Quorum Information Technologies Inc. (TSX V: QIS)
November 17, 2005 Interview with: Maury Marks, President and CEO
Business News, Financial News, Stocks, Money & Investment Ideas, CEO Interview
and Information on their
DISTRIBUTOR™, a Windows and Web solution, and XSELLERATOR™, a dealership management software program, which combine to form a Dealership and Customer Relationship Management System (DMS) for the automotive dealership market.

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Quorum Information Technologies Inc. is bringing an incredible new value equation to auto manufacturers and their dealerships through their DMS XSELLERATOR™ product

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Auto Dealership Mgmt. Software

Quorum Information Technologies Inc.

Suite 200, 6715-8 Street N.E.
Calgary, AB, T2E 7H7
Telephone: 403 777 0035 Ext: 110

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Maury Marks
President and CEO

Interview conducted by:
Lynn Fosse, Senior Editor
November 17, 2005

Mr. Marks grew up in an automotive dealership environment working in his family’s business for many years. He went on to pursue higher education and received a Bachelor of Management (with Distinction) from the University of Lethbridge in 1988.  In 1991, Mr. Marks received his Chartered Accountant’s designation after articling with Deloitte and Touche in Calgary.

Mr. Marks continued to work with Deloitte and Touche in the Management Consulting group in the systems development area, building world-class ERP solutions for clients.  From 1992 to 1995, Mr. Marks left Deloitte Touche to begin consulting on computer development, implementation, and system selection projects for various clients.  Since 1996, Mr. Marks has devoted all his time to building Quorum Information Technologies Inc., and XSellerator, its proprietary software product for the automotive dealership market.

Company Profile:
Quorum is a North American company with a primary focus on developing, marketing, implementing and supporting proprietary software products for the automotive retail vertical. Its key products are DISTRIBUTOR™, a Windows and Web based network solution, and XSELLERATOR™, a dealership management software program which combines to form a Dealership and Customer Relationship Management System (DMS) for the North American automotive dealership market. What makes this software so exciting and different from the competition is its current technology. The same Windows-based technology used by every other industry is finally available for automotive dealerships. XSELLERATOR isn't just a management system; it's a more efficient, productive and profitable way for dealerships to do business.

Currently, Quorum has 16% of the GM dealership market in Canada, making it the 3rd largest Dealership System Provider for GM in Canada. The Company has grown rapidly in the past five years, expanding from 15 new customers in 2000 to 145 new dealership customers across North America to date. Quorum has been recognized by the Deloitte & Touche Technology Fast 500 as one of the fastest growing technology companies in North America.

Quorum's success comes from developing, marketing, implementing and supporting the best DMS System, products and services for automotive dealerships, and from their commitment to total customer satisfaction. Quorum has expertise in all aspects of Dealership and Customer Relationship Management, and employs the best people in the business to deliver it.

CEOCFOinterviews.: Mr. Marks, how has your GM Certification helped in the US side of Quorum?
Mr. Marks: “We have generated lots of activity and interest in the U.S. and we are just starting to develop awareness around our brand name. The U.S. market has huge potential for us and is currently dominated by two big players, Automatic Data Processing, Inc., ADP (NYSE: ADP), and Reynolds & Reynolds (NYSE: REY). Both are billion dollar per year run rate companies which control 75% of the overall marketplace. Therefore, building market awareness is critical to our future success. When we mention to dealerships that Quorum has made it through the certification process with General Motors Corporation (NYSE: GM), their perspective is, ‘Wow, that must have been a mountain to climb.’ Well it was. We are very focused on building awareness into the marketplace in specific regions and building excitement around that. So that is step one, but probably more exciting for us is the work that we have been doing with GM U.S. and working on positioning ourselves as being a big market player with GM U.S. support - that has consumed a huge amount of our time.”

CEOCFO: Can you elaborate on what is involved?
Mr. Marks: “I don’t know that I can talk directly about that, given that I’m under non-disclosure agreements, but I can talk around the peripheral of it. If you look at what we are doing in Canada, we are GM Canada’s integration partner and that has been our absolute focus. It is one of the major reasons that we are now the third largest provider, next to ADP and Reynolds, in the Canadian marketplace. We have garnered success by partnering with the OEM, and together we have built the business-to-business integration model between the manufacturer and the dealership that is the clear leader in the industry. There is an enormous opportunity from a business-to-business integration perspective in automotive retail to build integration links back and forth between the manufacturers and their point of sale retail outlets to streamline the whole retail operation. Further, all the stakeholders realize this; the dealers understand this, the manufacturers understand this; it is just that nobody has come in and been the catalyst to build these pieces. And, Reynolds and ADP have proven they are unwilling or incapable of bringing it to the industry. Therefore, we have to take this integration model and the great relationship we have built with GM Canada and export it South of the 49th parallel to Detroit. We are excited about the possibility of working with General Motors Corporation and we are also in discussions with other OEM’s. We have gained a solid foot-hold in the marketplace with our U.S. based customers, evidenced by what we have built and rolled out to them.”

