labor, all the parts anybody needs through third-party software.
SPEAKER_01Well, I think you see several initiatives in the industry right now um solving those problems from you know Uber approach to uh service technicians to parts marketplaces that are more connected. Um, to I'm we're working with one dealer that is purely digital. You know, as we've been talking about for the last two years, this dealer has no real bricks and mortar. Um, everything ships direct to customers, they still have service, they still have parts, um, but it's all digitally enabled, you know, and and it's what's interesting is it's there are people coming into the industry on those kinds of initiatives that aren't tied mentally to the way we've done things, you know, and so for those kinds of dealers, you know, we're trying to provide something that's more or less like a headless business system, where you know, all of the smarts is in a untouchable, unviewable interface, basically, so that people who understand like a modern approach and how a customer experience should be can then interface with that so that the transactional pieces still get done properly, that the information is still available. But they're approaching it in a way that's like I'm I'm sitting here listening to them. Like, oh, we think it should look like this, and we should think the customer's experience should be that simple, and you know, we're gonna do this in the background. And and I'm like, part of me must have been like, no, no, no, you you must do it this way. This is how we've always done it. And they're like, no, I gotta listen, Matt. Just listen to what they say about the way we've done things and how do modern people see it differently, you know, and so with those kinds of initiatives coming into our space, and these are all highly connected systems now. You know, we can there's a platform where we can pull parts data out of dozens, if not soon hundreds, of dealers of by part number to see who's got something, you know. Um even the biggest dealers struggle to do that and only limit it to their own network, you know. And so I think we can solve those problems. Um, but that shift is coming, I think.
SPEAKER_03Was interesting. Fiatalis used to have a president in North America, used to have a bunch of dealers in North America, and they pulled out and went back to Italy. So all the dealers in North America, they didn't have any depots, they didn't have any parts areas or warehouses where they could place stock orders. And we created a company called Prism, guy in Oklahoma and I. And we took all the dealer inventories that were Fiat Alice dealers, put them into this system, and people could get a report once a week. Yep. Everybody updated it once a week so they could find out where to go. That's our digital approach in the paper world, right? Yeah. And if you think about service, we charge more in the field per hour than we do in the shop. If we look at the true cost, the cost to operate a shop is a hell of a lot more expensive than to operate in a field. Yes, strangely.
SPEAKER_01So, you know, we're we're we we ignore that, Ron. We don't, we don't, we ignore the building, the 50,000 square feet of building and AC and part, and we we ignore that. That truck is really expensive, that's why we need a higher rate in the field.
SPEAKER_03Yeah, yeah, yeah. It's it's it's it's a very strange world. So a couple of months ago, the chairman of Ford Motor Company announced to Wall Street and the dealer body that they were going to create a new contract for electric vehicles. And the contract for the dealers said, Thou shalt not have inventory. We will ship every car from a factory. If you have inventory, we will cancel you. Right. And here's the price for the electric vehicle, and you shall not change it. And if you do and we find out, we will cancel you. And oh, by the way, we're gonna create a software package to have on a phone, a tablet, a laptop where a customer can spec out their car and get a price for a car, we'll give them a quote for their trade-in, we'll deliver them a text drive, we'll finance it, we'll provide the warning, and and we'll ship from the factory. In other words, they're gonna be in direct competition with the dealer. And you know, when that's going on, I'm thinking to myself, in my lonely little part of the world, what's the parts business going to look like when it's an electric vehicle? And the parts business, last time I looked, was over 50% of the profitability in any dealership, including any OEM. Yeah. And then Volvo announces about six months ago they're gonna completely electrify their fleet. Of course, Volvo owns most of their dealers worldwide. Yeah, but this world is changing. I'm not sure if there's going to be dealers left anywhere. Everybody laughs at me when I make that pronouncement, but you know what is that going the same way as software?
