Dealer Services Corporation Drives Business Forward With WebFOCUS

Combining Operational Reports With Predictive Analytics Is Key to Profitability for Leading Automotive Finance Company

WebFOCUS Performance Management Framework (PMF) is a comprehensive application suite for enterprise metrics management and business intelligence. With the PMF, business strategies can be measured and tracked and owners are automatically linked to their business objectives.

In the financial services industry, being able to react nimbly to trends is essential for survival. For many financiers, a sudden economic downturn can be a shocking blow that leaves the company exposed to losses it simply can't cover. But Dealer Services Corporation (DSC) is rarely caught off guard, thanks to a business intelligence (BI) environment that helps managers predict how changing market conditions will affect its financial position.

Headquartered in Carmel, Indiana, DSC is America's largest independent inventory finance provider for used automobiles and other diversified products sold by independent and franchise dealers. Founded in 2005, the rapidly growing company was severely tested just three years later, during one of the sharpest downturns in automotive history. As consumer sales flagged, U.S. auto manufacturers dropped many independent dealers and franchises, along with their financing. With few options available to get their businesses started again, many of these dealers turned from new cars to used cars as their primary source of revenue. DSC was standing by to finance their used car inventories, and the information systems the company deployed to manage this burgeoning workload are a case study in best practices for the industry.

The Nuts and Bolts of Fleet Financing

DSC's floor plan financing is different from a typical line of credit. Every vehicle a dealer purchases represents a separate loan. Each loan has its own terms, due dates, and related details, which generates an enormous amount of transaction data for DSC's branch offices to manage. DSC serves its 9,000 dealer customers from 75 branch locations across the United States, handling day-to-day account management such as putting loans on the books and processing payments.

It's a risky business model that requires management to carefully monitor not only DSC's own financial position, but also that of its customers. Because it borrows the money it lends to dealers, DSC can get into a precarious position if it overextends credit.

"Our success depends on having accurate information from our field offices regarding our position with each dealer," says Chris Brady, CIO at DSC. "With this information in hand, we can predict each dealer's future financing needs and alert them if they have more inventory than they are likely to be able to sell in a timely fashion."

Information Builders WebFOCUS BI software helps DSC obtain that insight on a daily basis. "Our BI environment enables us to analyze both leading and lagging indicators," Brady continues. "WebFOCUS continually summarizes our position with each dealer and portfolio while giving us better ways to display and distribute critical information."

Consolidating and Distributing Information

Initially, DSC used Microsoft Analysis Services and Excel for financial and operational reporting. All branch data rolls up to a homegrown ERP system created with Microsoft .NET and Microsoft SQL Server technologies. As the business grew, analysts had a difficult time creating consolidated reports. They needed a single ERP system that could remove the technical barriers to accessing and sharing financial information.

"We were drawn to the sheer breadth of the WebFOCUS platform, including Active Reports, dashboards, and the various methods for creating and distributing reports," Brady recalls. "WebFOCUS can access our cubes, data warehouses, transactional stores, Excel spreadsheets – just about any information we can think of. In addition to having great technology, Information Builders is great to work with. If there is ever a problem, they want to hear about it, put in the effort to fix it, and get us back on track. I haven't seen that from other vendors. Information Builders listens to us. That's why we enjoy working with them."

DSC quickly standardized on WebFOCUS for all financial and operational reporting. "Previously, we had a lot of people spending vast amounts of time going through multiple reports, pulling data together, and trying to figure out what was going on," Brady notes. For example, each department created spreadsheets to summarize weekly activity within its domain. Senior managers received dozens of these spreadsheets each week and the data didn't always match. The sales department might say the company had 20 new dealers, while the lending department said there were 30 new dealers. "It was difficult to know who was right because you didn't know where they got their data in the first place," she admits.

Now, WebFOCUS generates a master report that combines data from all the pertinent business domains. WebFOCUS ReportCaster automatically distributes the report to executives, vice presidents, and regional managers. "Managers receive consistent information and can easily drill down from the corporate to the branch level," Brady says. "The time savings are enormous. The departments don't need to do anything because WebFOCUS creates the reports automatically from the data people have been entering all week."

Discerning Financial Patterns From Operational Intelligence

In addition to monitoring weekly account activity, WebFOCUS helps managers look ahead to predict future business trends. Using WebFOCUS Performance Management Framework (PMF), DSC measures performance against corporate goals and displays the results through WebFOCUS dashboards.

"While the master report is a summary of what has happened in the past, PMF breaks down the trends and factors that contribute to it," Brady explains. "It draws from the same operational metrics, and then it enables people to ask 'what if' questions so they can predict future outcomes and see trends taking shape. For example, we can drill down to the dealer level to discern who is most likely to have difficulties, based on past behavior. This not only reduces our own risk but also helps us advise dealers so that they can be more profitable."

Information from PMF also helps DSC forecast revenue, based on the expected number of loans coming in from each dealer. Will a particular dealer be likely to add five cars to its inventory next week, or fifty? The answer varies with the dealer's recent sales activity, the current season, day of the week, and many other factors.

Brady's team used PMF to create a predictive model that forecasts future activity based on each dealer's past behavior. "WebFOCUS PMF enables us to predict things such as when a dealer will pay off its vehicles, when they will incur new fees, and how many cars they will be adding to inventory," she explains. "It is extremely accurate. Our forecasts are usually within two percentage points of actual revenue."

An Accurate Gauge on Industry Trends

Thanks, in part, to this predictive BI system, DSC saw the automotive downturn coming well in advance, giving managers time to adjust financial reserves, tighten lending standards, and scrutinize each dealer's inventory – minimizing risk both to itself and its customers. "We are more profitable today because we know how much revenue we expect to generate," Brady relates. "If we see factors that will cause trouble in six months, we can take action now."

Being able to look ahead with confidence not only mitigates risk for DSC; it also helps the company treat its customers fairly. "Determining a dealership's credit worthiness is a complex task," Brady adds. "Sometimes a small hiccup in business is nothing more than that. It doesn't mean the dealer is about to close its doors."

By continually monitoring both leading and lagging indicators, DSC can detect patterns in customer behavior and more confidently predict what may happen next. In some cases, this extra level of insight can make the difference between shutting down an operation and helping a dealer get over a mere bump in the road. For example, DSC might suggest that a dealer auction off a portion of its inventory to avoid an impending financial crunch.

The field staff is constantly kept apprised of these metrics thanks to WebFOCUS Active Dashboard technology, which consolidates multiple reports into a single view for easy analysis. Active dashboards are browser-based and require no special software on the client, allowing field reps to access these dashboards from any computer, receive them as e-mail attachments, and even forward them to customers as active PDF files that permit remote analysis.

"WebFOCUS Active Dashboards are great for people who are frequently on the road, since they can easily stay abreast of how their regions or branches are doing," Brady sums up. "It's a good example of why we standardized on WebFOCUS in the first place: the technology is comprehensive, well integrated, and easy to extend throughout our diverse operation."