CEOCFO: Where do you stand now in the number of dealerships using your XSELLERATOR™?
Mr. Marks: “We now service and support over 145 dealerships across North America, and we are continuing to bring on individual dealerships. However, to gain real traction in the marketplace we believe a much more efficient way would be to negotiate a deal at the manufacturer level and have the market awareness push down from the manufacturer level.”

CEOCFO: Focusing on the highpoints, why should dealerships and GM want to use the XSELLERATOR™?
Mr. Marks: “As mentioned previously, from the dealers’ side, we compete against two large organizations, ADP and Reynolds & Reynolds, both of whom deliver 15 year old technology and are widely known in the marketplace. In the past both have tried to bring a variation of next generation windows based applications to the marketplace and both have either shelved or written off the applications. Reynolds & Reynolds just announced the write-off of over $90 million from shelving their “next generation” product.  The incumbents cannot seem to get things done technologically, but we also believe it is a cultural chasm they cannot cross. We bring an entirely new model to the dealerships; it is new technology and an integrated system where all departments work together, be it sales, service, parts or accounting. We take a customer relations focus instead of a departmental silo based focus by orienting the dealers around their customers and imbedding CRM within our product. Hence, we bring a whole new level of excitement in terms of how they can do business; more efficiently, with more customer focus - this is a big change for them.”

CEOCFO: Is every dealership ready for this?
Mr. Marks: “No they are not and for some dealerships it can take a fair bit of time before they actually realize the benefit. Some dealerships get it right away. These dealerships have been looking for the tools that will allow them to be more customer centric. The automotive industry is very competitive; to be successful dealerships are finding that they must move in this direction to survive.  In addition, we see our customers as more than just customers; we see them as partners who are helping to shape the future and direction of our XSELLERATOR product. We are continually modifying our software and building and releasing new versions with the dealership’s ideas added in.  In our view, XSELLERATOR is the DMS software by the dealerships for dealerships.”

CEOCFO: Do customers have to pay for the new versions?
Mr. Marks: “Like all DMS software, Dealerships pay for monthly support and maintenance. However, unlike our main competitors, new versions of XSellerator are included in the support payments that our customers make. All our customers are on the same version of the software, which not only benefits them, but it benefits us by allowing us to be more efficient and effective in the way we support the software.  As a result, we are able to bring all of this to our customers for less than what they have been paying to ADP or Reynolds and Reynolds - we bring considerable value to the equation. In addition, what we’ve also added to our value equation is the most advanced integration through to the manufacturer. Over the last two years, we have built 7 different integration points between us and GM Canada that they have never had before. Let me give you some tangible examples. One example is Electronic Vehicle Invoicing - we have built integration between the invoice that the dealership gets for each car that lands in their lot, so that it is automatically dropped into their dealership environment from the manufacturer, and they now have that electronic copy in front of the sales manager at any point-in-time. Therefore, if the consumer wants to see the options they can flip the screen around and say, ‘hey, here they are’. This is because the dealership has all of the information downloaded into their XSELLERATOR system. Another example is Vehicle Delivery Reporting. If a customer orders a vehicle at the dealership and they want to know where it is, Quorum has built the integration through to the GM order bank so that the dealership knows where all of the cars that have been special ordered for customers are at any point-in-time.

A further example is GM Lead Integration. If, for example, a customer goes to a GM car show, and leaves their name, Quorum has built the functionality to electronically integrate the lead that comes from GM in to the XSELLERATOR system at the dealership. Dealerships now can track and manage these leads electronically and report back results to the manufacturer.  Dealerships that do this effectively convert more leads into sales, which is what both the dealership and the manufacturer want. These are only a few of the examples of some of the business-to-business integration points that we have built. They are very helpful to the dealerships, but the manufacturer also benefits because the paper chase that used to go on between the manufacturer and the dealership is eliminated. This reduces errors and transaction costs, but more importantly can increase conversions and sales.

