Customer Solution Case Study
/ / New Business Management Solution Provides Global Solution for Automotive Market
Overview
Country:Germany
Industry:Automotive
Customer Profile
Incadea GmbH is an organization in Raubling, Germany, that in 2000, began developing software solutions in the automotive sector to manage dealership and service businesses.
In October 2003, Incadea was acquired by The Reynolds and Reynolds Company.
Business Situation
At the time of its start-up, Incadea sought to develop its product, incadea.engine, based on a world class business management solution, upon which it would build its own vertical solution to provide dealerships with a complete solution to managing their businesses.
Solution
Incadea selected Microsoft® Business Solutions–Navision® as their business management solution.
Benefits
Its world class reputation and worldwide presence
easy to customize
Its extensive partner channel
Its ability to deliver on-time and within budget / “None of our competitors can match the combination of technology, solutions, automotive retailing experience, and global capability that will be delivered by the combination of Reynolds and Reynolds, Incadea, and Microsoft.”
Lloyd “Buzz” Waterhouse, CEO, The Reynolds and Reynolds Company
German automotive software developer for dealerships, Incadea GmbH, wanted to provide a unique, industry-first vehicle sales and servicing solution based on a business management solution system that was perfectly suited to the company’s target market. The company selected Microsoft® Business Solutions–Navision®(now part of Microsoft Dynamics™) because of its world-class reputation in Europe, its position as part of the Microsoft family of solutions, and its extensive partner channel. Incadea has experienced great success with its venture, growing to 5,500 customers in four years.
Incadea was purchased by The Reynolds and Reynolds Company in October 2003. Reynolds and Reynolds sought to expand its U.S. market for integrated automotive retail solutions, including change management and profit improvement tools. It saw that Navision and Incadea had a solid reputation and had made in-roads in the European market.
Situation
Incadea GmbH, founded in 2000 in Raubling, Germany, was formed for the purpose of developing a software solution for vehicle manufacturers and points of service. Incadea wanted to provide a vehicle sales and servicing solution based on an business management solution that was perfectly suited to its target market. Incadea conducted numerous market studies to examine the future requirements of the automobile business and assess how business management solutions could be used as a dealership management system (DMS) foundation.
The market was ripe for a strong DMS offering. The European vehicle dealership market differs from that of the U.S. in that the market is very fragmented with many small dealerships, all of which need DMS solutions. Competitors entered the fragmented market too early—they were struggling and going out of business. Most of the existing dealership software was outdated and in need of replacement. Incadea required the ability to support a variety of brands, business rules, and markets, and it needed to do so economically with a partner distribution model.
An additional market driver was the European legal structures that enable manufacturers to require that dealers maintain single brand cohesion. In other words, dealerships offer only a single vehicle brand rather than multiple brands, contrary to the U.S. market. Incadea had several requirements for its potential business management solution partner:
The selected business management solution must be able to deliver an application within Incadea's limited development budget and timeframe.
The business management solution system must be built on a worldwide foundation; the core accounting application had to be available in most markets worldwide, and be used for rich customization.
The business relationship between Incadea and its potential business management solution provider had to be partner-oriented. Incadea wanted to engage partners to develop third-party applications and provide strategy and distribution systems.
Solution
Incadea selected Microsoft® Business Solutions–Navision®, which met all of itsbusiness management solution partner criteria. Not only did Microsoft Business Solutions have the rich partner network that Incadea demanded, but Incadea's product features, functionality, and technologies were an almost exact fit with the Microsoft .NET initiative. Microsoft .NET is software for connecting people, information, systems, and devices.
Peter Wenger, Incadea CEO, said, "Incadea has grown and prospered through a strategy of building automotive solutions on a flexible Microsoft environment and distributing them through Incadea solutions centers. Reynolds and Reynolds has embraced this successful business model."
Microsoft Navision has a strong organizational framework, necessary for a solution that is customized for various local markets.
Incadea began working with local partners to adapt incadea.engine to local markets. In its short four-year lifetime, Incadea has already accumulated 5,500 users in more than 300 dealerships across 23 countries. It has received endorsements from BMW, Opel, Volvo, Mitsubishi, FIAT/Alfa Romeo/Lancia, and Citroen. Outside of Europe, Incadea has established partner relationships that extend its range to Asia, Australia, Africa, and Latin America.
Reynolds and Reynolds Acquires Incadea
Enter Reynolds andReynolds, a leading provider of integrated solutions that help automotive retailers manage change and improve their profitability. Reynolds and Reynolds enables OEMs and retailers to work together to build the lifetime value of their customers. Reynolds and Reynolds serves more than 20,000 customers, comprising almost 90 percent of the automotive retailers and virtually all OEMs doing business in North America.
