Press Release

September 2007

Has choosing a DMS (Dealer Management System) from the Established Vendors become a High Risk strategy?

An opinion piece by Robert Pilkington, Managing Director Ebbon-Dacs

The majority of dealers and groups keep their DMS' for at least seven years, so the risk profile of their replacement DMS has to be evaluated for that entire period, says Robert Pilkington, Managing Director of Ebbon-Dacs.

In seven years 2015 will be just around corner. Consider what can change - It was long enough for propeller planes to be superseded by pressurised jet airliners in the late 1940's and in the last seven years, time for about 400 new items of legislation to be passed by the government and for an unknown company "Google" to grow into a household brand that is depended on by so many information hungry, bargain seeking customers.

Nobody can accurately predict the future. The best brains have repeatedly failed to do so in the past: we don't drive hover cars or eat synthetic pills for dinner, but we do communicate with pocket sized personal phones and drink crushed fruit in designer plastic bottles. Who would have predicted that?

If so much can change in the next seven years, how should this affect dealers and groups selecting a DMS now?

The best we can do, and many would agree this is the duty of business leaders, is be prepared, ready for change and in the best position to respond. This applies to every business, but even more so if you are evaluating mission critical software that's going to keep up with your business plans over the next seven years.

For most dealers, evaluating a new DMS today, almost all of the attention is on matching their old DMS' functionality, rather than setting up for a successful future. In other words they try to replicate exactly what they have now as the first priority.

Core functionality is important, but the most forward thinking businesses are ticking that off, rather than making it the focus of their selection process, and spending more effort on identifying opportunities to embrace their business' vision and future plans. It is doubtful that your best sales person sells their cars by explaining why the new car is exactly the same as the old one.

To take a "low risk" strategy for the future and to "be prepared for the unexpected" dealers should ask very challenging questions during the evaluation of their new DMS solution. The answers to these two questions should be given a high weighting within the evaluation process:

1 "What is the technology platform? Open or proprietary?"

Platform choice is of strategic and of material importance. Taking our earlier analogy, is it a highly developed propeller plane that's going to become obsolete? Or a jet powered airliner, ready for the next generation's demands?

To identify the answer to this question, the dealer must find out whether it is based on a large scale industry standard database (today this generally means Microsoft SQL or Oracle). Has it been built in a modern, progressive development environment such as .Net or Java? If not, then you are solely reliant on the business performance and development budget of your supplier, rather than the world's largest, best funded technology companies and a worldwide community of developers.

Another benefit of choosing a vendor on an open platform is that the development resources of the DMS vendor can be focused on innovative use of the technology and continuous business improvement for the dealerships that use their solutions. Rather than maintenance of the core system. Several large, established DMS vendors offer only dated, proprietary (closed) platforms to their systems and have been notoriously slow in progressing towards more open, standard platforms.

It is also worth recognising that the very best development minds are working in open technologies. There are literally hundreds of thousands of talented Microsoft Certified Software Engineers (MCSE's) globally. How many of these go-ahead engineers will want to have a dated DMS language on their CV in 2008?

2 "How flexible is the solution?"

There are two aspects to consider. First is the capability of the software to conform to your changing business needs, and the second is the willingness of the vendor to make that happen when your business needs it.

Businesses need to modify their processes at ever shorter intervals, affected by increasing consumer choice, business growth strategy and trends such as internet purchasing. If you are to be flexible and adaptable, then so must your DMS be capable of responding. Your DMS should unify systems and processes, not drive them apart by forcing cumbersome manual workarounds when responding to business process changes. Reporting is a good example where a huge amount of manual effort and intervention can be required (in Excel usually) in order to present information how the business wants it.

Leading automotive retailers realise that to differentiate their retail business they must have smarter processes than their competitors. They can't afford to wait for new versions of their DMS. For them, time really is money.

For example consider how your business will respond when you begin being squeezed out of the market by players who are doing better than you online? What about the drive for personalised communications which is working so well for retailers in the grocery and banking sectors?

A new generation DMS vendor should have architected their software to be flexible and simple to change without extensive rewrites. The company should also be truly aligned with this approach - flexibility for every customer, backed by a practical open technology to achieve it with. In fact, flexibility should be the supplier's ethos.

Summary

In summary, Mr. Pilkington believes that risk is a relative term. Every time a young graduate begins their career using open technology platforms such as Microsoft or Oracle, the risk associated with purchasing old, proprietary, technology increases. The traditional vendors on older proprietary technology may have been the "low risk" choice in the past, but their lack of technical progress has now changed this status, according to Mr Pilkington

If dealers fail to address their technology platform now, they are creating an unnecessary business risk that will live with them for the next seven years at least. In the last seven years mobile phones have been introduced that have far more computing power than the Apollo mission to the Moon. What has happened with your DMS?