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Quorum Information Technologies Inc (TSX V: QIS)
February 9, 2006 Interview with:
Maury Marks, President and CEO
Business News, Financial News, Stocks, Money & Investment Ideas, CEO Interview
and Information on their
DISTRIBUTOR™, a Windows and Web solution, and XSELLERATOR™, a dealership management software program, which combine to form a Dealership and Customer Relationship Management System (DMS) for the automotive dealership market.

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Quorum Information Technologies Inc.

January 13, 2005

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General Motors Awards Major IT Contract to Quorum Information Technologies Inc.

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Auto Dealership Mgmt. Software

Quorum Information Technologies Inc.

Suite 200, 6715-8 Street N.E.
Calgary, AB, T2E 7H7
Telephone: 403 777 0035 Ext: 11

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Maury Marks
President and CEO

Interview conducted by:
Lynn Fosse, Senior Editor
February 9, 2006

Mr. Marks grew up in an automotive dealership environment working in his family’s business for many years. He went on to pursue higher education and received a Bachelor of Management (with Distinction) from the University of Lethbridge in 1988. In 1991, Mr. Marks received his Chartered Accountant’s designation after articling with Deloitte and Touche in Calgary.

Mr. Marks continued to work with Deloitte & Touche in the Management Consulting group in the systems development area, building world-class ERP solutions for clients. From 1992 to 1995, Mr. Marks left Deloitte & Touche to begin consulting on computer development, implementation, and system selection projects for various clients. Since 1996, Mr. Marks has devoted all his time to building Quorum Information Technologies Inc., and XSellerator™, its proprietary software product for the automotive dealership market.

Company Profile:
Quorum is a North American company with a primary focus on developing, marketing, implementing and supporting proprietary software products for the automotive retail vertical. Its key products are DISTRIBUTOR™, a Windows and Web based network solution, and XSELLERATOR™, a dealership management software program which combines to form a Dealership and Customer Relationship Management System (DMS) for the North American automotive dealership market. What makes this software so exciting and different from the competition is its current technology. The same Windows-based technology used by every other industry is finally available for automotive dealerships. XSELLERATOR isn't just a management system; it's a more efficient, productive and profitable way for dealerships to do business.

Currently, Quorum has 17% of the GM dealership market in Canada, making it the third largest Dealership System Provider for GM in Canada, and has recently been named by GM as one of two providers of the GM Integrated Dealer Management System (IDMS) for North America. The Company has grown rapidly in the past five years, expanding from 15 new customers in 2000 to 155 new dealership customers across North America to date. Quorum has been recognized by the Deloitte & Touche Technology Fast 500 as one of the fastest growing technology companies in North America.

Quorum's success comes from developing, marketing, implementing and supporting the best DMS System, products and services for automotive dealerships, and from their commitment to total customer satisfaction. Quorum has expertise in all aspects of Dealership and Customer Relationship Management, and employs the best people in the business to deliver it.

CEOCFO: Mr. Marks, there have been some very positive changes at Quorum recently; please tell us what is happening?
Mr. Marks: “On January 3, 2006, General Motors announced that Quorum was awarded, along with Reynolds & Reynolds (REY: NYSE), to be one of two providers of GM’s Integrated Dealer Management System (IDMS) throughout North America. Under the contract, Quorum’s XSellerator software will be branded GM DMS software. GM is now out there talking to the dealers about the IDMS program, and they are promoting it across their entire dealership body of over 8,500 dealerships across North America. With this backing from GM, we expect to see significant growth in the adoption rate of XSellerator software, and as a result, significant earnings growth for our company over the next few years.”

CEOCFO: Are you competing with Reynolds & Reynolds?
Mr. Marks: “As an IDMS provider, we will continue to compete with Reynolds & Reynolds for individual dealerships, but we feel dealerships are being offered two clear and distinct choices, with the Quorum choice being the modern and technologically advanced DMS solution. We also see Automatic Data Processing (ADP: NYSE) to continue to be a competitor in the GM space, however, since they are not a part of IDMS we believe we have a clear competitive advantage in both technology and OEM support over ADP.”

CEOCFO: How influential is GM with their dealerships, given GM’s recent problems?
Mr. Marks: “That is a good question. It is like many franchise head office relationships, in that there are some franchise dealerships that will operate in closer alignment with GM, and others who will choose their own path. We believe that being named an IDMS provider by GM is a green light to a dealer to choose Quorum’s solution with confidence with the knowledge GM has performed the extensive due diligence on our product, they have negotiated the best value deal for its dealers on price, and GM is standing behind the solution as a good choice for its dealers.”

CEOCFO: Could you explain more what the Integrated Dealership Management System means?
Mr. Marks: “For GM it is about providing its dealers with choice and value and facilitating the adoption of new technology and innovation in the Dealer Management System (DMS) space. The “Integrated” part is about bringing tighter business-to-business integration between GM and its dealers so both the dealers and GM can conduct business more effectively and efficiently. Quorum has built a extensive, advanced integration with General Motors in Canada, and now we are going to leverage from that work to build integration to GM new global systems. Once implemented, XSellerator will allow both the dealerships and GM to be a lot more efficient. We are not stopping there; Quorum will work even closer with General Motors strategically to bring new integration and functionality to the market. This allows us insight to align our technology strategy with GM and with the opportunity to provide dealers with one integrated, seamless business process for their sales, service and parts operations.

