A dealer recently sent me his monthly DMS billing for over $25,000 a month. Included in this price were items like toner, credit bureau fees and even a phone system. I had to wonder, “What is considered a DMS today?” Would you get Internet Service, order technician tools, or keep your bank accounts with your DMS provider? Many of the current DMS providers are striving to be your single solution provider. There are many pros and cons to working with a one platform provider.
Single Solution Provider
Obviously, it is easier to send one big check monthly for $25,000 to a single provider for your website, CRM, forms, phone system, parts scan, service appointment schedule, office supplies and printer maintenance. Each of these items in theory should work smoothly with each other; sharing data without a charge to you. An example of this is DealerTrack DMS and VinSolutions CRM. These are both owned and marketed by the same company, Cox Automotive. Even though they were developed by different companies many years ago and share different technology platforms and databases, Cox has created a “Bridge” to enable users to smoothly move between these applications. Since they are controlled by the same owner, data can be shared smoothly without interruptions if all goes well. Of course for those who own multiple dealerships, we all know what happens when you tell all your dealerships to get along with each, standardize their practices, share customers, parts, and vehicle inventory.
Best of Class Providers
There is a reason why you don’t take an important client to McDonalds to enjoy a burger. Yes, McDonalds is huge, consistent, cheap and on every corner and has both hamburgers and chicken – but you probably have a local restaurant that makes a great burger and KFC has much better chicken. A best of class provider example might be CDK Drive DMS and DealerSocket CRM. CDK is considered a great DMS provider because nobody has as many factory integrations as CDK. When it comes to some of the OEMs, they favor CDK because it is easier to work with one of two DMS providers than dozens. Star Standards is striving to change that; we hope that someday the effort that has been made to standardize factory communication will make it fully to the OEMs. Instead of certifying a DMS provider, they will merely state, “Send these STAR files to this endpoint with this login and if they make it great, your dealer client will get paid their warranty claims and rebates and we’ll order the parts for your dealer. If they don’t make it, then you’ll need to figure out why.” The OEM certification process is misleading for dealers; it makes dealers think that the OEM has “approved” the DMS and the DMS company. It is a false sense of security for the dealers and the basis for past lawsuits. For CRM, many of the dealers that I know think that DealerSocket is a best of class CRM provider and beginning of being a platform provider. Because of their combination of OEMs they need CDK Drive and their sales process needs DealerSocket CRM, website, and inventory control.
Large Dealerships vs Small Dealerships and Dealership Groups
For a large dealership group, their options are limited. Not only does the unusual combination of various OEMs restrict many to CDK and R+R until the OEMs start certifying more; but the database structures means that many dealership groups that depend on centralized accounting depend on a Tier 1 DMS like CDK, R+R or DealerStar. This is hard to understand because I know many dealership groups that have a DMS like AutoSoft and Auto/Mate that were designed for the smaller dealers. How do these organizations get by with a Tier 2 or Tier 3 DMS? The reason why they don’t require a Tier 1 DMS is simple; they don’t operate on the level of centralized accounting that large public dealership groups use. Many operate their dozens of dealerships independently and some even use different DMS providers at each dealership and many different servers. But for a larger group, they need the single server and database structure of a Tier 1 DMS. This structure enables them to have uniform customer databases, inventories, and restrictions. They don’t need to purchase special reporting tools to query all their dealerships for vehicles that are a certain model, or employees at a certain rate, or parts with a value higher than $5,000 – they are all in the same tables separated by the Company number or Store ID to restrict employee access based on job position. All their accounting transactions are in the same table and they can quickly isolate certain transactions for all their dealerships instead of running dozens or hundreds of queries for each database/store on their server. Small dealerships have the greatest luxury when picking a DMS provider. If they can afford it, they can stick with a legacy system like CDK or R+R or they can chose from some of the bargain Tier 2 and Tier 3 DMS systems. I have yet to find a DMS that didn’t do the job, but it might not be the right DMS for your combination of OEMs, 3rd party providers, employee preferences and dealership processes.