Online wholesale automotive auctioneer OpenLane underwent an SAP AG implementation in 2003, granting better back-end integration, end-user visibility into dealer-seller transactions, and scalability for business growth. Plus, how the Canadian SME market is topping the Americans

Online car dealer’s life in the fast lane

A Menlo Park, Calif.-based wholesale automotive online auction business today runs a few thousand transactions daily between seller and dealer through its Web site.

 

Basically, all the necessary steps in such a transaction, including sales, banking, credit history, transportation of the sold vehicle, are facilitated through the Web site, using an automated workflow.

The company, OpenLane Inc., has been around for about a decade but in 2003, underwent an implementation of SAP AG technology to introduce integration between the Web site and an SAP back-end so that each time a car is sold, payment owed by the dealer can be tracked and remitted back to the seller, amid other associated workflows.

“We transact quite a volume of these transactions on a daily basis,” said Jonathan Varkul, OpenLane’s vice-president of enterprise solutions. In the early days, OpenLane ran just a few hundred transactions daily, but Varkul said scalability was a requirement then as the company would grow. “We could see what’s going to happen when this ramps up real quick,” he said.

Automating that workflow was important given the manual process that each transaction created. “We were having to manually key in a buy-side entry for the buyer who bought the car to process the receivables that came in, and then we’d have to process a manual sell-side entry to remit the funds to the seller for every single transaction,” explained Varkul.

OpenLane implemented SAP financials, materials management, sales and distribution tools, with the help of Germany-based business process management technology vendor IDS Scheer AG.

OpenLane required a strong back-end ERP system, but with the “flexibility to interact over the Internet, and interact to non-standard online business transactions,” said Jason Mausberg, IDS Scheer’s managing director. Online businesses at the beginning of the decade handled mostly business-to-consumer sales of consumer packaged gods, explained Mausberg, but OpenLane was niche because it was “providing a service that was interacted with credit bureaus to get credit history, online auction sites of the cars, shipping companies that they had to talk to, etc.”

Open Lane, said Mausberg, has since reaped a “competitive, strategic advantage from a service perspective” after implementation.

Part of that enhanced service, besides things like electronic funds transfer and built-in Canadian and U.S. banking standards, is also greater visibility for end users who want to track the transaction at each step of the way, to know, for instance if the vehicle has been transported to its destination, said Stephen Herlick, OpenLane’s manager of ERP.

And, the scalability factor proved useful when, according to Herlick, OpenLane experienced “a tremendous uptick” in business at the start of 2009. The company was able to handle the surge seamlessly, said Herlick, “without having to rescale the people side of it.”

Varkul said the technology made it such that the company could grow, from a handful of employees in its early days to about 400 today, yet not need to substantially expand the back-office systems that support it, and in effect “squeeze efficiency out of the backbone.”

According to Conrad Mandala, vice-president for small to medium enterprises with SAP, “scalability is probably right now the No. 1 issue” among SMEs like OpenLane. Businesses today are often demanding a convergence of multiple data sources or some form of integrated platform that can handle rapid growth, he said.

Looking at the SME market in general, the economic downturn has not dampened that desire to invest by what Mandala called “SME visionaries” who see the current lean times “as an opportunity for them to step over any potential competitors by investing in IT.”

And, actually, the Canadian market, continued Mandala, “is significantly more robust in investment right now than our U.S. counterparts,” given better access to capital. SAP business is forecast to be significantly stronger in Canada than the U.S. right now, but the U.S. will quickly catch up, he added.

Herlick said the company plans for even more end-user visibility, like greater detail into individual accounts, by taking advantage of enhancements to SAP NetWeaver.

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