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Renegotiating DMS Contracts- Reassess, Reorganize, Realign

Renegotiating DMS Contracts Reassess Reorganize Realign

It’s not the strongest of the species that survive, nor the most intelligent but the one most responsive to change

Darwin never had the chance to see an automobile but he could certainly have been referring to auto dealers in 2009 when he wrote those words. It has been a tough year and the next few months will determine which retailers survive the extinction. For years, domestic dealers have complained that there were just too many dealers selling the same products. Yet in every market, some dealers always seemed to come out on top. They always seemed to be a step ahead – always had a new plan to succeed. When change came, they were ready and they prospered.

This year, as the business map of every community in America is redrawn, the same principles will apply. The dealers who are primed to change and those who stand ready to find opportunities and new pathways to success will be the ones that ultimately thrive. Those who curse their fate and are swept along with the tide will most assuredly falter.

Dealers are facing daunting challenges that will continue to test their resolve across every phase of their organizations. Knowledge and control will rule the day. Other than having the right staff in key positions, a dealer has no tool that will give him better information and more critical control than his computer (DMS). Unfortunately, many dealers will find themselves with DMS systems that are just not up to the task. Others will find that the costs and contracts they negotiated a few years ago are no longer appropriate. Some dealers will need much more capacity, others will need much less. What will you do?

Here are some of the simple things to think about this year regarding your computer: Reassess

Remember that the hardware a dealer owns is the smallest part of his investment in technology. A dealers doesn’t “buy a computer”, he “contracts for computer services”. Your needs have changed and whether you are downsizing or acquiring, your DMS needs to be reassessed, not just as an expense but also as a crucial tool to help you run the unique business that you are reinventing. If you don’t have enough technology, you may miss opportunities. If you have too much, the cost can be an encumbrance you can’t afford.

Now is the time to get this right. You need the right technology and you need it on terms you can endure. If a restructuring with your current vendor is what is called for, negotiate a new deal. If now is the time to change providers, you should do that too – and as expeditiously as possible.

Plan well and make the right decisions now and the results will serve you well for the foreseeable future. If you make a hasty decision and just rely on intuition, you will miss the mark in your choice of vendor, configuration or negotiation. You will regret that for years to come.

Now is the optimal time to get experienced, professional help so that you can get what you need

– and on the best terms.


It’s likely that the coming months will be rife with stress and you will be making a lot of major choices. When it comes to technology, as in other areas, judicious planning is the key. Your system needs to reflect your overall plan. Will you be selling a location? Adding one (or more)? Adding new franchises or letting go of existing lines? What about your factory communications? Where is your physical computer? Are you using a vendor’s offsite service, commonly known as ASP (Application Service Provider)? For every change in your operations, your tech needs and options will correspondingly vary.

Some major questions about your existing contracts and arrangement must be answered. Can you divest yourself of redundant or unwarranted DMS expense? Will your vendor work with you to reach your goals? You may find that things which seem quite straightforward may be much more convoluted than you imagine. With some creative thinking and experienced assistance you may find that there are methods to reorganize that will reduce or at least postpone onerous costs. Whatever your needs or situation, proper planning in concert with trusted professionals will get you the best results. Depending on the severity of the issues at hand, you might need a CPA, an attorney or an independent consultant who knows the in and outs of the dealership computer business.


In 2009, many dealerships will set the course for the future and while some stores may close or morph into alternative undertakings, others will find new and more profitable ventures. Are you being forced to consolidate? Do you need to reduce your obligations? Will the new alignment in your market result in less competition and more business? Do you need to expand your operations and staff? Incorporate new brands? Do you see opportunities that you want to grasp?

Whenever dealers buy, sell, close or open a store, they encounter myriad decisions, not the least of which involve a DMS system or contract.

A few of the obvious questions: What systems are the stores on? Can I integrate the system into my operation? How much does it cost? Will the two systems communicate? Will one or the other computer system handle all the stores? Will that cost less?

Some of the less obvious issues: Should I assume an existing contract? Are its terms favorable or not? Does this contract terminate at the same time as my other contracts? Should I avoid any obligation to the other dealer’s vendor, even if it means making some other concession? What do I need to do and when? How much training will it take to get the staff up to speed on a different system? Is this an opportunity to renegotiate a better deal with my current vendor for more locations? Do I have leverage or exposure? Are there capital lease commitments in addition to maintenance agreements? Do these agreements bind both parties? If I’m selling, do I need to get out from under a contract when I sell or can I just cancel my obligation? Can I have consolidated statements? Separate log-ins for each corporation? There are about a hundred more questions that will need solutions.


Now is not the time for paralysis – you must take action. Make careful, considered choices that will serve your needs and improve your profitability. Don’t neglect your DMS computer system, its function, cost and obligations. The system configuration options are countless. The vendors have made sweeping changes in the way they approach dealers. The price you pay for your technology is primarily dependent on your knowledge and negotiating strategy. Don’t hesitate to seek professionals who can help.