NADA Special: Removing Silos Through Data Standards

Greg Uland Hi, I'm Greg Uland with Reynolds and Reynolds. Today I get to talk with Rafael Maldonado, who's the outgoing chairman of the Standards for Technology and Automotive Retail, or the STAR organization. I'm really excited about this one. It'll be something where we can all learn a little bit. Rafael, thanks so much for joining.

Rafael Maldonado Thank you for having me.

Greg Uland Absolutely. So why don't you start maybe just give everybody and myself included, a good thorough definition of what the STAR organization's purpose is and what the organization does in practice.

Rafael Maldonado Absolutely. So the STAR organization, the goal is really to develop a set of open standards that can underpin the safe and secure transfer of data to enable the next generation of automotive and retail. And that's basically what we're trying to do. And we want to do these in a global fashion.

Greg Uland Okay. So take it a little bit deeper. Just kind of next level, does that mean working with essentially technology vendors and OEMs? What parties are involved in that conversation to make that happen?

Rafael Maldonado So basically, we need the whole ecosystem involved if we're going to be successful in getting the standards enforced and also adopted. We need the whole ecosystem there. So we have OEMs. Most of the OEMs are actually members. We have the great DMS companies such as Reynolds and others are also members. And we also have other technology vendors that are also there. Finally, the dealers are also having a place at the table with us as well through the dealer advisory committee that we put together a few years back.

Greg Uland Great. So what does that conversation look like? What input are you getting from dealers? What are you asking for and what are you getting and what does that communication channel look like?

Rafael Maldonado The dealers are very important because they're impacted by the lack of standards. So what they're doing is basically telling us what is important because they are the ones on Main Street, right? They are in the front line. So they're telling us these are the paint points. These are the areas that we need to be working on. So they help us prioritize the type of standards that we work.

Greg Uland That's great. So good understanding, at least of the organization. Can we maybe back up a little bit and talk about you? So you have a pretty unique history as well. I suppose we all do. But talk about your path to where you are today. Moving into this role as chairman of STAR, what's led you to that area that you're in?

Rafael Maldonado Yeah, the process began by me being the former CEO of NADA. So I spent about ten years with the association. And as part of that, I began to become involved with the STAR organization. And three years ago, right before the pandemic hit, I became the chairman. So now I am actually moving on and I'll probably have a different role with the organization. But I think three years is good enough. We need fresh leadership. And so we're excited for the next chapter of the organization. Before that, I had a global role in an energy generation company. And before that I did some consulting and ten years in the Army as a veteran and ended up at the Pentagon as my last duty station. And that brought me to where I am from in Washington, DC.

Greg Uland That's great. Well, thank you for your service. Definitely appreciate it. So now that you're in automotive, I'm curious, do you think you'll ever leave?

Rafael Maldonado It's a very interesting industry. And the most interesting part of it is that it's ready for the next chapter, the disruption, the enabling. There's other industries that are more mature when it comes to standards. But the excitement and the industry as a whole is an amazing industry.

Greg Uland It is. So talk about standards in general and you mentioned other industries being ahead. What does that look like in other industries? What can it look like in automotive retail or really the automotive ecosystem in general? And why does it matter? Why is it so important to have those standards?

Rafael Maldonado Yeah, so I give you a couple of examples. One is the HL7 organization. The HL7 organization was put together to come up with standards for the health care industry. Another example. The other one is the financial industry. You have the finance data, financial data exchange. They also have come up with some standards to secure financial transactions. And we're surrounded by standards in our lives.

Greg Uland Absolutely.

Rafael Maldonado They give you two examples. The Bluetooth standard, that is a standard. So imagine a world where we have this excellent technology called Bluetooth, but everyone decides to build their own antenna. So now we have a great standard, but everybody has their own antenna, so no devices can connect with others. They would be useless. That's exactly what we have in the automotive industry. So what we're trying to do is start is let's come together, let's agree on the standards, and let's implement that and then differentiate with what you do with the data once you have it.

Greg Uland Yeah, that's a great way to look at it. So how have you seen companies take care of that and implement things that will benefit the dealer body or the manufacturers or somebody in the ecosystem? An entity in the ecosystem. Have you seen that implemented to date?