We are currently working on a project with GM Canada, which will take integration to a new level. When completed this integration will enable both the dealership’s customer data and the manufacturer’s stored customer data to be automatically verified and updated against each other, in real-time, each time a customer is touched by either the dealership or the manufacturer. This would facilitate effective marketing by the manufacturer to an individual customer, and would assist the dealership in knowing exactly what is going on with that customer for follow up purposes. Together the dealer and the manufacturer will be able to take a coordinated, targeted approach to the marketplace, instead of the very expensive shotgun approach, which is what is going on today. I could go on for an hour on this topic alone; we are bringing so many efficiencies to both the dealerships and the manufacturers. Further, it is not only efficiencies, but we offer a whole new way of doing business by being customer centric. It is really exciting and we strongly believe in what we are building.”

CEOCFO: Has the auto industry finally realized the need to be customer centric?
Mr. Marks: “I think that if you went to the manufacturers and asked them they would admit that they know it in their bones and if you went to the dealers they also know it in their bones. However, not everyone will be ready to make the change - those who do will be the winners in this very competitive business. Quorum’s XSELLERATOR product is poised to make it happen for them. Looking back a few years ago, there was considerable news discussing how the manufacturers were investing hundreds of millions of dollars in technology to make the supply side of their business more efficient. GM, Toyota Motor Corporation (NYSE: TM), DaimlerChrysler (NYSE: DCX) or Ford Motor Company (NYSE: F) naturally focused on the costs of production first.  Now their focus is ‘How do we make the retail chain more efficient and customer centric?’ The manufacturers, and in particular GM, have taken ownership of this issue and are working with their dealers to figure out the best solutions.  We believe Quorum can play a large role in what they are ultimately trying to achieve. That being said, it will be more difficult to implement change on the retail side because the dealers are independent entrepreneurs who do things their own way. So yes, the manufacturers have a lot of influence, but the choice of DMS software is the dealership’s to make.”

CEOCFO: On the other hand, if you have a system that will save them time and make them money, they should sit-up and pay attention.
Mr. Marks: “Absolutely, and what we are selling works very well for those who appreciate its extensive and revolutionary capabilities. We have a current customer base of over 100 former ADP and Reynolds customers who would never go back! We bring an incredible value equation through to the dealership, as everyone has been on these old antiquated systems for years, but converting the masses one dealership at a time is a slow process. This is why we believe our best strategy is to focus on the manufacturers and, with their help, try to bring the paradigm shift to the industry – we will gain some real momentum from that. We think that we are pursuing a really good strategy, working on the manufacturer side of the equation, which will eventually pay-off, and we hope to have some exciting news to announce early in the New Year (2006).”

CEOCFO: Tell us about the current financial picture of Quorum.
Mr. Marks: “We continue to invest capital in both our product and our company to prepare ourselves for some larger transactions which we believe will drive many more customers to XSELLERATOR. As such, we currently are burning cash, but at a rate we have anticipated and can manage as we get to where we need to go. We have access to additional sources of capital as needed and our current investor base is a very patient and committed group. In fact, many of our shareholders are our dealer customers; roughly 20% of our shares are held by that group. This confirms that we have a product out in the marketplace that really works. Interestingly, the largest group of shareholders come from our board of directors or insiders, and other business associates. This group owns over 50% of our stock. To date we have not made a concerted effort on the IR (Investor Relations) side; our focus has been on executing our business plan and we have been pursuing some larger deals. Upon execution, we are poised to raise significant new capital and considerably broaden our shareholder base.”

CEOCFO: In closing, what should potential investors expect from Quorum over the next couple of years?
Mr. Marks: “Our focus is to pursue transactions at the manufacturer level, and concurrently enter into an arrangement with an integration partner that would give us a lot more scalability. That is our primary focus, but after having stated that, we really believe that organically we can continue to grow and become profitable. To allow us to grow faster, we would like to sign a few big deals to accelerate our whole growth plan. These larger deals have a longer sales cycle; we’ve been working on them for quite some time and we believe we are getting closer. Stay tuned because 2006 should be the year the automotive industry jumps on the XSELLERATOR.”


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“What we are selling works very well for those who appreciate its extensive and revolutionary capabilities. We have a current customer base of over 100 former ADP and Reynolds customers who would never go back! We bring an incredible value equation through to the dealership, as everyone has been on these old antiquated systems for years, but converting the masses one dealership at a time is a slow process. This is why we believe our best strategy is to focus on the manufacturers and, with their help, try to bring the paradigm shift to the industry – we will gain some real momentum from that. We think that we are pursuing a really good strategy, working on the manufacturer side of the equation, which will eventually pay-off, and we hope to have some exciting news to announce early in the New Year (2006).” - Maury Marks


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