by Sandi Jerome
“Do your employees use the DMS as an excuse of why things don’t get done or a disappointing month?”
There is a saying, “Programmers get rich easily; one writes a virus, the other writes an anti-virus.” Over the past decades some DMS companies got rich because one DMS was sold and another got bought. Many dealers “jumped ship” after UCS bought R+R in 2006. It helped the growth of DealerTrack, Auto/Mate and AutoSoft. UCS bought Ford DCS in the late 1990’s. CDK (ADP) bought VCrest, EDS, and Dealer Solutions – just to name a few. One DMS buying another DMS is the fastest way a DMS provider can increase revenue and satisfy profit-hungry investors. It is hard to grow “organically” one install at a time. What if your DMS is sold to a larger DMS provider? Should you “jump ship” and find another smaller company? The answer to this question isn’t easy but there are a few steps you can ask your staff to follow to make the decision.
- Determine if your DMS is right for your dealership. Make a list of both subjective and objective items. Subjective lists are the easiest to compile. When you last logged into the software, how did you feel about the experience? Was it comfortable and easy? Do you think your DMS increases your profit? Are your employees productive? Does it provide the security you need to sleep soundly at night? Do you get the reports you need? Do your employees use the DMS as an excuse of why things don’t get done or a disappointing month? Conversely, ask them for objective responses. These should be facts. Here is an example; “I like our current DMS because the gross profit is shown on the bottom right hand corner of the deal posting screen.” This is a fact that can be supported by a screenshot. Another fact could be something that is missing, “I don’t like our DMS because I can’t export the checks written yesterday to Excel.” Putting this specific information into Pro and Con columns will help you make decisions when the time comes to select your backup DMS.
- What is your DMS budget? I’ve never seen a former DMS cost less after a buyout. Do you need to pay a certain maximum monthly price for your DMS? I’m stressing the word need. I’ve seen dealerships where the amount they were losing per month was about the same as 50% of their DMS bill. If they could slash that in half, then they would be profitable. I’ve also seen dealerships that were healthy and profitable change the DMS to save a few hundred a month with disastrous results.
- Have you been presented with a new contract? Normally the purchasing company will wait until something is required to force you into a new contract. For example, your factory might have a new integration point, but your DMS provider will only give that to dealers on version XX of the software. Since you didn’t sign a contract, you didn’t get the latest upgrade and are on XV of the software and now are forced to sign the new contract to comply with the factory requirements. Another item could be a payroll or yearend update only provided to dealers on the latest version and under the new contract.
- What is your backup plan? When I was a controller, I always had an office manager or other trusty clerk that was ready to step into my shoes if I had to quit. You should have the same decision made for your DMS. For example, if you’re on DealerTrack or AutoMate, then you should have already had a demo for maybe DealerStar and AutoSoft as two backups. Having a backup system Tiers below and above your current DMS is a good idea. Email me if you’d like my Tier lists. You should also know how much each of your backup DMS systems cost per month, upfront fees, and how long it would take them to get you installed. Most DMS providers should be able to respond to your email request if you send them the number of employees, number of users, factory integration required, and if you need payroll or not.
As a consultant, I found many dealerships suffered when they hastily changed DMS systems. With careful planning, you can be prepared and in the “driver’s seat” when being forced to make your next turn.