BodyShop Business recently spoke with AudaExplore about some of their latest product offerings and how those products are targeting trends in the collision repair industry.
In the discussion with Gordon Henderson, vice president of collision repair solutions for AudaExplore, many hot topics concerning the world of estimating came up from data sharing to predictive analytics to mobile technology.
BodyShop Business: Regarding the recent launch of your MSO-specific BMS, why are you focusing on the MSO segment of the collision repair market?
Gordon Henderson: There are several reasons we’re adding focus to MSOs. First, we’ve looked at the marketplace, and in a large way, we believe the MSOs are underserved because most of the solutions being created by the vendors in the space are typically focused on single shops’ operations because there are so many thousands of them.
Second, the expansion of MSOs is accelerating. At the halfway point this year, MSOs have already expanded their location count by the same number of stores as they did the last calendar year. Private and public investment is fueling that growth, and there appears to be no end in sight.
The third reason we’re adding focus on MSOs is the insurance companies clearly see them as key partners in their business. MSOs process somewhere around 35 to 40 percent of the DRP transactions in the marketplace, yet they only represent 12 to 13 percent of the total shop location count. Insurance claims, like our repair business, are very important to us, so we can also help insurance companies by helping their strategic partners, the MSOs. But we never lose sight of the fact that having a strong network of quality, geographically diverse single-shop operators is always critical to our success and the success of our partners.
BSB: It seems like you no longer want to just be an estimating system because you’re coming out with a lot of products geared toward being a full solution provider. Is this true?
GH: We’ve never been just an ‘estimating’ company, bur rather a solutions company for the repair industry. As the needs and challenges of our industry change, we want to provide clearly differentiated and value-generating solutions and have them all be fully integrated. But honestly, we see very interesting trends happening in estimating. We believe there will be a day where we’ll see a disruptive shift in how we estimate auto physical damage, so we’re building the next generation of estimating. Frankly, we’re working to put ourselves out of part of our traditional business in a way and come up with the next step in estimating. We think data is a big part of the coming disruption, and we’re investing substantially in that area. You’ll see a lot more news coming in the next six months or so around what we’re doing with data. But data is what we see in terms of predictive analytics and similar technologies that will really kind of change how we estimate auto physical damage. It will look a lot different in five to 10 years.
BSB: Speaking of data, are you familiar with repairers’ concerns over data sharing when they upload estimates to insurers and their push for BMS vs. EMS? What is AudaExplore’s stance on that issue?
GH: EMS and BMS are very different. EMS has been around a long time and is based on a DBASE4 file format, which is clunky. When you export data with this format, you get everything that the software exporting data has available in the file, so it’s not very flexible. The BMS format allows for a lot more flexibility, but you still have to have partners who both talk that same language and agree on what pieces of data will be sent and received.
The issue of BMS vs. EMS has been a little oversimplified in the market. To say if you just use BMS, everything will be fine is not really true. With BMS, you can send everything too. It’s all up to the software design that does the exporting in terms of what it includes.
And the challenges are big there. We conduct BMS transactions all the time. Most of the back-end integrations we do are BMS. We definitely are in support of CIECA and the BMS standard, we just need to see more adoption in the industry. Until we have more partners who are willing to trade it directly out of the estimating system and then give them control over that output, we won’t see a lot of movement.
The other thing about data is it’s not necessarily about what we can extract from the shop in terms of anything about the vehicle owner or rates, which I think is a lot of what shops are concerned about, especially that they’re being judged and forced to participate in a DRP to accept certain rates, and it’s all coming from EMS data. That’s not at all what we’re talking about. Our licensing agreements clearly state the terms and limitations we impose on ourselves on this issue. What we’re talking about is taking a look at patterns in repairs. When you replace this fender, let’s take a look at all the other parts around that fender to help guide appraisers to determine whether repair or replace is the right option.
BSB: In regard to your Driver Experience solutions, what is your sense of where the market is heading with mobile technology?
GH: Our assessment is that mobile technology is exploding. Generation Y leads the pack in terms of the adoption of mobile and social technologies, but the other generations follow right behind. In fact, the boomers and silent generation are the highest growth area of smart phone usage certainly at a lower take rate then Generation Y or X, but they’re increasing very rapidly.
We’ve had the Driver Experience platform solution in use with the AutoWatch app for several years now, and the majority of shops on that program use the mobile app. The reason is because most estimators’, shop managers’ and body techs’ phones are sitting right in their pocket or next to the tool box, so they already have them handy and it’s more convenient for them to operate programs like that from a mobile device. We’re still very much in the growth stage. Shops have sometimes been a little slow to adopt some of these technologies, but we’re seeing exploding growth in this area.
BSB: Is the collision industry embracing this technology? What is your sense of how these new products are being received by the industry?
GH: I think there’s a significant segment of the shop population that’s realizing they have to adapt or they’ll be left on the sidelines. As you look at the consolidation happening in the market and the growth in DRP networks and the increasing complexity of vehicles with substantially higher amounts of aluminum and other complex materials, shops are going to have to make significant investments and shifts in how they do business in order to survive.
Vehicle complexity continues to evolve and grow. It’s a lot more challenging to bring someone on board and train them to do a good estimate and quality repair, so if shops aren’t willing to leverage technology to help them do their job more efficiently and with higher quality, they’ll be on the sidelines. And I think more and more shops are realizing that. We are seeing the adoption of newer technologies growing. It’s human nature to be reluctant to change, and that’s probably true in most industries, but we’re starting to see the disruption happen; it started happening several years ago. But new technology shouldn’t be adopted by shops because it’s cool or neat, it should be adopted because it’s adding leverage in their business to let them do repairs faster, with higher quality, more accurate, and, at the end of the day, have higher customer satisfaction what we at AudaExplore call winning the ‘Era of Disruption.’