Microsoft to roll out auto dealer management system

Microsoft is getting ready to enter the automotive dealer management market.

The dealer management system, which is under development for Microsoft by Copenhagen-based Infonizer, will be built to the latest version of Microsoft's Dynamics AX ERP application, said John Reed, director of Microsoft's automotive retail solutions. Microsoft will market Infonizer's system under the name Dealer Management System for Microsoft Dynamics AX.

The system will streamline the automotive retail and service business processes, cut operating costs and increase sales and business opportunities, according to Infonizer. The system will replace the costly, ineffective and often obsolete IT systems currently operating in automotive dealers and services, Reed said.

Infonizer's DMS for Microsoft primarily targets dealer groups and large automotive dealers and services, Reed said.

"Microsoft got into this because there was a large market opportunity, a big sea change in terms of expectations around distribution, and a need for Microsoft to have a footprint in that market in order to meet consumer demand," Reed said. "This is a cooperative effort A¢ Infonizer develops the application and Microsoft can lend its strength of brand to help propel it into certain markets like the U.S. market."

Reed said the DMS will help dealerships operate most of their core business processes for sales, service and parts as well as their basic business management accounting.

"So it's the platform around which the business can operate," Reed said. "We're targeting a subset of dealers that would be initial pilot candidates and zeroing in on the types of businesses they operate and the brands they manage. The goal is to have a narrow set of dealers where we can make sure those customers are very satisfied before we would go more broadly into other dealer segments."

Reed said Microsoft initially wants to work with dealers who have a strong interest in innovating the business processes in their dealerships, including optimizing the sales or service processes.

"We expect to have pilot implementations beginning in the first half of calendar 2007," Reed said.

It makes sense for Microsoft to get into this market because of the size of the industry, said Mark Rush, president of Ron Rush Lincoln-Mercury, and a member of the US National Automobile Dealers Association's IT Committee.

"This industry is an oligopoly, meaning that there are too few vendors," Rush said. "There are two predominant vendors, ADP Inc. and Reynolds and Reynolds, that control an estimated 75% to 80% of the market, and a lot of the legacy vendors who have been in business for awhile have legacy costs."

Rush said new delivery methods and new software tools combined with the advent of an organization called STAR, Standards for Technology in Automotive Retailing, have dramatically lowered the costs for new players in the market.

"I think the current state of affairs, the size of the prize -- the size of the dealer business -- and the ability to come to market quickly and at a lower cost than ever before -- [Microsoft] thinks makes business sense," Rush said.

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