GMAC – Virag Consulting

Why I Freelance

Recently, Linked-In reminded me that I have been an independent consultant for fifteen years. Thanks to all who called and wrote with congratulations. In fact, I have been either consulting, at a startup (or consulting for a startup) since business school.

I used “freelance” in the title because this word is in need of some rehabilitation. There was a bitter post on Linked-In about how “freelance photographer” means “unemployed guy with a camera.” I get that all the time. I spoke with a recruiter recently who was startled to learn this is really what I do, and not just a placeholder on my resume.

According to McKinsey, there are 49 million of us “free agents,” equal in number to those who do it out of necessity.

I started consulting for a Big Six firm, back when there were six, and I noticed that our projects were always a big deal for the client staff. They felt lucky to be on the client’s once-in-a-lifetime project. We consultants, meanwhile, were continuously assigned to the good projects, client after client. It becomes addictive.

If I were recruiting here, I would recount some groovy projects and then pitch the glamour and excitement – but I have a much more practical argument. When you work for a long time at one company, you accrue specific knowledge about its organization, procedures, and history. If you ever leave that company, the value of this knowledge falls to zero.

I was engaged by GMAC just before the crash. Suddenly, my entire department was shuttered – desks empty, lights out. It was a disaster for the faithful, lifetime employees. Some were out of work for a year. The consultants, however, rapidly found new jobs.

Job security no longer exists, and the good wages, generous benefits and secure retirement that used to be guaranteed with full-time employment are in decline or have disappeared.

It is a little scary not knowing where I’ll be working next year. I won’t deny that. My point about GMAC is that the people who thought they had job security were mistaken. They were the ones most at risk.

Tom Peters writes that job security does not come from allegiance to your company. It comes from having skills and accomplishments, plus a network of people who know about your skills and accomplishments. This is where the exciting projects come in. When I call around looking for work, I want people to recognize me as “the guy who created Provider Exchange Network,” or something like that.

Changing jobs enhances your value by exposing you to new people, technology, and business models. This has certainly been true for me. F&I is a small community, but it includes dealer groups, software companies, and finance sources. This is great because it allows me to move around without violating any non-competes.

This article in Harvard Business Review echoes Peters’ observation about job security. The author is a B-school prof, who writes that the gig economy is the future. Focus on finding work, she says, not a job. I am lucky that this attitude (and related skills) were drilled into me at Coopers. In case you’re inspired to quit your day job, I’ll follow up with a “how to” article.

Full Lifecycle API for F&I Products

I have just wrapped up design work on a web service to cancel and refund F&I product contracts. Whether a refund is owed to the customer, from an early termination, or to the lender as recovered funds, it is in the provider’s interest to support an efficient automated process. On the lender side, it is also a compliance issue.

This job was rewarding for me because it completes the lifecycle I began automating, ten years ago, with electronic rating. MenuVantage was a leader in rating and originating product contracts, and many providers adopted our model specification.

I then did related work at GMAC Insurance, which was to include claims processing. Sadly, the crash of 2008 ended that project. GMAC also had the bright idea to check for an earlier contract, and apply the refund to the results of the rating call.

The industry has been developing web service support piecemeal. First, there was a need for rating and contracting, supported by companies like MenuVantage. Now, there is financial and regulatory pressure to automate terminations, supported by companies like Express Recoveries.

In hindsight, a savvy provider would have looked at the core processes and developed web service support for the whole lifecycle. It would look something like this:

Dealer and vehicle information ⇒ Return customized rate structure
Deal information with chosen rate ⇒ Originate contract
Form request ⇒ Return contract as PDF
Form with digital signature ⇒ Store in secure archive
Blank form request ⇒ Return blank form
Void request ⇒ Void contract, if eligible
Remittance query ⇒ Return remittance log
Remittance notify ⇒ Post pending payment
In-force query ⇒ Return contract data
Claim diagnosis ⇒ Verify coverage
Claim estimate ⇒ Approve/deny claim
Claim entry ⇒ Issue payment
Vehicle data from contract ⇒ Return cancellation quote
Contract data plus authorization ⇒ Cancel contract, issue refund

You could do one big API to manage the product from cradle to grave, and build provider portals and such on top of it. This would have the usual benefits of decoupling the back-end from the presentation layer, and it would facilitate integration with dealer and lender software.

Looking in Canada

I am seeking an engagement in Canada. Toronto would be best. Call it nostalgia. Call it the strong currency. I have relevant experience from Canadian projects with ADP and GMAC, and I have dual citizenship. If you’re reading this, you already know the value I bring to my clients. Please feel free to call, or write me at the email address given here.

GMAC 2.0

AmeriCredit is the new GMAC, only five years since divestment of the old GMAC. I am a strong believer in captive finance, and I never thought it made sense for GM to sell its lending arm. Of course, in 2006, GM was already under financial pressure.

In 2008, as the situation worsened, I had lunch with a friend in the online credit business. He remarked that GMAC had just about stopped making car loans. The new owner, Cerberus, was taking measures to protect its capital – sensible for them, but not what a dealer wants to hear.

GM concluded that it needed a captive lending arm after all: in October it bought AmeriCredit.

I observed that GM would have to develop a new captive, to take care of its dealers. GMAC 2.0, I said. I might have added, after Chapter 11.

What followed was a mad rush to certify GMAC as a bank holding company and obtain TARP funds. My DMS integration project was cancelled, and many of my friends at GMAC were laid off. Last year, the new GMAC bank signed up with Dealer Track. Of Route One’s exclusive captives, this left only Ford and Toyota.

When GM bought AmeriCredit, that seemed to validate my observation. Oddly, GM was denying it as recently as January of this year. That’s why this week’s announcement is important. Adding floorplan proves that AmeriCredit, now GM Financial, is the new GMAC.