Volvo Australia's CIO found that a little psychology went a long way when he needed to convince customers to opt for the company's global dealer system.
Not an item found in every CIO's toolkit, psychology has for Arne de Neeff proved almost as influential as business and technical skills in pushing his agenda during 15-plus years of IT management.
De Neeff added credentials in psychology to his extensive IT management experience in the mid-1980s because he wanted to find out why you can sometimes put in the best system in the world and absolutely nobody will use it. Now Volvo Australia's information systems manager, de Neeff knows. As it happens, he's been able to put that insight to excellent use at Volvo since joining the company in 1995. Psychology helped de Neeff persuade members of Volvo's national dealer network to adopt the Swedish company's state-of-the-art global dealer system rather than a system from one of its rivals. This was, of course, in conjunction with the dealers concerned receiving significant benefits from advanced technology.
With the top 80 per cent of dealers (as measured by turnover) having adopted Volvo's system, de Neeff reckons psychology can take a bow for what has to be considered a triumph for Volvo's IS group.
The Global Dealer System (GDS) was launched in Sydney this year by Volvo Truck Corporation. It is an electronic task management, materials handling and back office financials system which is connected in real time to the heavy truck maker's world communications network. GDS replaces an older, stand-alone global dealership system written in the early 1980s and based on IBM System 36s.
Volvo began an evaluation of other platforms in the late 1980s. The company spent some time considering Unix as a possible replacement platform but abandoned the project because of a lack of available software. Around 1995, the company decided to redevelop the existing system for IBM's AS/400, basing development on the British version of the original global system as the most advanced version available.
Development of the GDS began in England as a Volvo Truck Corporation-funded project. However, at Volvo Truck Australia's behest, the system was sent down under to its dealership at Lansvale in Sydney's west for final development and piloting. Only then was it injected into Volvo's global IT network around the world. Volvo Truck Australia's IT team continued working on GDS after its corporate acceptance for world use, and developed a further two new operational tools for adoption internationally.
Linked to Volvo's central databases in Sweden, GDS allows a dealer to access an individual truck's complete technical profile as created at its design phase, as well as its complete and continually updated service history. The company is now further enhancing the system to extend its use to fleet customers - including bus companies, which do their own maintenance.
"We needed a comprehensive technical solution which can be made available across Volvo's world with a clear upgrade path," de Neeff says. "GDS is unique in that it can access every Volvo truck's technical pedigree, recorded in a central database at its initial design and continually updated over the vehicle's working life. It also has direct access to all other relevant Volvo Truck databases for technical and business information.
"Our communications network means that a vehicle's particular data can go with it on the road, giving our dealers an e-based' tool to manage all service functions connected with any Volvo vehicle anywhere. We don't know any other vehicle manufacturer that can do that."
Not only does the functionality help dealers by letting them bypass the importer and handle their own design, pricing and ordering, it also frees the importer to do what it does best - marketing products. It's capability that suits Volvo's operational style right down the ground. "Volvo in general has a policy that it wants to do as much in the dealerships as possible," de Neeff says.
The finished GDS system makes the full technical and service history of every Volvo truck instantly accessible from anywhere in the world. It also supports all dealership operations from parts inventory and sales, workshop sales, warranty, vehicle management including service history, through to a complete back-office accounting system covering all aspects of dealership business.
But despite the technical excellence of GDS, rival software posed a threat. Other truck dealers were just as keen to get their systems accepted over Volvo's, for precisely the same reasons. De Neeff says Volvo Truck Australia was particularly eager to become the pilot market for the system because it recognised it had to react decisively against the danger that many of its dealers might otherwise adopt another system from automotive software specialist Reynolds & Reynolds or another competitor.
"Reynolds and whatever were knocking on the door and saying we have these great systems. Commercially we had to find a product fairly quickly that could replace (our dealers') existing system," de Neeff says. "We heard about this global application and said: Look, we'd like to be a pilot market for this', because we were stuck on getting that new software so we could keep our dealerships on our Volvo software and not let them go onto any other system."
