Like the rest of the Australian retail landscape, Melbourne-based Honda Motorcycles and Power Equipment is facing mounting pressure on its business from cheaper goods sourced from online overseas supplier. The solution? Take competitors on at their own game.

According to company’s senior IT manager, Craig Bassett, while Honda MPE’s after-sales market of market is merchandise, accessories and parts was an important revenue source for itself and its national network of dealers, an increasingly net-savvy customer base was making the most products that were priced closer to cost than retail.

“Everyone who tries to buy a product online checks eBay or other sites to see if they can get it for cheaper, then have it shipped over here,” Basset told Computerworld Australia. “That is affecting our market.”

“People can buy a Honda motorcycle part even from Honda America and get it shipped here for cheaper than what we would sell it at a dealership – that is affecting our business.”

There alternative, Bassett says is for the company to put a countermeasure in place: its own online sales site for Australian customers – expected to up and running around the end of 2012 and start by offering t-shirts, rider gear and other merchandise before moving into engine and vehicle parts.

“If we cut out dealer margin, and cut out freight maybe we can almost compete with overseas,” he says. “How competitive we can be will depend on the exchange rate and on the volumes people buy, so it is a bit of a gamble. Will it be profitable?”

And while Bassett concedes such a measure could risk angering the company’s network of dealer partners, Honda MPE is working to integrate the harsh economic realities of online retail with its existing bricks and mortar retailers.

“With an ecommerce platform we can see that if a customer buys online we can have it delivered to the dealership and the customer then picks it up and also looks at the newest bike or something, or we can pay the dealer some margin or a fee as a commission-type thing,” he says.

Bassett says the company is currently assessing an in-house option — one favoured by his keen-to-build IT team versus a Cloud-based solution sourced either locally or through the US — currently his preferred option.

“Honda has given us a direction: where possible outsource or go cloud-based. So we are looking at e-commerce as our next business initiative,” he says. “So, do we go and develop and eCommerce platform ourselves or go to a Cloud provider who can tailor and configure are system for us.

“If we develop ourselves there is a high risk something goes wrong or we can go with someone who has done it 50 times before.”

Cloud-based eCommerce platforms aren’t the only thing occupying Bassett’s time. On top of recently partnering with Nimsoft for real-time monitoring of its infrastructure, the IT manager says he’s also looking toward the next three years during which Honda Japan is expected to begin pushing out its SAP-based private cloud to its subsidiaries – including Honda MPE.

Bassett says one of the first deployments to take place when the Cloud descends from on high is a replacement of the company’s 30-year-old IBM mainframe-based ERP system with SAP’s finance module. That Honda Japan is desirous of setting SAP as its global standard finance platform is an added incentive.

However, Bassett says that until the Honda private Cloud comes to Australia it is difficult to assess whether moving more of Honda MPE’s systems – and in some cases migrating from existing Cloud providers such as Salesforce – is the way to go.

While the Honda Cloud may also make a lot of sense when looked at from an infrastructure and software cost-saving perspectives, taking such an approach could have hidden costs.

“Implementing SAP for a small company is a large exercise – it is probably an 18 month exercise,” he says. “It is an evolving step for us as the skills change the need to partner with different providers is going to increase.

“We have a very settled environment now but if the company decides to go SAP where do we get the skills from? They will probably come from Japan; we will ship them over and do an express install.”

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