SPEAKER_01It it has to change. It's like, you know, we we as people, I think, are often very quick to forget how young things are. You know, like we we think like we've always driven around in cars. The car will never go away the way we know it today. And like, well, the car is just about to hit like just like 100 years old or just did. You know, we in the hum age of humanity, we haven't been driving cars that long. You know, we think our dealer structures are just the way that it has to be in a way it's always been. Well, how old are the oldest dealers? You know, also not much more than 100 years. So who why is it to say that it has to stay the way it looks? And if most people look back a generation or two, even in their old dealerships, it looked radically different. So why would you assume that it's gonna stay? Especially with every other market force that we see and people's expectations, you know, at some nowadays often we say, Oh, that you know, my our machines are so complex to configure. But you take a modern software developer and give them like the variations of a machine and tell them to build a website where someone can configure it, and in modern software, they would do it in like a week or two, you know, and like that used to be a couple of years of hard work in old ASP or something to try and do it, but now it's like, no, you know, we do it now too. New dealers want new websites, and like, okay, we can build your new website, um, like from scratch, not like a WordPress website, and we can do it in two days. You know, give us a basic design, boom, websites up, you know, and it'll it'll grow and do things that old but tech-based websites will never do. So, and I think this is part of the challenge, and and it I find that the most curious thing about the software industry in our the software business in our industry is why are we so tied to the old stuff? Why are we so scared? Um, and I guess that's where my opportunities come. Haven't been scared to just say, we know a lot about this business. I've worked every part of the business, we know what the information requirements are, we know what the transaction requirements are. And in modern software, we can build it in under two years.
SPEAKER_03And that's an unbelievably different circuit. Like how many people? Two years, just to spitball. Three people? Three. Three, yeah, three mobile apps. So let me call it five man years to develop from zero working business system. Yes. And I think dealer data processing was about 200 man years in the 60s.
SPEAKER_02Yeah.
SPEAKER_03It um it it it's it's really unbelievable the um the the way, like you say, you know, change is really, really hard. Um because we're fat, dumb, and happy. We get comfortable doing what we do the way things are. I figured it out. Yeah. Don't don't confuse me. And you know, if if you look at the cycles of man from birth to school to post-secondary education, to the workforce, to getting married, to having a family, um, and all of those rather dramatic changes in your life. How we get up in the morning and and get ourselves ready to leave our house or our apartment or whatever it is, is the same every single day. Exactly the same, every single day. You shave your face or don't, you brush your teeth or don't, and exactly the same. You you sleep on the same side of the bed, you get dressed the same way. Why? Oh no, I don't, but no, I know. I but well, I I know a guy in Seattle who used to shave in a different room in his house because he didn't want to become a creature of a habit. Yeah. I said, Don't you think that's a little extreme? He said, Well, yeah, but it kind of proved a point to me every day. Okay.
SPEAKER_01Yeah. I mean, I think maybe to some degree the the change over the last two years may even accelerate some change. You know, I'm I'm walking through my neighborhood this morning and everyone's out cutting the lawn on a Monday afternoon. Like, why are there so many people cutting their lawn? Like, oh, they all work from home. They they all put, like, oh, I have a meeting and I'm outside cutting the lawn. And like that habit is also breaking. You know, people are thinking even more differently now. Like, why does it have to be the way it had to be?
SPEAKER_03COVID, as much as I don't like the way it was handled, has opened the door to working from home, which is going to radically change how we do things in our lives.
unknownYeah.
SPEAKER_03And it takes us back to some fundamentals. I, as you know, I'm a bit of a maniac about trying to stay up to date. And there's there's there's a couple of things I've been reading, but uh there's a professor at Harvard by the name of Nir Eal, who's written a book called Indistractable that talks about chunking. Chunking time has been around for a long time, but it has replaced the go, you know, the to-do list, which is endemic of stress because you got to get everything finished within this time period. But what becomes more clear, I think, going back to your cutting the grass on Monday afternoon or whatever in the middle of the day, our lives are consist of our career, our family, and ourselves. And it would be nice if it was a third, a third, a third, but I think the first one to suffer is ourselves. We stop exercising, we stop looking after ourselves, we don't eat regularly, da-da-da-da. And the second one that we lose is the family. We're so concerned with making money and being able to provide a living, etc., that we start losing track and we get on this treadmill and it's hard like hell to get off.
SPEAKER_00Yeah.
SPEAKER_01COVID broke that for a lot of people. They definitely re-reassessed and and realized that they could live on a lot less money than they used to. Yes. You know, all those people that left service industries, they're like, I I thought I absolutely couldn't afford to leave, but I figured out that if I left, I could survive long enough to go do something else and actually eventually make more money.
