When to Change Your DMS Provider

An Automotive dealership is a constantly evolving and advancing machine that continues to take on new information every single day. This could essentially mean that their Dealership Management System (DMS) is their central nervous system. Their central nervous system, the DMS, essentially controls the entire activities of the dealership with no parts of the company being left untouched. The sheer amount of data that is held with the system is excessively large. Generally, it holds everything from financial data, service history, vehicle inventory information, parts inventory information, customer data, and more.

If your DMS ever goes down or malfunctions, it can cause a lot of problems within the dealerships, not to mention slow down all the processes that are currently taking place. So, many dealerships just choose not to switch or even think about moving their DMS providers. The idea of even having that in between providers time is dauntingly scary for them. Many of them are stuck in a rut of being used to a certain system or ways of doing things that they don’t want to even think about upgrading to a newer, more advanced system – even if it will make their lives easier.

Along with the learning curve that is to be expected, there is also a decent amount of costs that come with changing DMS providers. Training your employees with the newer systems can cost as much as $5,000 per seat that loses productivity while being trained. If you have chosen or researched another DMS provider already, then what do they have that your current provider/system lacks? Just because your current system has the capability of implementing a certain function, doesn’t mean that it will be reliable or easy to implement in the long run.

There isn’t one single answer as to when you should change your provider. However, if you get to a point where you feel as though you’re being charged for services that are being unused, your systems seems to have slowed down, or if you feel as though your system is not being as efficient as possible – it’s probably time for you to switch. Below we’ll be going through some steps on how you should go about changing your DMS provider. Subsequently, these steps can also just be used to evaluate how your current system is running and if there’s anything else in the market that just might suit your dealership better.

10 Steps To Change Your DMS Provider

There are numerous questions and concerns that are raised by employees and employers while looking to change DMS providers. However, before you can even think about updating or switching, it’s important to follow a few steps prior to making the decision.

1. Know Your Current Situation
   1. Perform an inventory and audit check of all the current items on your DMS providers bill. As you go through the bill, you should also note what each section and line means to fully understand the system.
   2. Identify the currently listed items that are not being used or do use and note down their associated costs. This will help you make a list of your ‘must-have’ services, as well as help you list services that you don’t need/use. Just this step alone can save you as much as 20% of your current DMS bill.

2. Evaluate The Current Automotive Market
In the past eight years or so, there have been two important DMS provider shifts in the manner that their services and systems are provided.

1. 1. Application Service Provider (ASP) model – This became very popular with most small and large-sized businesses. With this model, DMS providers keep a network which keeps all the data and software that a dealership uses. Dealerships no longer have to purchase and/or lease backup tapes, servers, and other hardware pieces.

   2. Software as a Service (SaaS) Pricing – This pricing concept acted as a subscription-like plan for dealerships, which could sometimes even be on a month by month basis. For this, dealerships licensed the use of the DMS software rather than having to purchase it. This method allows users to eliminate long-term contracts and allowed them more flexibility if they ever wanted to switch vendors. It also allows dealers with the ability to purchase newer DMS software versions through their subscription charges.

3. Create Your Must-Have List
After the first step, you’ll already have a list of services that you already use. With this list, dealers should meet with key managerial staff to assess their likes and dislikes over each service that they currently have. This will allow you to gain a sense of understanding over what exact type of service you’re looking to get from a new provider.

4. Create Possible Provider List
Most of the time, dealers get names of prospective DMS providers through other dealers. However, there are a few tips that you should follow to build your possible providers list.

1. 1. Refer To NADA Information – This will allow you to check a bi-annual survey of DMS provider to dealer satisfaction rates.

   2. Use your ‘Must Have’ list to assess possible providers. If they do not provide the services you are looking for – eliminate them from your list.

   3. Get opinions and input from other dealership managers to gain a more detailed list with reference to the ‘Must Have’ list.

5. Demo Prospective Providers

1. Ensure that the systems that prospective providers have shown you meet the needs of your dealership, as well as allow you with space to grow.

2. Ensure that you get all your managerial staff to test out the demo software to gain a wider perspective.

6. Pricing

1. With the current list of prices and costs that you receive from your current provider, as you would have found in the first step, you can get a better understanding of what is being offered to you and its worth.

2. Include input from your managerial staff as they will be the ones to fully use this software on a daily basis.

3. Anticipate cost increments – also question their pricing models, i.e. if they offer prices ‘freezes’ or do they raise their prices frequently?

7. Select Provider
Through your discussion over pricing and the service that they provide, you should also research what other companies or dealerships have said about your prospective DMS provider. NADA’s survey can be very helpful at picking out the bad seeds, but getting a first-hand opinion can be even more beneficial.

8. Map Installation

1. With today’s technological advancements, DMS systems can occur over one weekend. If they start late Friday, they should be able to be done before work starts on Monday morning. However, for dealerships, it can be a bit tricky, since they mostly only close on Sundays.

2. For the change to go over as smooth as possible, ensure that there are no ‘gaps’ with your DMS coverage, which means that you have the next provider set up, ready to go before your current one expires. Additional review and audit everything in your current DMS.

9. Plan Training
Most providers offer video-based, online and in-person DMS training. Dealers should work with the provider to find a time and method that is suitable for both parties.

10. Evaluate Systems
As the system progresses and managerial staff has the opportunity to use the new DMS, they get a better understanding of the use and its efficiency. The recommended evaluation period is at a 90-day mark or a 180-day mark.

Through these steps and your own research, you’re sure to reach a conclusion over whether it is time for you to change your DMS providers.