Tag Archive | "SaaS"

SaaS or Build: Which Admin System Is Best for You?


For automotive F&I providers and administrators, information technology is the third largest expense after personnel and administrative costs. A majority of that cost goes toward the upkeep and maintenance of the core administration system(s) responsible for products, rates, dealers, contracts, claims and earnings management.

Given the central role that the administration system plays, and especially in circumstances where it has been internally developed by a few key individuals, it is perhaps not surprising that the system and its attendant functions are sometimes viewed as a competitive advantage.

To deliver a competitive advantage, an administrative system needs to provide at least one of the following:

  • Support a product or solution that no one else can offer or
  • Enable support for a product at a lower effort and/or cost than others.

When Legacy Loses Uniqueness

Unfortunately, while the internally developed system may once have delivered on these requirements, it becomes increasingly more difficult and expensive for the development team to keep the uniqueness going. In fact, as more products and product permutations have hit the market, most teams have become consumed with keeping up with basic product requirements; maintaining the uniqueness that they originally delivered becomes secondary. In other words, that thing that set them apart at the start is lost in the effort to keep up with the competition.

F&I business priorities today require administrators to provide a complete portfolio of F&I products through a diverse set of sales channels with flexible and customizable accounting, commission and reinsurance programs. The greatest challenges to legacy systems are that they can only handle one or two products, can only support a few point-of-sale tools (e.g. menus) and have prohibitive modification costs for even simple changes.

In addition, continuing to support in-house systems requires considerable overhead, including salaries, benefits, building space, application licenses and liability. Moreover, continuing to maintain a custom administration system forces businesses to continually mitigate the key-man and technology obsolescence risks.

Emergence of SaaS

In recent years, many industries have taken advantage of the rapid commoditization of computing and have moved to outsourced or Software as a Service (SaaS) solutions for their technology needs. There is no debate as to if SaaS solutions are the right step, but of how and when to adopt such solutions. Adopting SaaS solutions allows providers to set service level standards for vendors, thereby enabling them to focus on managing factors that provide the true competitive edge: products, business processes, branding, data and partnerships.

SaaS solution providers are usually focused on one thing: the software. They have more than one customer and can therefore maintain a much larger development team than any individual provider, so they are able to keep up with business demands and often also get “ahead of the curve” when it comes to connectivity and innovative solutions.

As such, when adopting a SaaS solution, providers must look for a system that will allow for management of a complete product portfolio, retain those business processes that give them a competitive advantage, allow open access to their data and build high-performance partnerships.

It is extremely tough to finance an internal development team that can commit to all of this and deliver it in a timely manner. By adopting the right SaaS solution, a provider will gain a competitive advantage through a system that can support all of its business needs now and into the future. In addition, it enables the team to focus on true business priorities as opposed to technology challenges.

What can SaaS Do for Me?

Here is what product providers should look for in a SaaS provider:

  • A system that allows for management of a complete F&I product portfolio
  • A system that is highly configurable, allowing you to build a competitive advantage through innovative pricing, product combinations and coverage
  • A system that is flexible and robust reporting and business intelligence solutions — keep in mind that the data is yours and you should have easy access to it at all times
  • A system that provides connectivity to menus, DMS systems, credit card providers, inspection companies and other partners
  • A company that gives you the attention and support you need, not just through the implementation but also once you go live

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Outsource or In: TPAs Choose Between SaaS and Build


Success in the F&I office is a win-win situation. Every product attached to the deal means added revenue for dealers and greater peace of mind for car buyers. But it’s no easy task. It takes training, experience and a growing reliance on smart technology.

F&I products are, by nature, complex. As a result, they need to be backed by complex and continually evolving software. The architecture is largely invisible to dealers, but they depend on it for every transaction.

Ron Greer, vice president of provider services for the Provider Exchange Network (PEN), compares the software to electrical wiring. “Nobody cares who made it unless it doesn’t work.”