SPEAKER_03And the breaking that's that's the personal life, and there's a percentage of the population that did that, but now I go back to the dealer world, and the number of people that are changing how they look at their business is still very small, isn't it?
SPEAKER_01I I I think tragically, yes. We we you and I talked about this during the pandemic and tried to it is tragic. It is tragic. And I haven't seen a lot. I mean, aside from the couple of initiatives that I've seen, people have kind of held on. I think part of the problem is that a lot of dealerships were deemed essential, you know, and so a lot of dealership people were back in the office a lot faster than other industries. Like I had people in my old place that probably only spent six months at home, and then they were allowed to come back to the office while other companies were still forced to work from home. So maybe that didn't give us enough time. So or maybe it's just because they run old dealer systems and they have to be in the office to access them because there's no other way to access them but installing something on your computer in the office.
SPEAKER_03Yeah. It's funny when I I was being um recruited, if you will, by a man by the name of Ian Sharp, who had a company called IP Sharp Associate. I'm sure I told you the story. When he sold, he sold it to Reuters.
SPEAKER_02Yep.
SPEAKER_03And Reuters spun off Michael Bloomberg, but created Bloomberg. Bloomberg got fired from his job in a brokerage after 15 or 20 years, and he had $10 million separation. That's what he started Bloomberg with, and he makes that probably in a couple of days today. Because he looked at the world differently. But he was in a he he looks at that as a wonderful thing that happened to him that he got fired, because otherwise he was in that routine, he was in that rut. We don't really look over the wall, is what I call it now. It's it's really it's it's really interesting. Um, so here comes all the software companies. Do you think that systems as such should be uh viewed as an expense as a percentage of sales? You think there's anything that we can do like that as a standard metric?
SPEAKER_01Um I mean, I think you can uh budget it in that sense, but I I don't one of the things I try and teach dealers is that you know, purely viewing this as an expense is a really bad habit. It it really puts off the value of what you should be doing. And I think that's what you see, and like the very large dealer, they they're not too shy to spend money on information to try and improve the business. But certainly at a lot of dealers, you know, they still see it purely as an expense. The payback, they don't really understand um the the cost, the money that slips through their fingers in you know small losses and poor decisions and wasted parts and wasted man hours is never measured. Um, and so I don't think viewing information systems as an expense is a great start. You know, the the if we all sit in the office every day staring at our computers, then something should tell us like, hey, the thing we're doing on those computers is really important. You know, if we all walked somewhere every day and there was no road, it wouldn't take us long to decide that it would be a lot more efficient to spend a lot of money and build a road. We do it all the time. And yet somehow on the information side, we have people running spreadsheets all day long to try and run the business, and no one measures the cost of doing it that way because they're too too worried about it being, you know, oh, I got to spend more money on software.
SPEAKER_03You do you have any many discussions with people that talk about opportunity cost?
SPEAKER_01It's it's uh it's a hard thing to to get people to understand. Like you would think that here here's, I guess, the measure. If more people understood um opportunity cost, our CRM would be way busier. You know, because they don't they they don't look at all the potential information they have and decide that they're gonna figure out how to drive their sales strategy to find their opportunities through using tools that really aren't that expensive comparatively. You know, they miss all kinds of opportunities. We've joked about this, you know, the EDA report that's used by the sales manager, but like, look at the deals you missed. And like, I have a couple of dealers who like we are mining that data automated through algorithms to generate predicted opportunities and placing them right in front of the sales rep. And when people kind of get their head around it, they're like, whoa, like I'm gonna spend my time calling the people that are most likely to want something, not just the guys I know and like.
SPEAKER_03Steve Clegg at Zintero, who does data analytics and deals with transactions and customer retention, yeah. There's a really interesting statistic that comes out that the distance between where the machine is and where the dealer location is is directly related to retention rates. It's not surprising, but if I go around to a hundred dealers, there might be two that Understand that's true. And if you know, I've I think the catapult dealer I started with in Montreal was out about 20 minutes from downtown, 20 miles from downtown Montreal. And then when I first started there, it might take me 10 minutes to get there. And then it became the center of the city. And it took me an hour and a half to get there. You look at Chicago, look at Atlanta, look at Dallas, New York, Toronto, going from one side of the city to the other. Dallas is now 70 miles east to west, 30 miles north to south, our dear lord. And you have one location. Congratulations.
