Guest writer John Andersen walks us through the latest merger that will directly impact our industry in “Imagine That.”
Imagine waking up one morning to find that Coke and Pepsi had merged. What if Samsung and Apple formed a single company? Can you picture a world where UPS acquires FedEx to become the dominant shipping company in North America?
That’s how the beginning of May felt for a lot of people, with e-Emphasys announcing the acquisition of the heavy equipment portion of CDK Global.
CDK’s Intellidealer solution and e-Emphasys eXtend offering were unquestionably the top two solutions for heavy equipment distributors in North America. The new combined customer base will represent at least 70% of the dealership rooftops in North America, with sights set on a more global presence. It’s an exciting time for both companies, but what does this mean for the customers?
Most customers will be advised that despite this exciting opportunity, it will be business as usual for at least the next 12 months. The company will realign departments, consolidating development, sales, and customer support, while trying not to disrupt the existing clients. There will be new markets, global plays, and perhaps even more acquisitions. There will be talks about technology stacks, integration, and eventually a preferred direction. As the undeniable dominant provider in North America, you can expect OEM attention and maybe some new agreements.
However, what is missing is that all-important product innovation. There was no mention of any groundbreaking application being released. We didn’t read about the next generation of systems or cutting-edge technology that will help form the future of the distributor. We didn’t hear about how this new resource-rich, experience-dense, perfectly positioned entity will deliver anything other than reheated versions of the same old systems. Worse, they will spend a minimum of 12 months arranging the furniture and preparing those all-important renewal contracts.
Success requires more than just resources. It requires passion. It requires humility and understanding. The roots of all these businesses were planted in people who loved the dealerships, the end users of equipment, and the processes. Each strived to be the best provider by leading customers from simple paper to complex systems. Profitability was a byproduct of being a true partner with the customer and stretching the boundaries of what could make a distributor better.
As consolidation continued, that innovation slowed until new development was made up of interfaces, rewrites of data access, bolt-ons, and strategic partnerships. DMS providers were transitioned to private equity partners or venture capitalists that simply work the numbers. Terms like dealer spend or rooftop ROI supplanted innovation and satisfaction for the end-user customer.
The call to action for each distributor should be the same, whether it’s an old supplier, a new supplier, an OEM-supplied system, or a brand-new player: What is the new product that you will be delivering to me in the next 6 months that will fundamentally change the way I am operating? If the answer is a reheat, rework, or just nothing, then it’s time for a change. In the current climate of consolidation, it is easy to lose sight of the importance of innovation. The excitement and buzz generated by the merger of two large companies can often overshadow the need for product development that is truly customer focused. As customers, we should demand more from our technology providers. We should be asking questions about the next generation of systems and cutting-edge technology that will help us to achieve our business objectives. We should expect our technology partners to deliver truly innovative solutions that will fundamentally change the way we operate. It is important for technology providers to remain passionate about their customers and the industry they serve. They must continue to strive to be the best provider by leading customers from simple processes to complex systems. Profitability should be a byproduct of being a true partner with the customer and pushing the boundaries of what can make a distributor better.
In summary, while these mergers/acquisitions may bring benefits in terms of size, scale and reach we must not lose sight of the importance of innovation. We should demand more from our technology partners and push them to deliver truly groundbreaking solutions that will change the industry for the better. Only then can we ensure a bright and successful future for the heavy equipment industry.