Rafael Maldonado Yeah, we have. Hopefully in the next few days we'll be releasing some standards to the industry, but we have OEMs and DMS companies working and using these standards already because the way that we develop the standards is that we put together these subcommittees and they start working on their environment's testing and then actually put it into production. So we have several major OEMs as well as several major DMS companies that are already using these standards that we're getting ready to publish to the industry. And they are open standards so anyone can use it. So that's important.

Greg Uland It is, yeah. And I'm interested from your perspective, how this collaboration has happened and how it's evolved. So for us as a company, we've really put a focus in the last couple of years on being a better industry partner, right? And growing our relationships inside of the industry. We were talking before we started recording about Sean Leibold, who's our director of industry relations, and just trying to be a bigger part of the industry and create this environment where we can all collaborate to move forward at a faster pace. So it's been a big focus for us and I know what we've been doing. I'm curious what you've seen work. Trying to get all these different parties with different interests in some instances on the same page and working towards the same goal.

Rafael Maldonado It's been very interesting because when I started getting involved, when I was a CIO at NADA and began to get involved with STAR. I'll be honest with you, I did not see the desire for collaboration at the time, right? It was more that most people were skeptical. They didn't want to sit at the table. But I have seen a significant shift in the industry towards collaboration. So people are realizing that if we're going to really deliver the customer experience of the future right, we have to collaborate. So people are calling out the table, they're working together, they're trying to come up with standards that will work for all and then compete. I call it the frenemies concept, right? We collaborate where we can and then we compete and may the best one win; the best solution win. But we're not different. Sometimes we try to differentiate on plumbing. Yeah, and let's agree on the plumbing and then let's differentiate on what we do with the water once we have done well.

Greg Uland I think a fairly decent example, or at least somewhat analogy maybe is in the world of eContracting and funding. So you think about all of the players that are involved in the process of handling that contract, right? You have the dealer, certainly you have a software provider or seven in some cases, depending on the flow of that deal. You have a RouteOne or a Dealertrack. You have any number of lenders that any dealer might work with. Everybody's working with a pretty large number of lenders. You have the state associations and you have regulatory organizations at the state level, at the county level all over the country, and trying to make it something that's a reality. Because at the end of the day, when you think about eContracting in this example, it's good for everybody, it's good for the consumer. They get a fast and easy deal process. It's good for the lender, there's less risk, it takes different people, it takes less time and it's good for the dealer. They get cash in bank faster. So there's wins all the way around. But how do you collaborate to make that happen?

Rafael Maldonado And that's an excellent point, because when we talk about standards, everybody wins, right? So when you look at it from the OEM perspective, right now, they have an environment that is extremely complex because when they integrate with their partners, they might be doing this a hundred different times, right? Imagine a world where they can do it one standard, 100 different times. That's a total shift. And you remove the complexity of the environment. So making it much easier to operate and much easier to secure, which is extremely important. And I strongly believe that we will not be able to meet the demands of the regulatory and privacy environments coming down the pipe. Without standard, it would be virtually impossible to do that because it's just too complex. Because as the data moves from one vendor to another to another, you may be secure, but what happens when the data goes downstream? What's happening there? But if we have a set of standards across the board, then it's a lot easier to secure. It's much easier.

Greg Uland That's a good point. That's a good angle to view it through, a lens to view it through. When you think about security, because that is an issue. But it's both from a compliance perspective, certainly. You mentioned regulations. Amendments to the safeguards rule coming in June. That's a certainly a concern from a compliance perspective. But beyond just compliance and complying with the law and the regulations, you also have that responsibility of protecting the information rights.

Rafael Maldonado Absolutely. It's security.

Greg Uland It's not just about checking the boxes. It's about ensuring that data and that information is safe, secure, protected from any hand off that happens.

Rafael Maldonado Yeah. And if you have a lack of standards, that makes it much more difficult to actually secure the environment just by the pure complexity that you have. So removing complexity actually increases the security posture of all of the organizations in the ecosystem, whether it's an OEM, a vendor, DMS vendor, or a dealer.

Greg Uland Yeah, you're right. So you mentioned OEMs a couple of times, and I don't know if this path is going to go anywhere. So if it doesn't, I'll want to shift gears, but one of the things that I'm interested in outside of the retail world is a car manufacturer and what they're building in the car, but there's so much tech in the car from the interface with the driver and the passengers to everything else that connects to the manufacturer, it connects to the dealer. There's all these pieces that are becoming electronic and they're becoming connected. And when you think about that and you think about external entrants into the dash. So Apple's a great example right now. They're trying to expand what they're doing with CarPlay. Have you had any conversations or do you see any progress where manufacturers may streamline that in-car experience and the technology there to make it more accessible as well?

