The role of small independent systems providers in dealer systems integration

As the pandemic first hit Europe in the Spring, and lockdown closed showrooms, dealers looked to innovate quickly to maintain contact with customers, and in many cases, continue to sell cars remotely and fulfil these sales through contactless handover and delivery.  Many dealers use a range of digital tools and services to engage with their customers, some provided by large CRM platforms, some that come as a component within their dealer management systems, and some that are specialist tools built by smaller independent solutions providers.

Many of these smaller specialist dealer systems providers (DSPs) responded quickly to support their clients.  Codeweavers, founded in 2002, like many of these small independents, are little more than minnows compared to their customers, with a turnover in 2019 of around €8m.  In March, the company made two of their products available free for three months as a marketing promotion to support retailers going into lockdown.  Both products enabled remote selling – one was a checkout, used car evaluation and offer inquiry, the other a finance application.  Many systems providers offer similar API (Application Programming Interface) enabled plug-in capabilities, and whilst differentiation between remarkably similar offerings is hard to identify on paper, some tools and systems providers become popular for a time and gain a ‘flavour of the month’ reputation through recommendation.  Some of this endorsement may be due to leading edge capability of the solutions and tools that they offer.  Many, like CitNow, find a niche through delivery of a specific and precisely targeted application that is clearly innovative, or at least more impressive than those offered by competitors, and demonstrates in-depth expertise of the problem that they are offering to solve.  Equally, these tools may be notably easy to use and install, so requiring less investment in staff training or implementation.

But growing out of this niche is often a challenge for the DSPs.  Looking at the slightly haphazard array of tools offered by many small systems providers, they seem to grow through relationships, so having proven themselves with one application, they are asked by clients to look at another problem.  Equally, many of the providers grow by expanding their learning from one market segment to another, most obviously from fleet to retail.  But many small software houses struggle to grow, as shown by most of them having a national rather than international focus, and by a lack of significant long-term growth in headcount or turnover.  (However, the acquisition announced this week by CitNOW of Dealerweb is notable as combining two complementary and well-regarded DSPs in a move deliberately targeted on covering more of the omni-channel functionality).

However, these small systems providers clearly do retain some of the classic strengths that are frequently associated with small businesses; DSPs are often cited by customers as agile, responsive, and willing to actively engage in supporting systems integration.  Looking at the testimonials given by a Dealer group customer of eDynamix, another small systems provider offering showroom and workshop omnichannel functionalities, the focus of customer feedback is on their willingness to pivot to the needs of an individual client; "Development ideas are listened to and often implemented.  With a dealer group origin, they really understand the wants and needs and strive to develop their relationship, products and services around what’s really important.”  A UK NSC Group Strategy director gave similarly positive feedback about Cooper Solutions, a specialist fleet services systems provider, saying; “I like the fact that on occasion they are not afraid to disagree with us in developing the software and that candour is a clear sign of a good partnership; it shows how well they understand the dealer environment because their views are always based upon real experience.”

This is perhaps the core of the appeal of smaller systems providers. They can respond quickly and locally to specific needs, and often become good at implementation support and integration, effectively acting as a low-cost integration service.  As with many small companies then, it’s all about the personal touch, and trust, both extremely hard to replicate at scale in a larger systems house.  For all systems providers growing their omnichannel presence, building relationships with their dealer and NSC clients is critical and larger IT providers perhaps have much to learn from smaller start-ups that enter the market, whilst smaller businesses should look to make larger IT platform providers aware of their support skills and close network of clients.  This would provide a “win-win-win” outcome for clients and both large and small providers.

Image: Codeweavers