SPEAKER_01But that, but that there, right, that right there is why like the modern world has solved so many of those problems. I mean, how can you get your groceries this afternoon from one online system delivered to your door faster than you can go buy them? And we can't apply similar lessons to a dealership operation. That's why I have a lot of faith in like what I'm seeing in the few people who are really going digital. And they're like, I just like I don't want people taking phone calls. I got a call from an old uh customer, someone I did a lot of work for like four years ago. And like, remember when you started that parts website um and we didn't go with it? I'm like, yeah, like we want that back because the owner spent a week filling parts orders because the parts guy was was uh was sick. And he's like, This is a lot of time. I'm spending a lot of time filling a $25 order. Why am I spending time filling a $25? Like, I've I gotta write down the order, I gotta fill it in in the system, I've gotta, you know, run an invoice. Like, why am I doing all this? Like, this could all just be done. Like, yeah, there are platforms that you can we can set this up for you in a week, and now all your parts orders will just flow.
SPEAKER_03I mean I had the long time ago, I used to have everybody who was on the field as a salesman selling parts and service or machines before rentals come in and sit at the counter for one day a month and work. Yeah. And in so doing, I got much more support to make changes because they recognized, oh my God, how tedious, how repetitive, how stupid these things are that we do. You know, it it's it's it's remarkable, not using market segmentation so that we don't know what kind of service that customer expects and needs. Or, you know, the customer service answers an 800 number, and it could be India, could be China, could be wherever the hell it is, or people putting a customer service or a complaint line in the chairman's office so that they hear for right now what the hell's going on. I mean, what kind of stupidity is that?
SPEAKER_01It's interesting, right? But it's it's it's our view, right? Like I think there's always there are people in our industry who are like absolute professionals and they'll always bring value. Some of our parts people are probably some of the brightest people I've met that are customer service oriented and they can find and solve problems, but they don't need to do 100% of the orders. And I think we had Stephanie Smith on here uh that one time. And Stephanie comes from outside the industry and just saw information and customers a completely different way, and now they drive an intense percentage of their sales purely on digital marketing. In fact, you know, to things like watch us turn on the tap. You want to you want a couple of leads? One sec, dial this knob and look the emails come in. Okay, we're busy for the rest of the day, you know, to that kind of and and so I think it's gonna take a few more believers to come from outside the industry to come and sit on a parts desk and be like, whoa.
SPEAKER_03And and and Stephanie's a great example because she took us. I mean, everything in life and all progressions go through wave curves, and and we get on a an accelerated curve, we're all excited, and then we plateau, and then we revert, and then we get on another one with a new generation of people or tools. And what happens is we all get overloaded with the level of work, just like you say, we open the dial. Oh, we're busy for the rest of the day. I'm not going to go any further. Why not open it so I'm busy for two days today? Right. Because I can't find the people, and and so here comes another log jam on systems. As Mike Rowe says, unless you're working with your hands or building something, you can be replaced by robots and artificial intelligence. Yeah. And society is not ready for that, Mets. Robots and artificial intelligence? Well, the the story I like to tell is there's there's a guy in in Atlanta, Georgia, true story, had a very rare heart disease, and he was in the hospital and and at risk of losing his life within the next 24, 48 hours. And there was one surgeon available. He was at his country place 90 miles from town, big estate. They he said, Yeah, I'll come in and do the operation. He gets in his Rolls-Royce or whatever the heck the real expensive car was he had, starts the drive, and halfway there the car breaks down. He calls around, he finds a technician, a mechanic. The mechanic gets out there, finds the problem, fixes the problem, the doctor goes down to the hospital, the operation's a success. The doctor goes back to his vacation, the patient goes back home. My question is: who do you think? The doctor or the mechanic? Like that. You know, I don't care what you choose, it's the wrong one. Without the mechanic, nothing happens.
