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Jared Hamilton
From: Jared Hamilton
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Introduction to DMS

Overview

This buyer's guide overview is designed to offer insight and advice for those who may not be familiar with this category as well as help guide dealers in their decisionmaking process. It is not designed to endorse or influence readers but simply to educate.

What is a DMS?

A DMS (Dealership Management System) in its simplest definition is the brains of any dealership's operations. This integral piece of software is typically responsible for collecting, facilitating and recording just about every piece of information and activity of a dealership's operations. A DMS will typically be involved with everything from customer information, transactional data, vehicle inventory, accounting functionalities, service repair orders and history, desking abilities as well as RDR reporting. In addition, a DMS is typically the hub in which a dealership's vendors receive the data they need to perform their tasks such as gathering pricing data for not only a dealership's website but also for all third-party listing sites which a dealer subscribes.

Importance of DMS

As you've probably guessed, a dealership's DMS is the most vital service in operation. Because of this, dealers would be wise to not make hasty decisions when selecting a DMS. Once a DMS solution is chosen, it can oftentimes be difficult and arduous to switch providers in the future. This difficulty exponentially increases the longer a dealership is with a provider. The data within a DMS encompasses just about every aspect of a dealership's operations and will contain a database that is the lifeblood of both current and future activities.

Considerations in Choosing a DMS Solution

Data Ownership

A major consideration in choosing a DMS solution provider is knowing who owns the data contained within it. On the surface, it might seem that the answer to that question is easy but this controversy has as been around for quite some time. As previously mentioned, the DMS contains the entire existence of a dealership. The loss of all that data can be devastating to a dealership akin to removing all memories from a dealership's brain including customer, service and transactional data as well as other vital accounting records. In addition, this ownership can dictate the ease at which a dealership could transition to another solution provider in the future should the desire arise.

Data Privacy

Because the DMS contains so much private customer information, another consideration that a dealer should investigate is the security of that data by the provider. A breach of a dealership's DMS can lead to devastating consequences for both a dealership's customers as well as present legal liability for the dealership for the misuse of that data. DMS systems will contain F&I information including personal information like social security numbers, dates of birth and other sensitive customer information. Another consideration when it comes to data privacy and security is how the data is stored. Some providers will use server based infrastructures – typically with an on-site server along with an off-site backup server – while other DMS providers operate by storing the data in the cloud. Depending on a dealer's needs in off-site accessibility along with the various data security risks each storage method presents is something a dealer should consider.

Functionality

While most DMS solution providers will offer comparable functionalities, some will have more robust offerings and features integrated than others. The needs of a dealership weighted against both the benefits of the additional features versus the costs should be considered when selecting a solutions provider. Some of the newer entrants into the DMS space (Agile Core DMS Providers) include features as standard where legacy providers (Integrated Platform Providers) may offer some of the additional features as optional at additional charge. The above graphic will lend some clarification into the differences between the two types of DMS providers described.

Technology Partner Integration

For seamless operation and integration with a dealer's other technology partners, it is often necessary for access to DMS data. Some providers are completely open to working with other solution providers while others necessitate outside vendors to pay for certifications and access. This can cause problems for a dealership who wants to use a certain outside vendor who needs DMS access but is not certified to access it. Closed access can translate into higher costs from outside vendors passed on to the dealer if the DMS provider charges the vendor for access. Dealers should inquire whether the DMS provider's access is open or closed as well as how that translates into outside vendors access and/or restrictions to that data.

Marketing/Data Segmentation and Export Functionality

Many vendors do not need unrestricted access to a dealer's DMS data to provide services. Since customer data is necessary in marketing and segmentation is frequently used to choose groups of customers to send relevant messages to, a dealer should inquire as to the ease in segmenting customer audiences and then the ability to export selected information which they can then pass along to the outside vendor. In example, an e-mail marketing vendor would only need the customer's name and e-mail address if the dealer is doing the segmentation prior to the transfer of information. The e-mail marketing vendor would not need complete access to the entire customer's history nor would they need transactional data. The ability to not only control who is accessing the data but also which data they can access is an important distinction in this era of customer privacy concerns.

Financial Considerations

Not including features and add-ons, one of the decisions a dealer will be faced with is the cost and contract terms for any given DMS provider. The legacy providers have a large market share in the automotive space and will oftentimes be more expensive and require longer contracts while the newer companies will be less expensive and have shorter contracts. This generalization, of course, can vary from company to company and be negotiated through increasing contract terms and functionality. Keep in mind that this is the most important technology partner a dealership will have so ensuring that a dealer chooses the right match for their budget and situation is imperative.

Which DMS is Right for You?

Ultimately, this decision is dependent on the dealership's structure on an organizational level. Small independent or single rooftop stores may be fine by going with a less expensive solution while large dealership groups who need enterprise level solutions may find that a legacy solution provider is the best choice. With the difficulty at times in transitioning from one DMS to another, a dealer should take into consideration their vision for business growth. Failure to do so may see a dealer being forced to transition from one DMS to another at a future date – a process that can be time-consuming, arduous and take many man hours. The ability of the DMS solution selected to grow with a dealership is an important consideration in the selection process.

Conclusion

Selecting a DMS provider is one of the most important decisions a dealership of any size can make. This technology partner will more than likely be one that a dealership will utilize for years, if not decades, to come. Choosing a DMS provider should not be taken lightly. Utilization of the DMS vendor ratings on page 12 can assist dealers in beginning the process of choosing which DMS providers to consider and begin their research. Dealers should also utilize their peer networks, 20 Group members as well as other channels to reach out to and discuss providers with current dealer clients of prospective DMS solution providers.

Dealership Complexity

Single-point

Enterprise Groups


Complexity & Cost
Many Number of Solutions Few

Core DMS Functionality

Sales & F&I
Accounting
Service & Parts
Report Generator

Typical Agile DMS ‐ Standard Features

Desking
Payroll
Dashboards

API Data Integration

Third Party Products

Service Scheduling Products
Inventory Solutions
Appraisal Tools
F&I/Service Menus
CRM Products

Typical Integrated Platform DMS – Standard Features

Enhanced Data Sharing between Modules
Detailed Dashboards

Optional Modules

Payroll
Appraisal Tools
F&I/Service Menus
CRM Products
Desking
Inventory Solutions
Electronic Dispatch
Quick Service Center
Service Scheduling

Data Integration

Third Party Products

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