By Jeff Bennett
Alvin Kowalik has purchased many General Motors Co. pickup
trucks over the years. But last year, the cattle rancher in Selma,
Texas, tried something new, and purchased a pickup through GM's
Shop-Click-Drive website.
"I found the truck, listed my trade-in and was given the sales
price. A nice lady from the dealership calls me, we made a deal,
they drove it out and I signed the papers," Mr. Kowalik said.
For Mr. Kowalik, 68 years old, the transaction was easy. For GM,
the deal effectively took three years, involving an overhaul of its
computer infrastructure, beginning with creating its own software
development unit and building programs to reflect customers'
preference for online shopping and ordering.
Two years ago, Chief Information Officer Randy Mott ended GM's
$3 billion a year outsourcing deal with Hewlett-Packard Co.,
replacing it and others with about 8,000 GM software engineers,
from 1,400 previously. "Because we brought the [information
technology] work back in-house, we can take the lid off of what is
possible," Mr. Mott said in an interview.
GM is among companies ranging from General Electric Co. to Tesla
Motors Inc. that are building custom software for products and
internal use. They believe it is the best way to differentiate
themselves and respond as rapidly as possible to customer
preferences.
The new focus on custom, internally-built software poses a
potential challenge to technology outsourcing companies such as H-P
and Dell Inc., as well as providers of off-the-shelf business
software, such as Microsoft Corp., Oracle Corp. and SAP SE. While
they still play a role even in custom projects such as
Shop-Click-Drive, the role may be smaller than it otherwise might
have been.
It is still too early to say whether GM's investments in IT have
had a discernible impact on the bottom line. But the technology has
led to significant changes in the way the company operates and goes
to market, and it has helped open up new sales sources of revenue
such as capturing online shoppers.
The changes to the business were just as complex as the
technology. "Shopping for cars online has been the Holy Grail for
decades. It's difficult," said Ryndee Carney, a GM spokeswoman.
Many consumers are interested in shopping for cars on online, but
the size of the transaction can give them second thoughts about the
process, according to Ms. Carney. Moreover, state laws mandate that
new vehicles must be sold through a dealership, not a manufacturer
or a third-party. You can't buy a new car on Amazon.
Until now, the closest that the market has come to online
shopping for new vehicles has been third-party websites like
TrueCar Inc., which sell leads to dealers. GM said it worked with
dealers to give them an alternative. Unlike the third-party sites,
Shop Clock Drive resides on the dealer's Internet platform, and it
is free for them to use. The close rate for Shop Click Drive is
higher too--30%, compared with at best 22% at third party sites,
according to Ms. Carney. So far, 1,838 of GM's 4,300 dealers have
agreed to participate in the program, she said. She declined to
discuss how the program's margins compare to those of traditional
sales channels.
The creation of the technology platform wasn't a layup, either.
The Shop-Click-Drive platform was a two-year, built-from-scratch
endeavor designed to link potential shoppers with dealers who had
the vehicles they wanted. The auto maker hired software developer,
Entrega Systems Group Inc., in Troy, Mich., to develop a small
pilot for the program. GM said its internal teams, including
software engineers, testers and business analysts, worked on areas
such as the "back end" of the platform--he behind the scenes stuff
that customers don't see--and the software tool that connects
dealers to GM. The custom applications are integrated into
commercial components such as an Oracle Corp. database, GM
said.
Shop-Click-Drive operates like an electronic bridge. A customer
who clicks on the site is automatically routed to a dealership
website. The electronic exchange takes place on GM's servers in
Warren, Mich. Dealers electronically send their inventory data to
GM daily. However, none of the information collected from a
customer is kept by GM.
"We pass the customer information, such as names and address
onto the dealer and the financial information, such as credit
applications, onto our partner RouteOne which secures the customer
data on its severs in Farmington Hills, Mich., before passing it to
the banks," selected by a dealer, said Jim Bement, manager of
Shop-Click-Drive. "Once that is done, the information is
automatically erased" from GM servers.
The move protects GM since the auto maker doesn't sell vehicles
directly to customers as per its agreement with its dealership
network. The site also is programmed to work with information
providers such as Kelley Blue Book, which offers trade-in value
data.
"There is no way a dealer could do something like this on his
own," said Mr. Bement. "They don't have that type of money and they
don't have access to all the technology we have at the
headquarters."
Mr. Mott says the auto maker is in the early stages of
leveraging its new computer and software capability. But he doubts
that Shop Click Drive could have been built without those
investments. "Engineers...were constrained on the computing they
could use and the applications we could run," he says.
Clint Boulton contributed to this article.
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