The New Battleground
A Quick Disclaimer:
At The Gillrie Institute, we don’t have a dog in this fight. We are not affected by the outcome. Only our dealers are and this article is in response to our client’s voiced concerns. At the Gillrie Institute, we do not have any financial connection to any vendor, large or small. Our only interest is in protecting the rights of our clients. We know that if the variety of options available in the technology marketplace is restricted, innovation will cease and our dealers’ costs will rise.
The Problem: DMS Vendors vs 3rd Party Vendors
By strictly controlling how your network is accessed and modified, a computer vendor can not only monitor your usage very closely (to its own benefit) but can also prevent or seriously complicate your dealership’s access to a more comprehensive or lower cost solution offered by a third party vendor. No dealer can afford to give up this sort of competitive advantage in this market.
Why Is This Happening Now?
Networks used to be difficult to configure and hard to maintain. As a consequence, DMS vendors never had a problem convincing dealers that only those with access to arcane technological secrets could manage their networks. Because networks have now become much simpler and because the tools to manage them are readily available, more dealers began to move away from the computer vendors’ expensive and inflexible infrastructures and take control locally, using whatever solutions worked best in their stores. Some DMS vendors, seeing both easy revenue and tight control slipping away from them, have taken action to halt the movement to more nimble and economical competitors.
What Should You Look For?
It began when your DMS vendor suddenly expressed an urgent concern about the security of your data. They then suggested that, as a precaution against insidious infiltration of your network, they have decided to restrict access to only their “approved and certified” third parties. Under this scenario they will become the sole custodian of your data and, by controlling those with whom you can do business, eliminate that pesky competition. You may find that you are directed to employ only their partner firms which, freed from the pressures of a free market, can now charge you whatever they please. As always, it comes down to increased revenue for the vendor and additional expense for the dealer.
If you balk, you will be told that you could use any vendor you like so long as that vendor is willing to be certified and pay the required access fees to your DMS provider.
One of the bigger third party companies was recently told that these fees for certification would amount to about $700.00 per month per dealer location. When you do the math, you can’t help but conclude that this is all just another ruse by the DMS provider to hijack your data along with your money! Could it also be a way to make competitors uncompetitive, thereby driving them out of business? You know, of course, who it is who will eventually pay for less competition and increased fees, don’t you?
What Kinds of Services Do Third Party Vendors Offer To Dealers?
Dealers have turned to alternative vendors for a myriad of services. AS long as the market is free and open, more solutions will continue to evolve. Listed here are some, but certainly not all, of the areas where dealers have found satisfying extra-DMS relationships.
- F&I Menus
- Electronic Repair Orders & Dispatching
- Web Filtering
- Phone Systems (VOIP & other)
- Managerial Report Generators and Custom Written Software
- Impact Printers & PCs
- Utilization Training
- Archiving & Archival Scanning
- Interfaces With Finances Sources
- Marketing, CSI & Service Reminder Calling
- Database Cleansing & Maintenance
- Paperless & Laser- Based F&I / MV Forms
- Signature Capture & Virtual Contracts
- Web Hosting & Web Marketing
- What Can You Do?
Your goal should be to maintain control and keep all of your options open while controlling costs. How do you do it? Dealers must be pro-active at contract time. Don’t sign the standard boilerplate or agree to terms that don’t advance your goals. If you know what to ask for, you will find that you can forge a much better contractual deal that you are initially offered.
If you fail to take the necessary steps to avoid losing control, you will eventually find that you can’t do business with the third party firms you want to use or, alternatively, you will be forced to bear the cost of the additional fees that your DMS vendor will charge. Address the issues with specific written addenda before you sign a new contract. You may find you need some help to anticipate how some terms may be applied. Remember that the other side does this every day and you are therefore at a distinct disadvantage if you go it alone.
You may feel pressured and feel you have no choice, for example, when a vendor representative insists that you can only use that vendor’s own networking or archiving, Reps may be very persistent because it is a question of “exit barriers”, control and, of course, added revenue for the vendor. Don’t cave to the pressure when the issue is one you feel is important. You should be able to find a way to get what you need. After all it’s your business and your money! Make the decisions yours and be sure you can live with your choices down the road.
Vendors are becoming more strident in their demands that you acquiesce to their demands. One has already introduced a drastic measure that demands the correct answers to several personal information questions that must be answered each time you or your staff pull information from YOUR OWN network.
Be prepared to reassess your position regarding a particular vendor if you are unable to negotiate the protections you feel are essential. Can you live with the terms to which the vendor will agree? It’s your call – if you are not comfortable with the responses you received or if you still feel exposed, it may be time to tell them you just can’t do business on their terms – and move on. Don’t let them trivialize your concerns. Give in on issues that are crucial and you may be sorry later on. You may be told that you that you are being petty or your requests are unwarranted. Ask them then to accommodate you, considering the “insignificant” nature of your request. If they still resist, draw your own conclusions. Why are they so unwilling to bend if there is no validity to your apprehensions? Another vendor may be more willing to give you what you need. Explore all of your options and call us if you find you need some help!