Rafael Maldonado Yeah, I believe it should be looked at and also streamlined. I think everything begins with the customer experience.

Greg Uland It does.

Rafael Maldonado And so we need to ensure what is that customer experience that we want to deliver and want, and we need to ensure that we have security and privacy across the whole stream of transactions and also ensure that is standardized. Because if we can standardize, we can apply the proper security and the proper privacy rules to the data. STAR sees our role, potentially in the future, to play in that area, the area of telematics and all the other things that are going on. Because if you think about it, the car today is really a computer that provides transportation systems. And is going to provide much more services as the things that are going on inside the car expand. So there might be a role to play for the STAR organization when it comes to those standards in the future. But I'll be honest with you, we have so much to do right now. Just on the data side, just to protect the data that is at the dealership. I think our focus needs to be there because having no standards create silos at the dealership that actually goes against delivering a good customer experience. So you may have a situation today where your DMS potentially is not talking to your service system, a scheduling system. And I bought a car from you today, a month later or three months later, I go to get service and you don't know who I am. A lot of that is because there's no standards and all the systems are siloed and it's costly to integrate systems with. With STAR, we remove some of that complexity, we remove the cost. So the experience is possible regardless of vendor.

Greg Uland Well, and when you think about that and you take it to the next level right in that information moving from piece of software to piece of software to piece of software. In today's world, even with integration, you're still forced at the dealership level to have somebody at a minimum checking the information that's being transferred between systems to ensure that it's accurate. Something's not typed in incorrectly. Be at a maximum, you're rekeying the entire set of information. So finding a way to streamline that process and make it a single system, or at least a single environment, can really have a major impact at the retail level.

Rafael Maldonado Absolutely. And selecting what your system of record is and then ensuring that system can be the source system that then you can do integrations with and put the information in once and then use it many. And enable through providing secure integrations.

Greg Uland 100%. So thinking about all this stuff how involved historically and maybe going forward, do you see the dealer body being? You came from NADA, obviously a very prominent organization in our industry, probably the most prominent organization in our industry. And virtually all of the dealer body is as a member of NADA. So how do you see the dealer body influencing STAR, getting involved in STAR and having input there?

Rafael Maldonado Well, I believe that the dealer in the past has not been that involved. But give us a little bit of a history. STAR was started by a former CEO of NADA because back then he saw the need for standards and that's over 15 years ago. So the dealers at that time were very involved. But that changed with time. Now he's changing back. So now we created, I believe it was a year ago, a dealer advisory subcommittee, and we have several dealers in there giving us input. And this year now we have dealers that are going to be part of our steering committee. So that is changing. And dealers are becoming very sophisticated because if you're not, as a dealer today, you become a risk to your own business. And so you see dealers that are extremely savvy as to what needs to happen in the technology environment to be able to be compliant, to be secure, to take care of the data and the privacy and so on, and deliver the customer experience that they want to deliver to their customers. So that is changing and that is a positive outcome because we have the dealers at the table because ultimately they're the ones that are getting hurt the most by their lack of standards. And their customers. So as one important thing is that they need to continue to get educated on the issues that are surfacing because of the lack of standards, the issue that they suffer, and make that connection. And I think when dealers, and it's starting to happen, when dealers make that connection, they're going to become very active in this process.

Greg Uland So how do dealers get involved? Where do they go? How do they reach out?

Rafael Maldonado Go to our website. They can contact me directly. They can go through NADA because NADA is a member of STAR. And a member for years. So they can contact actually Dan Roddy at NADA or they can contact me directly. Or the website. STAR website. 

Greg Uland Perfect. All right. So we kind of went all over the place a little. But what haven't we talked about that we should? Anything else you want to touch on before we go?

Rafael Maldonado I want to make the point again that if we are to tackle the regulatory, cybersecurity, and privacy challenges that are coming as soon as June this year, we have to have standards. It is extremely difficult not to do that or be able to do that with our standards. So I encourage everyone, if you don't know about STAR, please reach out. Will love to talk to you and talk to you about a value proposition, whether you're a DMS technology vendor, a dealer, or an OEM.

Greg Uland [00:19:08] Absolutely. All right. Well, thank you very much for taking the time. I hope you have a great show. Great weekend. I'm sure we'll talk soon.