Making Connections

F&I Administration Solutions LLC and the StoneEagle Group both offer administration platforms for F&I products on the software as a service (SaaS) model. PEN, a division of Open Dealer Exchange (ODE), also is in the SaaS business, and Greer’s goal is to connect product providers to dealers across North America. All three companies are dedicated to the development of their solutions and, as is the nature of the SaaS model, are able to distribute their costs — and savings — across their respective client bases.

But some providers have elected to keep the administration of their products in-house. They choose that course by weighing several factors, including the desire for control, flexibility and speed-to-market.

“You have total control. You set the priorities,” says Kelly Price, president of National Automotive Experts (NAE). Price says her company last considered using a large-scale SaaS provider in 2005. She was told it would take six months to add additional products. “The timeline to get something programmed would be too long for our company to bear.”

Her sentiments are echoed by Matt Nowicki, vice president of retail software for Innovative Aftermarket Systems (IAS) and chief architect of that company’s back-end administrative system. He says he has recommended SaaS for smaller third-party administrators (TPAs), but it wouldn’t work for IAS.

“The dividing line is related to the number of product lines and variables,” Nowicki says, noting that IAS’s suite of offerings requires hundreds of unique forms. And when new opportunities present themselves in the form of a new or modified product, he wants to be able to deliver it quickly.

Quantities of Scale

F&I Admin’s COO, Kumar Kathinokkula, says that those very arguments to keep software in-house are often the most compelling reasons for signing onto the SaaS model. To remain competitive, a SaaS provider needs to be flexible, fast to move products to market and, most importantly, put control in the hands of the providers.

“The SaaS model makes obvious sense to the small to mid-size third-party administrators,” Kathinokkula says. “The larger TPAs have more financial resources to support the required IT department to deliver on their requirements; although, of late, we have been approached by many larger providers as they struggle to keep up with the demands of their product and sales teams.”

Kathinokkula believes that an industry populated by increasing numbers of products and variations on those products will require increasingly powerful technology. “For administrators, sometimes the price is just too high.”

Andy Hamilton, vice president of StoneEagle Insurance Systems for the StoneEagle Group, agrees. He says his company provides a platform designed to accommodate new providers as well as companies that have built administrative systems of their own. In his experience, growing TPAs tend to reach a tipping point at which SaaS becomes the only sensible choice.

“Some small TPAs say, ‘We want to control it, no matter the scale,’” Hamilton says. “But the costs [to build] are astronomically high.”

Buying Brainpower

At IAS, Nowicki reports that his IT staff includes 14 people with an average tenure of about eight years. NAE’s Price says she has been fortunate in the personnel department as well: “We’ve had the same programmer since 1996, and we’ve brought on two more in the last few years, and they’ve stayed.”

But Kathinokkula believes that technology departments must make sure they do not get left behind by the latest development tools and database capabilities. “For dependable, reliable software, [you must] hire experts with intimate knowledge in the latest technologies,” he says.

Price and Nowicki would argue that their internal IT departments have met that challenge and maintained the level of control they desire. Greer, Hamilton, Kathinokkula and other proponents of SaaS believe their companies’ scale offers the same level of control, but with many additional advantages, including the ability to keep up with new products and other continuing demands from provider sales and product departments.

Ultimately, TPAs that partner with SaaS providers and those that build their own platforms share a common goal: Create a system that allows product providers to focus on developing, marketing and branding their offerings. Let dealers focus on sales, and let their customers enjoy the benefits of a secured purchase.

Where do you stand on this issue? email hidden; JavaScript is required to let us know where you stand on the continuing debate over SaaS versus build.

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EFG Sells CRM Software Suite to OptionSoft


DALLAS — EFG Companies has sold its eight-year-old SalesEDGE CRM solution to OptionSoft, which will incorporate the software suite into its product portfolio. Terms of the deal were not disclosed.

SalesEDGE is a comprehensive customer retention solution that enables management teams to track all points of customer interaction to maximize conversion and build customer loyalty. Officials with EFG said the company selected OptionSoft because it was the best company to further develop the CRM.

