Businessmodel of CDK Global

Customer Segments

CDK Global provides technology and digital marketing solutions to clients operating across the automotive retail chain, primarily comprising major original equipment manufacturers and their associated retail franchises. The Company categorises its clients across the US and abroad as:

• Automotive Retailers, comprising franchised automotive retail groups, original equipment manufacturer-owned retail locations, and independent used car retailers, to which the company provides technology solutions and digital marketing services;
• Original Equipment Manufacturers, to which the Company provides data management, business intelligence, benchmarking, and dealership management systems integration services; and
• Other Application, Service and Information Providers, to which it provides tools, resources and integration solutions. The majority of CDK Global’s business in conducted in the US and Canada. The Company also serves customers across Europe, the Middle East, Asia, Africa, and Latin America.

Value Propositions

CDK Global provides value to its customers in the following ways:

• Its established brand name and market reputation, being the largest and most established global provider of automotive retail technology solutions;
• The quality and reliability of its solutions, developed by a team of expert personnel supported by market-leading technology partners;
• The reach of its global sales network, having the widest geographic reach in the automotive retail solutions market; and
• The provision of complementary services, supporting its technology solutions with digital marketing services. ### Channels

CDK Global operates a website as www.cdkglobal.com, through which customers are able to find information on the Company’s services and solutions. CDK Global also operates an online store, which allows customers to purchase certain technology solutions, as well as third-party hardware products.

CDK Global additionally operates its own direct sales force, with teams allocated across the Company’s various operating jurisdictions. The Company has a team assigned to specifically establish relationship with original equipment manufacturers to which it markets and sells CDK Global solutions. It also operates separate team that focuses on making sales to automotive retailers.

While the majority of the CDK Global’s sales are made by its own in-house salespeople, in some cases the Company also markets its solutions through third-party channel partners.

Customer Relationships

Many of CDK Global’s products, solutions and services can be accessed on a self-service basis through the Company’s online store. This requires no interaction with CDK Global representatives, with customers able to manage accounts and purchases autonomously.

The majority of CDK Global’s sales are made directly, with customers consulting with the members of the Company’s sales teams over a period of time in order to receive a service tailored to their individual needs.

CDK Global continues to provide technical support and learning services to its customers after sales have been made. This includes personal support through web chat and telephone services, and online resources such as guides and tutorials, as well as training services.

Customers are also able to interact with CDK Global through its social media accounts with Twitter, Facebook, YouTube and LinkedIn, and the Company provides details of its upcoming events so that customers are able to interact with the Company in person.

Key Activities

CDK Global is a provider of integrated technology and digital marketing solutions to customers operating within the automotive retail industry.

The Company operates two principal business groups: the Automotive Retail Group, including operations across North America and internationally, comprising the development and provision of solutions designed to automate customer workflow processes, and manage financing, insurance, parts supply, and repair and maintenance of vehicles; and the Digital Marketing Group, comprising digital marketing strategy services, online advertising, and website design and operations.

CDK Global operates principally in North America, but provides services to customers across Europe, Africa, Asia and Latin America.

Key Partners

CDK Global collaborates with a range of companies throughout the process of developing, marketing and selling its solutions. The Company’s most significant partners are technology companies that help it to develop effective and efficient technology solutions. These technology companies comprise:

• Software and Application Developers, that help to develop the Company’s software-based solutions;
• Integration Partners, which assist the Company in integrating third-party functionality into CDK Global products; and
• Strategic Alliance Partners, which share tools and resources with the Company, and collaborate with CDK Global on joint-venture projects. CDK Global has a number of high-profile partners, including Bull, Cisco, Citrix, Dell, Nortel, Red Hat, Microsoft and Lexmark. The Company is also listed as one of Yahoo’s preferred partners.

Key Resources

CDK Global’s key resources are its technology and solutions, its IT infrastructure, its sales channels, its partnerships, and its personnel. Searches of record published by the US Patent and Trademark Office identified no patent applications filed in CDK Global’s name.

The Company does, however, own a number of patents that were assigned to it prior to it being spun-off from ADP.

Cost Structure

CDK Global incurs costs in relation to the development of its products and solutions, the maintenance of its IT infrastructure, the contracting of third party service providers, the management of its sales networks and partnerships, and the retention of its personnel.

As of 30th June 2015, CDK Global employed a global workforce of 8,900 full-time employees, accruing costs in the form of salaries and benefits. It also operates an international network of offices, representing costs in the form of rent and utilities.

Revenue Streams

CDK Global generates revenue through the development and sale of various technology solutions to customers across the automotive industry, and the provision of digital marketing services. The Company categorises its revenue streams as follows:

• Bundled sales of Dealer Management Systems and integrated solutions, comprising revenue from product installation fess, monthly fees for software licenses, ongoing software support and maintenance services, and revenue generated from other integrated solutions hosted by the Company or installed on-site;
• Transactional revenues, comprising revenue generated on a fee per transaction processed basis in relation to the Company’s solutions that help auto retailers process credit reports, vehicle registrations, data updates, and internet sales leads; and
• Digital Marketing services, comprising revenue from the placement of advertising for clients and provision of websites and related marketing services. In 2015 CDK Global generated $2.06 billion, up on the $1.98 billion recorded by the Company in 2014. The vast majority of the Company’s revenue is generated by its Automotive North America segment, which accounted for $1.34 billion of CDK Global’s 2015 revenue. Automotive Retail International and Digital Marketing accounted for #346.2 million and $414,1 million respectively.