Core Technology Needs for the Automotive Retail Industry
Welcome to the first in our series of four blogs geared to automotive retail. This first post will focus on core technology needs. Future installments will cover technology and the regulatory environment, unique business continuity planning needs, and optimizing technology and the role Managed Service Providers (MSPs) can play.
While every industry has its challenges and related technology and security needs, automotive retail has a mix of requirements—the need to protect customer data, a combination of online and in-store interactions, multiple operational needs in one place, status as a financial provider, and more—that raise the bar on the need for protection, uptime, and resiliency.
An Industry Reshaped
“Core technology needs have changed pretty dramatically over the past number of years for automotive retail,” notes Scott Spatz, CEO at Cooperative Systems. “Technology has always played an important role in the automotive retail space. But with the growth of customer touchpoints, both online and in-store, increasingly streamlined systems for multiple operational needs (e.g., everything from CMS and sales to repair scheduling, parts, and more), dealerships taking on on-premise financial services roles, and increased compliance needs, there’s been a sea change in the sector.”
Part of the push is external, stemming from changes in the post-Covid world. Consumers’ desire for “touchless” interactions and the need for immediate inventory availability and pricing remained a priority once retail stores reopened. It changed the process of negotiation and created a level of convenience that customers became used to—and it changed the competitive landscape.
In the past, says Spatz, dealerships and other automotive retail providers could afford to be reactive regarding technology and cyber security.
“The difference is that technology has become truly business critical,” he notes. “Given the shift in customer demand and the way the industry has shifted, proactive technology planning for the integration of new systems into existing infrastructures and managing the day-to-day has become a necessity. What once was a ‘nice to have’ has become a ‘need to have.’”
In the bigger picture, that forward-thinking planning typically encompasses components like additional cyber security measures and infrastructure monitoring, but that protection also extends to the physical premises, where you’re constantly dealing with outsiders in your stores.
Dealing with the Unexpected
Perhaps the core function of technology is supporting uptime. While that’s true for every industry, recent events have demonstrated how a disruption can literally stop operations in their tracks across the board.
This past summer, two cyber incidents halted software firm CDK’s core Dealer Management System (DMS)—one of its many dealer-serving components—an event that shut down the operations of nearly 15,000 car dealerships across North America. Because CDK’s solutions cover a wide range of dealership processes, the unexpected disruption brought retail sales to a literal standstill for more than a week, forcing some dealerships back into the world of paper orders. Anderson Economic Group estimated that total dealership losses may have topped $940 million.
“The disruption demonstrated how truly critical uptime is to dealerships,” says Spatz. “If their systems are down or unavailable, or if there’s a security incident going on where some systems aren’t 100 percent available, vehicles can’t be sold or serviced. During the CDK episode, some dealers were able to use manual processes and be somewhat operational, but the wheels were simply not moving for the industry as a whole.”
Fortunately, Coopsys was able to respond to client needs quickly, helping to remove vulnerable code dependency and rolling out a complete security information and event management (SIEM) solution for one of its largest customers within 24 hours.
“What we learned,” he continues, “was that there were decided gaps in Business Continuity Plans and associated recovery needs.”
Learn more about how those lessons inform ongoing initiatives in our next installment, “Addressing Automotive Retail’s Unique Business Continuity Planning Needs.”
Regardless of the type of business you operate, contact us to learn how Cooperative Systems can help you develop an IT plan that meets your specific operational and security needs.