Ken Fife

In late 2001, Ken Fife faced the very real possibility that the software business he had spent more than a decade building was going to fail.

His company, Auto IT, develops software for managing automotive and agricultural machinery dealerships. It was on the verge of releasing a new version for Microsoft’s Windows operating system, but after several years in development, was running out of money.

“People had stopped buying the old product because they knew there was a new one coming,” Fife says. “We were struggling to pay our GST. Luckily we hadn’t raised the ire of the tax department, and they happily agreed to an arrangement. But there were some sleepless nights.”

But in a turn of good fortune a white knight emerged in the form of Esanda Finance. Esanda had announced its desire to partner with an automotive dealer software developer, and in late 2001 it agreed to purchase 25% of Auto IT for $1 million.

“We paid all our tax, we were slightly cashed up, and we finished launching out software,” Fife says. “Esanda were very good for us, because they cleaned up our due diligence, made sure that we were audited correctly, and put all sorts of good processes into the company.”

A change in management at Esanda three years later saw it break off the partnership, and Fife and his fellow shareholders bought back its stake for roughly what they had been paid.

Today, Auto IT employs 80 people, is sold in 10 countries, and will turn over around $12 million this year. But Fife has ambitious plans to transform the company into a $40 million business in just five years, thanks to an aggressive expansion of its international sales that will see it open in two new countries each year.

A key component of that plan is Auto IT’s relationship with the US agricultural machinery maker John Deere, which in 2003 approached Auto IT to replace its dealer systems in the US. John Deere was particularly impressed that Auto IT was a Windows-based system, showing that Fife’s gamble had paid off.

Today, Auto IT is John Deere’s preferred software supplier for its dealers around the world, enabling Auto IT to gain a foothold in markets and then start selling to other dealers. The software is being deployed in Spanish throughout John Deere dealers in Mexico, which Fife says is leading to opportunities in South America.

“Provided we foster that relationship and make sure that we keep our nose clean, it’s in their interest to get us into their dealerships,” he says.

A former farmer from New Zealand, Fife arrived in Australia in 1983 at the age of 40 with no real idea of what he wanted to do. He responded to a radio advertisement from the Control Data Institute to learn to be a computer salesperson, and through various career twists landed at an accounting company that owned a software system that eventually became Auto IT.

Fife upgraded the software from running on old-style mini computers onto a PC-based system, and from 1992 to 2000 he grew the client based from 14 car dealers to 200, as well as adding agricultural and trucking dealers. In 2000 the company merged with Sydney-based, rival Newmans Information Systems, and adopted the name Auto IT.

But today it is still only the second largest auto dealership software company in Australia with 20% of the market. That places it a long way behind the number one player, Reynolds and Reynolds, which commands around 70%.

Fife’s plan to tackle Reynolds and Reynolds is to offer new entirely new products and services for dealers, rather than competing on price and features. Auto IT will soon launch Dealer Spectrum, which will sell for a reduced price but will feature reporting and consulting service with web-based training that will help dealerships improve their performance.

“When we sell a system, the software is only a part of it, it’s mainly the processes that surround it,” Fife says.

The company is also creating a web portal so that dealer customers can perform functions such as booking in a car for a service.

Fife is one of five shareholders in the business, and is in no hurry to liquefy his shareholding, despite the ambitious targets. He says he has been careful to instil strong governance and ethics into the business as it embarks on its growth challenge. While an IPO was on the radar at the time of the merger in 2000, it is not a priority now.

“I now know that listing a company under $20 million is a road to nowhere,” Fife says. “When we get up to $20 million it’s something we might look at.

“The only way I know to make money is to be methodical, work very hard, keep your ethics fine, and for me it always takes 20 years to get there. I’ve always been a quiet risk taker.”