Chinese philosopher Lao Tzu said, “If you do not change direction, you may end up where you are heading.” For many dealerships on the Auto/Mate DMS, they are heading towards being a client of DMS giant CDK.
Although the deal requires regulatory approval, this brings back the change in directions for DMS providers that we experienced decades ago. During that period, larger DMS companies bought smaller DMS providers in order to gain market share. It is hard to sell and install a DMS system at a dealership. Even the best DMS with a great product and lower price can’t grow rapidly because conversion, training, and installations take time and money. If you want to quickly get 10 or 1,000 more dealerships, the easiest way is to buy them. This sale joins the other recent sales of DMS companies; Karmak (Canada) bought Adam and PBS (Canada) bought DDS. This current wave of DMS market consolidation started when UCS bought R+R in 2006.
What should you do if your DMS is sold to another company or being discontinued because your DMS provider has bought another similar product? This might be a good time to go shopping for your backup DMS. As the old saying goes, “The best time to borrow money is when you don’t need it,” and so goes the recommendation for when to shop for a new DMS. You need a backup DMS selected years before you might be forced into a difficult contract at the last moment.
A good place to shop for any technology is at the Digital Dealer Conference & Expo in Las Vegas September 18-20th. The majority of the 120+ exhibitors are technology experts. It is a great place to mingle with other tech savvy dealers and ask them, “What DMS do you use and why?” You can chat with the various speakers and vendors and find out if their software works well with one DMS or another.
Being able to interface and share data is important. This is a sore subject for some software companies that are being charged a fee for access to your data. In a recent court hearing, Authenticom was granted a motion for a preliminary injunction against the DMS giants who had created an agreement in 2015 to allow each other access to dealership data yet charged 3rd parties $700 to $900 a month per dealership for the dealership’s data. A dealer recently told me that for his 10+ technologies, he’s paying over $2,700 a month for his own data! This might be the reason why some technology companies like Cox/VinSolutions and Dominion/Autobase bought DMS companies during the past decade. By switching their CRM customers to their own DMS, they protect the access to the data they need and save data charges.
But some DMS providers like DealerStar and DealerTrack are committed to “free data.” According to the January 2017 DealerTrack blog, “DMS platforms that allow for open integration also save dealerships money. Because they don’t restrict cross-platform linking, they also do not charge expensive security or data access fees. By reducing or eliminating those fees, dealerships using open, modular DMS platforms enjoy an immediate reduction of monthly expense.” Make sure you get this “free data access” included in your next DMS contract.
What else can you do to prepare for changing DMS providers? Many DMS providers enable you to take a test drive of their system or sign up for their training/tutorials. What better way is there to find out if a DMS is right for you than to try it out yourself? Start making a list of all the features you might want in your next DMS. If you want a full DMS feature list, please send me an email. There is no reason to pay for a feature you don’t need, but if it is something your employees want and it increases profit or protects your assets – you might as well “trade up” to your next DMS.
Author: Sandi Jerome
Sandi Jerome is the owner of Sandi Jerome Computer Consulting. Sandi founded DealerStar, a web-based DMS. She is a former CFO, System Administrator, Fixed Operations Manager, and Controller with over 30 years experience in the auto industry.