Shopping for Your Dealer Management System (DMS)

NADA MONTHLY DEALER OPERATIONS COMMENTARY:

Shopping for Your Dealer Management System (DMS)

Itês a fact: computer costs have become the average dealerês fifth largest expense.

Itês also a fact that the right computer system may well be worth the cost, if you know how to use it to maximum advantage.

Itês good business to understand your computer system and use it fullyãand itês good business to control costs. Itês a common misconception that computer costs are not negotiableãthey are. You can shop for competitive systems, and you can change your DMS. Sometimes, rethinking your DMS makes senseãif your equipment or connectivity needs upgrading, for example, or your business is expanding. Maybe itês contract renewal time and you have questions about your options. Regardless of your reasons for investigating a new DMS, there are five main questions you must answer for each vendor you consider:

1. Does this proposal or contract represent too much computerãor too little? What features and benefits do I really need or want?

2. What is the true cost of this system and all of the monthly support?

3. What is the best way to pay for this system? Cash? Finance? Lease?

4. What are the terms and conditions of the final contractãthe binding document that is the actual legal structure of the acquisition?

5. What negotiating strategy can I employ to achieve the best results? The most challenging aspect of the DMS acquisition is determining what price is the right price to pay for the system you need.

To answer these questions to the lasting benefit of your dealership, use a careful evaluation process:

à Outline your computer needs, and get more than one vendor to submit a proposal.

à Ask each vendor to demonstrate products to you and your key managers.

à Make sure the proposals you receive are detailed, with each individual item individually priced.

à Get a terminal/PC schematic.

à Donêt limit your proposal because you think you canêt afford everything on it.

à Include sufficient capacity for future growth.

à Include remote access to your system.

à Check the proposal for omissions of related costsãdata archiving, for example, or interfaces for factory communications, parts cataloging, training, etc.

à Identify and explain any update charges.

à Get detailed laser printer pricing schedules and forms set-up charges.

à Consider training and network rewiring costs.

à Be aware of existing leases and other contractual obligations.

à Know the lease rate or APR.

à Consider data archiving and disaster recovery procedures.

à Set a time limit for the proposal.

à Decide whether to keep your current DMS or acquire a new one.

Each of these points, and other considerations such as reducing your computer bill, protecting your network, and protecting your customers, are expanded upon in detail in NADA Management Guide BM26, A Dealer Guide to Negotiating With Your Computer Vendors. For further information, please contact NADA Management Education at (800) 252-NADA, ext. 2.