SPEAKER_01Now, there's a strange irony in our industry. I I learned a lot over the years that I was really closely tied to the OEMs. Um, I got a lot of factory tours. I learned a lot about lean manufacturing. And this is why it's funny, is like our OEMs have people in place that are really good at being proactive and working with continuous improvement to always make the production smoother, faster, higher quality. You know, and yet once we switch over to the dealer side, we very much struggle to retain those kinds of people in the business that can continue to drive the dealership forward. Now, one of the things that I've learned in doing this and with the dealers that we work with is we have to take the role of like that lean manufacturing project manager. We have to be the ones that schedule weekly meetings with the dealer because they don't have people that think this way, you know. Um, and we have to, you know, show them the next step or work with them to find the next step or ask them the right questions to find out where they're struggling, because dealership people are great in that we like to fix problems. We like to run out and fix machines, and then we, you know, we have to invoice it, sure. But like that's our focus. We want to get it done. That's you know, who we retain heavily in the dealerships. And if we're gonna actually move your dealership further and actually improve these information-driven things, you need people who will think like the OEM factory, lean manufacturing, continuous improvement type people and and really move these projects forward.
SPEAKER_03In fact, we have discouraged people who have those attributes from staying with them because we don't challenge them in any work. We we all of the employees in dealerships today, and I say this respectfully, because they do really good work and hard work and they put in a lot of effort, they're tools in a toolbox.
SPEAKER_02Yep.
SPEAKER_03And their opinions are rarely sought, or if they are sought, they're not paid attention to. And process improvement is the only game in town. You know, it it's it's really, really something. Okay, so I think we probably beat that up. We don't have a solution, do we? Do we have a solution? No. The dealer body needs to become uh heavily invaded by process improvement people, opportunity cost thinkers, market share thinkers, customer retention thinkers, profit share thinkers, rather than continue to do what we've always done and hope we get out the other side alive.
SPEAKER_01Yeah, I think like I said, we we retain people who are more reactive. Um, we struggle to find to attract new people to the industry. Probably, you know, a double-edged sword that because of who we are, we struggle to attract them and retain them. Um, but that's and so we're understaffed often, very focused on you know, margin per person and all these some of these metrics that have been introduced by consultants, right? Uh have also, you know, somewhat driven out the the goal, like you say, like why aren't we hitting 80% parts market share? Well, you know, because we're busy enough at 40% and we make enough money at 40% that why would I employ more people, bring my margin per person down for a little while to try and recapture that parts margin or that parts market share? You know, why do I not have more texts? Well, texts are hard to find to begin with, and I know I'm only getting 30% of all the service work, but uh we're all busy and I'm making money. What's my incentive to really capture everything out there?
SPEAKER_03You're you're giving me back the logical argument a lot of smart people use on me. And and the counter to that is well, think about it this way: every parts person you add, parts sales go up. Why don't you take a strategy that says I'm gonna keep doing that until my part sales does not go up? Yep, exactly. And there is no answer, and that's where the discussion ends, and that's about where we should close this chapter for you and I. Isn't that a smooth segue?
SPEAKER_01Well done.
SPEAKER_03No, I think I I you know I wish you well in your software. I I think what you're doing is is really wonderful work, and and it's way ahead of its time, and I think a lot more are going to get there. And the fact that we've had all of this venture capital money come in on the big size, the big guys, is indicative of something. There's there's uh there's a pent-up demand here coming. But we have years to pass before we get truly utilizing the the brains that we've got that can work in this industry. So, Mets, are you got any closing wise sage advice other than buying your software?
SPEAKER_01Don't be scared, like the the so many people so captured uh that they think they can't make the change, and it can be you know difficult, but don't be scared. I mean, it's holding up all aspects of your business from actually moving forward, and it's frustrating the heck out of your people.
SPEAKER_03It really is.
SPEAKER_01You know, I have a and they're quiet and they're silent and they sit there and just get their job done so they can go home. But you know, I I it's been really fulfilling to sit with people who have been in all kinds of systems, and and they sit down in front of our modern interface, and they're like, this is so easy. Like I just figured out how to do everything. Like, yeah, you didn't need training, just like it's intuitive, it's modern, you know, and that's satisfying. And it shows that people want they're they're held back.
SPEAKER_03One of the things that I believed and have done for a long number of years is the statement, what would you do if you weren't afraid? You know, and it's it's it's intimidating, but it's liberating at the same time. Mets, thank you very much, and I hope everybody who's listening has enjoyed this uh candid conversation. We look forward to being with you for another one in the near future. Mahalo.
