The time has come. Your dealership’s DMS contract with a large, expensive legacy provider is ending. Your search for a new DMS partner is beginning. Which DMS is best?
The answer is: it depends what your needs are. One thing that’s certain is when it comes to making such a critical management decision; there is little, if any, room for error.
This article won’t go into detail about the process for choosing the right system (for a free ten-step guide, dealers can e-mail the author of this article). But assuming that a dealership has already analyzed their current DMS expenses and potential cost reductions, assessed the market, created a “needs” list and drawn up a potential vendor prospect list, one of the first choices they may be faced with is whether to choose a DMS in an Application Service Provider (ASP) model, or in-house server model.
With ASP, the DMS provider maintains a hosted environment of servers at the provider’s location that houses all the software and data a dealer uses. Dealers do not have to purchase or maintain servers.
With a DMS in-house server model, the dealership is required to purchase the server and in most cases the DMS vendor will maintain the server.
Contrary to what dealers may hear from various sales representatives, neither the ASP nor the in-house format is the one, “best” technology. What is best for your dealership may depend on whether you have a single store, multi-store franchise along with many other factors.
Following are the primary considerations when it comes to choosing between deploying the DMS as an ASP or in-house server:
1) ‘New’ technology vs. ‘old’ technology.
Advocates of ASP claim it’s a new technology and the future of things to come. In reality, ASP is an evolution of a 40-plus year old technology developed in the 1960s and known then as “time sharing” applications. Today, due to high-speed Internet connections and advances in server technology, ASP solutions are more viable and a popular choice for businesses in many industries.
The in-house client/server model, though hardly old but perceived by some as un-trendy, is in reality, a tried and true technology that is not going to disappear any time soon. Many businesses prefer to keep their computer operations in-house for several reasons, including reliability, cost, control of data, and more.
The bottom line is, both formats offer dealerships what is needed: a low-cost, effective DMS solution. The choice should not be made based on which technology is new or trendy, but on which system best fits the dealership’s needs and wants.
2) Purchase of hardware
A perceived advantage of the ASP model is the minimum amount of hardware that has to be purchased to get the system up and running. In most cases the ASP provider will require the purchase of a VPN router that is compatible with the vendor’s network. This router can run from $2,000 to $3,000.
With the in-house server model, dealers are required to purchase a server. Though legacy providers have been known to charge anywhere from $20,000 to $60,000 for high performance servers, today’s non-legacy DMS vendors offer industry standard high performance servers that costs no more than $4,000 – $6,000. As servers only need to be replaced every five to six years, the depreciated cost is negligible.
With a broadband connection, access to the ASP servers can be very efficient. However the connection needs to be of high quality. If the Internet connection is sluggish for some reason, access to the dealer’s data may be slow. In all cases access to the ASP is through a VPN (virtual private network) which in essence gives the dealership a secure “pipe” through the Internet to the provider’s location. However it is still through the Internet and as such the response time can be awful at times no matter what speed the connection (Did you try to get on the Internet the day Michael Jackson died? The speed of the Internet was at a crawl.)
An in-house server, on the other hand, runs at a consistently high speed and will always have a much greater response time then the ASP. If there are problems with the Internet connection, it doesn’t affect access to the dealer’s data at all.
4) Dealership control of data
One potential problem with the ASP model is the dealership does not maintain control over its own data. No matter how much a provider may assure the dealer it will never happen, in the event of a dispute between dealership and vendor, it would be possible for the dealership to be cut off from its own data.
On the other hand, the in-house server model eliminates this concern. Dealerships maintain complete control of their data and network at all times.
5) Back-up of data
Generally accepted backup procedure is to have a full copy of your data backed up off site every night. With the ASP, since the data is housed in servers at the provider’s location it is therefore off the dealership site, however the dealer needs to ensure that the provider backs up its hosted site to another location just in case there is an issue at the primary hosting facility. With the in-house server model, the dealership can choose to either manually back up onto tapes every night, or have the DMS provider do an automatic remote back up. A remote backup is where the in house server automatically transmits all of the data every night to a remote facility controlled by the DMS provider.
6) ‘Less’ vs. ‘more’ maintenance
ASP providers tout the fact their model eliminates the need to maintain a server, saves space and takes all the DMS maintenance off the dealership’s hands. But since in-house solutions can run on a server the size of your typical tower PC, it doesn’t take much additional space, and in-house vendors can also provide all the needed maintenance remotely.
7) Upgrades to the software
In both cases updated software will be needed to be loaded on the server whether the server is hosted at the ASP site or is in the dealership. In the case of the ASP, the vendor will load all of the software updates on their servers and will then notify the users when it has been done. In the past (and still currently with some DMS vendors) software updates were handled by sending the dealership CDs with the update information and the dealership personnel had to load them on the server. Currently most DMS vendors who supply an in house server will automatically load the software updates remotely on to the in house server and then notify the dealership that it has been done.
8) Remote access to network
Many dealers are under the assumption that with ASP, they will be able to have full access to their network from any laptop, anywhere. In reality, ASP access from a remote location requires the installation of a Virtual Private Network (VPN) on a laptop. Remote access to the DMS is accomplished the same way with an in-house server model.
9) In the event of catastrophe…
It rarely happens, but ask any dealer who has been through it. It’s a nightmare. Whether a mudslide, tornado or hurricane, the last thing a dealer needs to worry about is the DMS. An advantage of ASP is that if disaster strikes, all the data is safely off site. All the dealership needs to do is re-establish an Internet connection. However, if there have been widespread telecommunications outages in the area as will happen in catastrophic situations, it may be impossible to quickly re-establish the VPN connection to the ASP. In addition the connection issue is out of the control of the dealership in that their Internet Service Provider may be swamped with other clients who are in the same situation as the dealership.
When disaster strikes a dealership with an in-house server, the server may be lost. This is why the data should always be backed up remotely, and why most DMS providers do this automatically. In the event of catastrophe, the dealership can call the vendor who should be able to ship out a new server with all the updated information intact, overnight, if necessary.
Determining what’s right for you
It’s up to each dealership to determine which DMS system is right for their needs. Both in-house and ASP models have their advantages. In many cases either one would be a good choice. Ultimately, a DMS vendor that offers both in-house server and ASP solutions provides the most flexibility. It give the dealer the most security, in that, if the deployment by one method is not satisfactory to the dealership then it is an easy change over to the other deployment method. As a dealership grows and its needs change, it is good to know that your DMS provider offers both solutions so you can maintain your relationship with that provider yet change the method of deployment of the DMS.