Auto industry software providers need to re-think the value of long-term contracts in the quest to drive innovation

harris shaun

The days of long-term contracts for technology are numbered in many areas.

This is the view of financial software provider Codeweavers as it looks to the practices of successful market disrupters, which are achieving sales and loyalty through a more enlightened approach based upon quality and service.

Codeweavers’ sales director Shaun Harris explained: “We see the confidence of companies such as Netflix, which offers a simple monthly billing period that can be ended at any time, with charges only up to the end of the month, as a guiding pioneer. Theirs is a statement of belief in their service and one which clearly helps more customers to make an easier buying choice.

“In the Netflix model, customers know they are never ‘locked-in’. Instead, they stay loyal because they have access to quality and innovative products combined with great customer service. This is the recipe for success that in the dealer technology market, we need to learn from,”

While apps have redefined much of the software used by consumers, B2B software has often retained its traditional long-term framework.

It is something that Harris believes risks stifling innovation in the motor industry and limiting the capacity of dealers and manufacturers to provide the type of agility that consumers expect.

He stressed: “The range and scope of support technology available to dealers and manufacturers is becoming ever wider, creating exciting new possibilities. However, traditional thinking on terms & conditions has not kept pace with the speed and ease which dealers want. In other markets, we see that rigid structures stuck in the past have encouraged market disrupters to make hay. Motor retailing needs every ounce of fresh thinking it can muster; we have to make it easier for dealers to access.”

Slow, often manual, process for the implementation of software and upgrades created the long-term contract principle. Harris believes it requires ‘boots on the floor’ consultancy support, necessitating long-term contracts to offset the inherent costs.

He added: “Today, the use of manual updates has largely become redundant and the old extended contract model for software providers is increasingly hard to justify. This is especially true when it stifles the ability of clients to move quickly to emerging options that are more appropriate to their needs.

“The contract model needs to evolve. As a software provider, we see the speed and pace of change as an opportunity, not a threat. We want to be on our toes and innovating continuously. If a business has a long-term contract in place, this energy and creativity can all too easily be replaced by inertia and procrastination.

“In an ever faster operating environment, this simply is not the way ahead. After all, in a B2C market, it would no longer be considered acceptable because an alternative is just an App Store click away. We have to think the same way.”