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CASE STUDY - Dealer Services Drives Business Forward with Business Intelligence

Commentary by Chris Brady, CIO, Dealer Services

Dealer Services Corporation (DSC) is America’s largest independent inventory finance provider for used automobiles and other dealer-sold products. Headquartered in Indiana, the company serves 9,000 customers from 75 branches.

In 2008, a sharp industry downturn forced dealers to shift from selling new cars to selling used ones. However, the flurry of loan activity this created put a major strain on DSC’s information systems, making it difficult for managers to predict the effects of changing market conditions.

DSC’s financing differs from typical credit. Each vehicle purchased represents a separate loan with its own terms, deadlines, and related details. This generates an enormous amount of data for the branches that oversee account management.

It’s a risky business model that requires close monitoring of DSC’s financial position, and that of its customers. Because it borrows the money it lends to dealers, DSC must carefully avoid extending too much credit.

“Our success depends on having accurate information from our field offices regarding our position with each dealer,” said Chris Brady, CIO. “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.”

Consolidating and Distributing Information

As the business grew, analysts were challenged to create consolidated reports with existing tools. DSC deployed the WebFOCUS business intelligence (BI) platform, which quickly became the standard for financial and operational reporting.

With WebFOCUS, DSC transforms enormous volumes of transaction data into leading and lagging indicators that enable better borrowing and lending decisions, and more accurate forecasting of dealer financial conditions. Additionally, staff across multiple departments can gain vital intelligence that allows them to better predict dealer revenues and more precisely evaluate each dealer’s credit worthiness.

Discerning Financial Patterns from Operational Intelligence

WebFOCUS Performance Management Framework (PMF) also allows managers to anticipate future trends by measuring performance against corporate goals. “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.”

PMF helps DSC forecast revenue based on expected loan volumes and create predictive models that anticipate future activity, such as when a dealer will pay off his vehicles or expand inventory.

An Accurate Gauge of Industry Trends

Thanks in part to WebFOCUS, DSC saw the downturn coming, giving managers time to adjust financial reserves, lending standards, and dealer inventory. Looking ahead with confidence mitigates risk for DSC and ensures customers are treated fairly when it comes to determining credit worthiness.

By continually monitoring key indicators, DSC can detect patterns in customer behavior and better predict what may happen next. For example, DSC might suggest a dealer auction off a portion of its inventory to avoid an impending financial crunch.

Using RStat for Statistical Analysis

DSC uses WebFOCUS RStat to create predictive models and deploy them as intuitive scoring applications that leverage regression decision trees, neural networks, and other common data mining routines. This gives managers a fuller picture of how their business is likely to behave, and helps them mitigate loan risk.

DSC’s field staff is constantly apprised of these metrics thanks to WebFOCUS Active Technologies, which consolidates multiple reports into a single view for easy analysis, and then makes them accessible via the Web or e-mail.

“It’s a good example of why we standardized on WebFOCUS in the first place,” Brady said. “The technology is comprehensive, well integrated, and easy to extend throughout our diverse operation.”

This article originally appeared in the issue of .

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