“We have developed and grown our technology platform to the point where it needs the resources of a full-time, full-service technology company,” said John Pappanastos, president and CEO of EFG Companies. “We chose OptionSoft because of its singular focus on the automotive retail space, their strategic vision for the SalesEDGE tool, and their focus on ensuring customer satisfaction.”

OptionSoft is a SaaS company. Its mission is to provide clients with robust software solutions to help them focus on increasing sales and streamlining contracting and paperwork. In this sale, OptionSoft not only sees value in the capability of SalesEDGE, but has already developed ancillary products to augment the potential of the technology.

“The SalesEdge CRM will provide OptionSoft Technologies with a foundation to incorporate our full suite of F&I Menu, sales desk, service drive sales tool, CSI Red Alert, and our iPad/mobile technologies,” said Ken Tomaro, president of OptionSoft Technologies. “The SalesEdge CRM gives OptionSoft the opportunity to be the premier software provider for sales and marketing tools in the automotive, RV, powersports, marine dealerships and credit unions.”

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SaaS BI Lowers Ownership Costs, Enhances Security


The combination of business intelligence (BI) and Software as a Service (SaaS) is generating interest among insurers looking for a fast, secure solution that generates a greater return on investment.

Insurers’ growing frustration with traditional “on-premises” software implementations is fueling greater interest in SaaS BI solutions. Despite new technological advances, the common perception of on-premise solutions is that they take longer, cost more and end up being more complicated than expected.

SaaS speeds time to value by removing many of the traditional steps of software implementation. Rather than designing and building a BI solution from the ground up, SaaS-delivered BI leverages an existing platform.

The time savings afforded by this solution is especially evident with insurance-specific SaaS BI applications where insurance business content is already inherent in the solution.

Lowering the Total Cost of Ownership

While the costs associated with the traditional software model (i.e., buying software, completing a complex implementation and absorbing the ongoing cost of labor to support and maintain the software) have improved slightly over time, SaaS BI solutions can significantly reduce the total cost of ownership.

The ability to share the technology investment and human resources across multiple clients allows SaaS applications to deliver high-quality service at lower prices.

“We concluded a build approach would be cost prohibitive looking at the ongoing maintenance and learning curve required,” says Joe Scollo, chief operating officer for American Safety Insurance.

SaaS requires no software purchase or infrastructure and offers rapid deployment and subscription pricing, resulting in an immediate and positive impact. SaaS subscription fees also include ongoing support, upgrades, access to a help desk and enhancements.

American Auto Guardian, Inc., an administrator of VSCs and other aftermarket products for auto dealers throughout the United States, selected iPartners, a provider of “on-demand” management information and analysis solutions, to serve its BI needs.

“Our business model is not to develop software internally due to the expensive start-up and maintenance costs,” says Jim Devers, American Auto Guardian’s chief operating officer. “Our philosophy is to find a business partner who has a proven track record and expertise and develop the software solution with them.”

Ensuring Effective Security

New technology inevitably leads to discussions about security. Insurers considering a SaaS-delivered solution should feel confident that the SaaS provider has a good solution fit, a track record of success and the appropriate measures in place to provide effective data security.

“Without data security, there is no SaaS. It is our No. 1 priority,” explains Tom DiMarco, vice president of operations for iPartners. “We have implemented security measures at every level of our solution and are open to sharing our strategy with our customers and prospects.”

Effective security requires attention to detail and should involve a multi-layered defense in the infrastructure, applications and communications. An insurer’s SaaS provider should invest in SAS 70 Type II audited hosting facilities, high-availability hardened networks with intrusion detection and prevention systems, frequent third-party penetration testing, encrypted redundant data storage, segregated customer databases, strict data access permissions and disaster recovery.

“We know our data is in good hands with iPartners, our SaaS provider,” says Rob Shoenfelt, chief information officer for Celina Insurance. “Security is one of its priorities and core to the ongoing success of its business.”

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