Seeing a great fit with its business objectives, in October 2003, Reynolds and Reynolds closed a deal to acquire Incadea GmbH. Not only would Reynolds and Reynolds add the fast-growing incadea.engine software, but it would at the same time be able to expand its alliance with Microsoft. Dale Medford, Executive Vice President and CFO, says, "Incadea was no longer a small start-up. It was actually a company that had a thorough understanding of the automotive market. It was also built on top of a business management solution application [Microsoft Navision] with a company that had a strong reputation. With the acquisition of Navision by Microsoft, that whole scenario exploded by orders of magnitude. Now a company such as BMW would take an application like Incadea extremely seriously because it was backed by Microsoft."
On the announcement of the acquisition, Lloyd "Buzz" Waterhouse, Reynolds and Reynolds Chief Executive Officer, Chairman, and President, said, "Reynolds and Reynolds is today making an aggressive, game-changing move within the global automotive retailing marketplace by forming a new global business unit, acquiring Incadea and expanding its strategic alliance with Microsoft. None of our competitors can match the combination of technology, solutions, automotive retailing experience, and global capability that will be delivered by the combination of Reynolds and Reynolds, Incadea, and Microsoft."
Benefits
Unique, Industry-First Solution
Incadea has a unique, industry-first solution for automotive retailing. Based on Microsoft Windows® operating system and Microsoft Navision business management solution software, it is supported by Microsoft and a multi-continent network of partners who customize it with country-specific layers.
Rapid Localization
The software can be rapidly localized and deployed on a large scale across multiple countries and languages. It delivers the standardization and process-driven benefits of business management solution while providing flexible, easy-to-use functionality.
Reynolds and Reynolds/Incadea Not Plagued with Multiple Platforms Like Its Competitors
Waterhouse says that the key to the company’s fast growth plans for outside the U.S. and Canada is that it will not face the challenge of supporting multiple platforms, a problem that continues to plague other companies that have relied on multiple acquisitions to grow its global businesses. "Our competitors were shackled by a series of limitations. They were struggling to use a legacy DMS system and keep it up to date. We don't have any of that baggage," says Waterhouse.
Scalable to Large Implementations
For Reynolds and Reynolds, the basic functionality—the Microsoft Windows interface, the ability to use the Windows operating system because of its ubiquity and relatively low cost, the ability to plug into server products such as Microsoft SQL Server™ — all made scaling to a larger implementation easier.
The Build vs. Buy Decision
Peter Wenger, one of the founders of Incadea, contrasts Incadea's decision to partner with an existing business management solution provider with what it would have taken for Incadea to build the business management solution themselves. "Because Incadea was a start-up, our objective was to go to market as quickly and cost effectively as possible. Just getting the product to market would've been its primary business objective for the first three to four years."
Wenger points out that by not having to divert development resources to develop the business management solution portions of the solution, it was able to staff more efficiently from the start. As it was, the development cycle was 12 to 18 months long.
"I think you could've easily doubled or tripled that if it had tried to do a core Accounts Payable application. That would have involved an ongoing R&D investment that would have ended up being a losing proposition. There's no way you're going to make a world class business management solution as a small company and do all the work that is appropriate in a vertical market."
The business management portion of the solution contains about 70 percent of the functionality, and incadea.engine and related components comprise the remaining 30 percent. The business managementsolution components provide the basis upon which to build additional functionality in the stack. Reynolds and Reynolds is now beginning to build additional applications on top of the stack. There are three areas needed for business-to-consumer and business-to-business capability.
These include the core DMS or business management solution application; parts and service management, which is extensive and includes order entry; and also customer relationship management, which gives the dealer the capability to manage the inbound sales process as well as customer management processes.
The Web application is the strategic enabler. Other solutions can be integrated on top of this base. The value to the dealer is that they can easily tie together the customer and service databases.
Business Relationship with Microsoft
Medford points to the value of Reynolds and Reynolds' business relationship with Microsoft. "The opportunity for Incadea is as much around the business partnership with Microsoft as it is around the base technology. The ability to plug into the channel is important. There is a level of engagement by Microsoft that is ad hoc and grass roots. Sometimes local account teams are involved, sometimes solution specialists, sometimes account managers pull in someone with an Incadea background."
Microsoft Dynamics
Microsoft Dynamics is a line of integrated, adaptable business management solutions that enables you and your people to make business decisions with greater confidence. Microsoft Dynamics works like familiar Microsoft software such as Microsoft Office, which means less of a learning curve for your people, so they can get up and running quickly and focus on what’s most important. And because it is from Microsoft, it easily works with the systems that your company already has implemented. By automating and streamlining financial, customer relationship
and supply chain processes, Microsoft Dynamics brings together people, processes and technologies, increasing the productivity and effectiveness of your business, and helping you drive business success.
For more information about Microsoft Dynamics, go to: