Ristken's DeMarco Shares Perspective on E-business Initiatives

As F&I product providers and administrators continually work to improve and streamline their operations, technology solutions are driving the latest evolutions in the industry. Patrick DeMarco, president of Ristken Software Services, spoke with P&A Magazine about the technological advances he’s seen in the past few years and Ristken’s efforts to lead the way in the future.

Q. How do you add value to your clients?

We consider ourselves a technology service provider, which powers the forward-facing agenda of our customers. We have two elements to our business: our service application business (F&I menu and F&I reporting) and our e-business solutions. We take our customers’ process and technology requirements as they relate to e-rating, e-contracting and e-remittance and build an appropriate e-business solution. While there are elements of each customers’ solution that are similar, much of it is customized and driven by what our customers want to provide their dealers.

Our processes have evolved because the markets evolved and our customers’ needs for technology have changed. The appetite and requirements for technology to drive a dealership’s business and a service provider’s business has grown and evolved. Technology is so much more relevant in the dealership today.

We’ve gone from essentially providing applications like menu and reporting tools to being more partner driven. We take our customers’ business needs, apply our technology solutions and make them more efficient in their operation. We’ve obviously had to grow and make improvements to our technology.

Q. Looking forward, what changes do you see in the near future?

We’re going to continue to see the requirements for technology continue to grow. Providers and administrators are going to demand more robust, efficient solutions and technology will have to be taken to another level to meet those needs. I only see growth and greater appetites for bringing new technology to dealerships.

Fortunately, we are now seeing great acceptance at the dealership level for technological advancements. Dealerships are showing that they have the ability to change culturally from paper forms to electronic forms. Dealers have not only accepted, but, in many cases, really embraced new technology.

Q. Ristken has been developing product rates, electronic forms and electronic remittance for a couple of years now. Have there been any challenges in the evolution of e-business services?

We definitely encountered some pitfalls. There’s a bit of customization to what each provider wants to do, so scalability is challenging at times. You can’t build something for Service Provider A and rubber stamp it for everyone else to use.

Some of the biggest challenges have involved understanding customers’ requirements and business processes and truly becoming an integrated partner with our customers. Building an appropriate e-business solution requires us to understand their needs and how they want to service their dealers.

We’ve also had to get our clients to understand what integration is and to start looking beyond the basic menu with some sort of electronic rates attached, which everybody has. The e-business solutions that we’ve built can be used with our menu or they can be used as a standalone system. The dealerships don’t have to use our menu and they don’t even have to be sold in F&I. For example, they can be sold in the service drive. There’s been a need for education in the marketplace to try to differentiate how we handle e-business and how we build it and how we work with our customers. The message is definitely getting through as we have seen a surge in demand for our e-business solutions just in the last quarter. Companies are understanding that they need these types of solutions to stay competitive.

For service providers, this is not their core focus. A lot of them decide they’re going to build their own e-business and host their own forms and there’s a lot more to it than they might think. We try to educate them about the issues they really have to consider. The following are important questions that must be asked: Are you building a system that your dealers will actually use? Do they have to use it with certain menu providers?

Q. Compare the efficiency of development and the ability to consume technology related to e-rating, e-contracting and e-remittance.

E-rating is the easiest for service providers to get their arms around because it can be viewed as an iterative process. We’re starting to see strong evolution from paper rate books to an electronic format regardless of whether that is integrated into a menu application or on a standalone system. The process of making service providers’ rates available to the dealer electronically is most prevalent right now.

The electronic contracting piece is interesting because it has gone in a couple different directions. There are service providers who say “we’ve got our own forms library and anybody who wants to electronically contract can do that and we can do it ourselves.” A company like Ristken can either build an entire back-end e-business solution and host all forms or build web services that allow our system to communicate directly with the service provider.

We’re starting to see more and more e-contracting and dealers are becoming more accepting because there are efficiencies realized both at the dealership level and service provider level. Ford has been out in front and other OEMs are starting to take initiatives. A lot of them have it on the retail contract side, but then they don’t necessarily have it on the F&I product side.

E-remittance is different because many providers don’t have a system set up to be able to accept electronic remittance. This functionality requires some business intelligence and business process about how exactly the provider wants these forms remitted. For example, what constitutes a finalized contract? Quite frankly, a lot of service providers are not technically able to receive electronic remittance at this point. Right now, it’s often a hybrid: they may do full electronic rating and contracting and their remittance is still manual. I anticipate that in the next 24 months – and hopefully even sooner – we’re not going to be having these conversations and everyone is going to be paperless. We’re not going to be sitting here in five years talking about printing out contracts and using the mail or a fax machine.

Q. Are dealers on board with e-remittance if service providers could accept it?

If you build a system in which there is ease of use at the dealership level, they will use it. Dealers are thriving and seeing efficiencies in their business operations because of e-business initiatives, whether it’s just e-rating or the full gamut of rating, contracting and remittance. I don’t anticipate that that’s going to do anything but grow. Dealers, if provided the opportunity to sell a service product that they can electronically rate, electronically contract and electronically remit, they’re going to lean toward selling those products rather than the products of a service provider that doesn’t offer those types of technologies. I think it’s becoming the competitive nature of the marketplace that service providers that are able to provide those types of efficiencies are ultimately going to win.

Q. How do you see mobile technology fitting in to menu and reporting applications?

Mobile technology is definitely something to pay attention to. We’re currently working on some applications related to reporting, so I absolutely think you’re going to see growth along the lines of mobile devices and mobile applications. What mobile devices can do today versus 12 months ago is amazing.

The applications we’re working on will allow an F&I manager or dealer to review any reports that we have via our F&I reporting tool on their smart phone. The industry is starting to realize that tomorrow’s F&I manager is sitting in a college dormitory right now and will never accept the current technologies that are provided in the F&I office of a dealership.

Q. Where do you see the business of menu and reporting evolving?

There are two parts to this answer that are interconnected. The first consideration is the business of menu and reporting as it relates to DMS integration. If you’re not in a certified program with a DMS provider, then your applications and your ability to have consistent delivery to your customers (i.e., service providers or dealers) is going to be jeopardized. The certification of the DMS is going to be critical to the ability to deliver a consistent application to dealers. Back-door integration can put customers in jeopardy and the companies using that approach are going to be short-lived in the industry.

The second piece in this evolution is a greater focus on the reporting aspect and the ability for service providers and dealers to use reports in a way that we can better drive the operations of their business. Menus have become more of a commodity because you either believe in the menu selling process or you don’t and you either put that process in place or you don’t. I think dealers and service providers are going to require any vendor to provide a full, comprehensive F&I reporting system whether a menu is in place or not.