There was much at stake. GDS relies heavily on electronic transfers for order placement and the updating of dealers' financial and purchasing systems. That meant any dealers failing to go with GDS would be automatically creating more work for Volvo. "Having persuaded the dealers to go with the Volvo GDS, we're not faced with that problem," de Neeff explains.
Let's Make a Deal
Volvo trucks are seldom alike. Since Volvo trucks are built to individual specifications involving hundreds of engine, transmission, axle and chassis combinations to meet different transport needs in widely varying environments, GDS filled the need for a comprehensive technical solution with a clear upgrade path. But could it be sold to dealers?
There's no doubt GDS contains truckloads of technical excellence. Volvo Truck Australia managing director Claes Svedberg has described it as a "a unique total management solution that centralises all dealership functions in an integrated e-business system linked to Volvo resources in Australia and overseas.
"It is a leadership product, able to grow in step with Volvo Truck's rapid international expansion. GDS, combined with other locally developed operational tools, means more efficient dealership operations to get trucks back on the road faster and keep them there longer," Svedberg says.
No doubt he's right. How many other systems would let European drivers wind their way through dozens of countries and still have their truck's particular data available immediately at any Volvo dealership along the way - in the local language? However, as de Neeff well knows, the most technically excellent system in the world can and likely will be rejected by users unless it appeals to them on the right emotional level, especially if those users are going to end up having to pay for it. That's where psychology came in.
When people reject technically excellent systems, de Neeff says, it's usually because either the system was poorly conceived, because it hasn't been effectively "sold" to them, or because the system doesn't really help them in any way. He says the developers of the system have to be 100 per cent behind it if they want to get users on board.
"If you start doing stuff in a half-hearted way, it's going to cost you twice as much. You've got to be behind the project - I mean, you've got to believe in it. You shouldn't be doing it for political reasons or because someone else is doing it," de Neeff says. "Also motivation of people is very important. The system has got to be sold, they've got to believe in it, and it's got to help them. If it doesn't help them or it's just another system they have to use, then basically you shouldn't start on it."
For some Volvo dealers, adopting the system made perfect sense. "Basically this group said: Look, Volvo is our business. If we don't take the Volvo system, then we should not really be handling Volvo; we're just making it more difficult for ourselves'," de Neeff says.
"But some people were really saying: Well, hold back a second. Before we say yes, let's do a study of the market and let's find out what's available in the market and compare our system to it. Others basically said: Well, what's the future of the Volvo system? Will it grow? Will it be enhanced? Will you drop it?' To these people, Volvo was seen as a supplier of trucks or cars, not a supplier of software."
That's where being involved in the pilot paid huge dividends. De Neeff says that involvement made it easier for the IS group to show dealers where the new software was heading and to spell out the advantages. They could also point out the savings possible under the new system.
"You have to show that A. you believe in it yourself, and B. that it is a good product," he says. "Also, if you're starting with new products, of course you've got to explain that it is a beginning phase, that the people adopting it are pioneers and that they should therefore be proud of that fact.
"It needed quite a bit of persuasion, and many presentations of the system. The first pilot, of course, was looked at critically - would it fail or would it work? I think we did well in that respect." The high levels of acceptance of the system would tend to support that claim.
Rolling, Rolling, Rolling
Installing GDS and other IT-based operational tools in Volvo's 34 Australian dealerships, some corporately owned and others privately licensed, prompted an evaluation of how the overall infrastructure should be rolled out and supported. Unlike some other countries where GDS operates mostly as a stand-alone dealer-based system, Volvo Truck Australia decided to centralise its national system around its head office IBM servers. Now that Australian configuration is being progressively adopted in other countries.
"We opted for a national thin-client/server system to control costs, improve support and maintain maximum security," de Neeff says. "Dealers have enough to do without adding IT management to their tasks. We needed easy integration with existing hardware, low maintenance in remote areas and maximum simplicity for users."
To facilitate implementation of the new system, Volvo Truck Australia created an IT module for installation in each dealership alongside existing systems, with self-sufficiency the key and easy help desk access a priority.
Volvo Australia uses NT Terminal Server and Citrix MetaFrame to enable dealers to access the VSS sales tool and Impact, a parts and service procedures electronic catalogue, as Windows solutions on NCs. VSS allows vehicle configuration from myriad technical options while computing cost and delivery details. Both modules were developed entirely in Australia.