Keep in mind that dealers will be buying a solution directly from GM and signing a contract directly with GM providing them an extra layer of comfort knowing GM will back-stop the solution and insure that DMS providers meet all the contractual commitments in their agreements.”

CEOCFO: If a dealership is looking to sign, how do you present yourselves to the individual dealership?
Mr. Marks: “We will present ourselves as an IDMS provider on behalf of GM.  We will still demo the product and explain the incredible benefits the dealer can achieve through the use of XSellerator. As well, we will present the quote for the software, hardware and services to be provided to the dealer, and deliver on behalf of GM, the standard GM dealer contract for IDMS.  So the contracts are all with GM and then we work on behalf of General Motors to deliver IDMS.”

CEOCFO: How does that work out for you from a revenue perspective?
Mr. Marks: “We had to negotiate pricing with GM, and because of GM’s buying power the dealerships will access a discounted deal compared to what our current market rate would be. This is another plus for the dealership; they are basically getting a bulk buy deal for their individual dealership. As well, there is standard pricing for every size of dealership based on users accessing the IDMS software so everyone participating can be sure of getting a fair price”

CEOCFO: When does GM start pounding the drum?
Mr. Marks: “They are starting right now; if you go into the automotive space and you go to Wards Automotive, or Automotive News, there are articles now that are starting to appear around the IDMS program. We have the North American Auto Dealers Association meeting coming up in early February, in Orlando, and thousands of dealers will attend this conference. GM will be promoting the IDMS program at this conference; they have sent messages out to their field staff and messages out to all of their dealers. Hence, the GM marketing machine is in gear, pushing the message out to everybody. GM has many different touch points into their dealerships including; newsletters, e-mail, and a field organization of area representatives who are visiting the dealerships helping them from a sales, service, and parts perspective. Therefore, GM has a lot of opportunities to talk to their dealerships about the IDMS program and explain its many advantages.”

CEOCFO: What are the challenges now that GM is in play? Are you equipped for the increased business and hopefully other entities looking at you as well?
Mr. Marks: “Quorum has been involved in the due diligence and contract negotiation process put in place by GM with respect to the IDMS contract for over 15 months. During that time, in anticipation that Quorum may be awarded the IDMS contract, Quorum took many steps to meet the challenges that delivery on this contract would present. Therefore, we have ramped up and streamlined our implementation capabilities for scalability; we increased our software support services, and increased our development bandwidth. We took as many of these steps pre-award as we reasonably could and now that the contract has been awarded, we are increasing our expansion in all the areas mentioned. However, there are limits to our pace of growth and we have been very careful with General Motors to set the expectation that we can only grow so fast. As a consequence, GM looks at this as a longer-term initiative and we both want to grow the IDMS program at a manageable pace. You will see us continually ramp-up our Dealer install capacity per month. We expect 2006 will be a building year for us and we will complete roughly 100 new dealership installations, and 2007 we expect to be able to install roughly 250 new dealerships.”

CEOCFO: About how long does it take to implement the system in a particular dealership?
Mr. Marks: “For the average store which has approximately 25 users, our optimal implementation runs a duration of roughly six weeks and involves about 45 days of person effort with approximately 21 of those days being onsite at the dealership in “over the shoulder” training. We have really streamlined our process to find the right balance between utilizing web-based training and support tools and having the right amount of human touch at the dealership for the “go live” process. When we do take them live, we have three or four people onsite for the live week and then one person will be back for a return visit. We have a very efficient implementation model when you consider that we have 21 days onsite for a dealership where we are completely replacing their key system for all departments. We believe our model is very scalable as we ramp up to meet the demand.”

CEOCFO: You have something major happening; please address potential investors and why they should be interested in you right now?
Mr. Marks: “We believe that Quorum has built the best product available in the DMS marketplace today, and in our minds, GM’s award to Quorum of the IDMS contract for North America validates this. We are at 155 dealerships today and there are 8,500 GM branded dealerships today in the North American marketplace. The marketplace has absolutely just opened up for us and we believe through this contract we have a clear path to become the third player, along with Reynolds and ADP in the DMS marketplace. A watermark for our potential growth is to extrapolate what we have already achieved in the GM Canada marketplace before IDMS. Quorum has a 17% market share of the GM Canadian dealers; with GM support behind us, is there any reason why we should not achieve a similar or greater market share throughout the North American GM dealership world, in a reasonably short amount of time? We believe we are a very high growth story with GM support behind us.”

CEOCFO: In closing, what are some of the other opportunities that have opened up for you?
Mr. Marks: “I’ve talked a lot about GM and IDMS, but this contract also gives us the opportunity to work with other manufacturers in the North American marketplace and specifically in the U.S. marketplace. There are a lot more dealer groups and multi-franchise dealers in the US, so you are going to see Quorum work with other OEMs and we are actually in the process of building out integration to DaimlerChrysler (DCX) which should be completed by the end of Q1. We plan to pilot some DCX stores in 2006 and be ready to market, sell, and install at full pace to DCX in 2007. We’ve got a lot of opportunities with other manufacturers to build out on this whole integration model as well. If you look at the entire North American marketplace, there are 25,000 dealerships, so it is a big market and we’ve got lots of room to grow.”


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“We believe that Quorum has built the best product available in the DMS marketplace today, and in our minds, GM’s award to Quorum of the IDMS contract for North America validates this. - Maury Marks


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