Now the company has embarked on a program to enhance technical competency among its dealership specialists as part of a worldwide corporate bid for greater excellence. The company's primary goal is number-one ranking in after-market service in Australia. Introduced by corporate headquarters, the "Volvo Standard of Global Competencies" will create a platform of uniform knowledge and skills to serve after-market needs in Australia and around the world as new technology is introduced over the next few years.
"Linking the correct competencies to the appropriate job allocations will reduce repeat repairs and warranty costs," says GDS global development manager Glenn Adams, who has day-to-day ownership of the program in Australia. "It means increased workshop efficiency and productivity - it's as simple as that."
In the first phase of the program, technicians will be assessed so that any required "top up" gap training or support can be given to bring them up to the required level. While technicians are not expected to become computer scientists, they do need to understand PC operating systems, their care and maintenance, basic networking and data transfer, retention and analysis.
"The time is fast approaching when mechanical problems can be diagnosed with a laptop on the roadside in the Pilbara, the data sent by wireless link to a remote analysis centre anywhere in the world, and new information downloaded for the truck's systems to get it moving again," Glenn says.
Charting a Course
De Neeff has been working in corporate IT since leaving the Dutch Navy in the early 1970s, where he worked on the first digital fire control systems. He worked as a Cobol programmer until the late 1970s and has been in IT management since then. "I basically fell into IT," he says. "Somebody told me it was a very easy job - you sit in front of a typewriter and wait for a question then wake up and answer it. That was basically my introduction to IT."
After arriving in Australia in the early 80s he was hired as a project manager at Hoover in Meadowbank, NSW. A year later, he was promoted to IT manager. He stayed at Hoover until it was bought out by Southcorp in 1995, then moved to Volvo. Compared to Hoover, he says, Volvo spends much more on corporate systems and global data communications. As much as 25 per cent of his budget now goes on pure data communications costs, not even counting the people who have to manage that data.
Having heavily automated its factories, Volvo's approach has been to get payback of that investment by linking order systems directly into the factory. "A lot of computer systems were really developed to the same high level as a factory automation system so that there is fairly little manual input in between the order taking and the factory process and the delivery of the truck," says de Neeff.
Now Volvo is keen to exploit the advantages of e-business, with de Neeff saying the GDS contains "as much e-business as is possible with the current system".
While the company is confident there are no real IT challenges left in moving to an entirely e-business platform, it recognises that the business implications are enormous. For instance, how does Volvo protect franchisees' interests when their contract specifies customers should buy from them, but those customers are determined to shop around?
"With e-business, we can sell a part out of Sydney to a Perth customer. That means the business relationships, the franchise agreements and whatever, need to be reviewed. How are you going to channel the income from selling a part in a particular area back to the dealer who might be responsible for replacing the part or delivering the part?
"And if you start giving end customers more access to internal systems, how far does that open you up to your competition?"
To resolve the business relationship issues, Volvo has set up a Dealer Council, where representative dealers meet with Volvo Truck's Australian managing director and members of the commercial group in order to address specific questions.
However, de Neeff is much less worried about the issue of customer stickiness, even welcoming the greater openness that flows from making more information available to customers. "I think the openness will help us," he says. "By nature, Volvo is an open company. The Swedish, they're very democratic. For instance, body builders - the people who build the back end of the truck, the trailers - or the bus body builders have full, open access to the Volvo build information. I think we're the only company who does that, and I think that will continue."
And e-business is providing another opportunity for Volvo that was simply never available before. De Neeff says manufacturers reselling through wholesalers or dealers tend to lose touch with their customers. By connecting the factory directly to the Web, allowing customers to ask questions and enquire about their products at the source, Volvo gets much more information customers.
"I think that's one of the major things that people are forgetting - that the Internet lets you reclaim your customers," de Neeff says. "From that information, we can do mailings and the marketing department can work better. That's all good because if the importer doesn't have to do all the administrative work for dealers, it means the marketing company can basically work on marketing. So it should lead to improved sales and happier dealers in the long run."