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Shopping for Your Dealership Management System

Jun 24, 2005

Computer costs have become the average dealer’s fifth largest expense; however, the right computer system may well be worth the cost, if you know how to use it to maximum advantage.It’s good business to understand your computer system and use it fully—and it’s good business to control costs.It’s a common misconception that computer costs are not negotiable—they are.You can shop for competitive systems, and you can change your DMS. Sometimes, rethinking your DMS makes sense—if your equipment or connectivity needs upgrading or your business is expanding.Maybe your contract is up for renewal 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 computer—or 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 contract—the 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. NJ CAR suggests the following tips for reducing DMS costs: ·Limit your contract to a maximum of 24 months on anything purchased, and even as low as 12 months where possible.·Purchase as much of your own hardware, with a strong manufacturer warranty.·Always get at least two DMS providers bidding on your business.·PC purchases are a commodity item and should be purchased outside of any agreement.·PC administrative access should always be granted to dealership personnel.·Manager your own network.·Do not sign up for maintenance on hardware items unless it’s necessary.·Negotiate with your vendors for free technology upgrades for the life of your contract.·Negotiate with your vendors for caps on price increases.·Perform yearly software audits on what you have versus what you are using. It is also important to use a careful evaluation process to identify your needs. ·Outline your computer needs, and get more than one vendor to submit a proposal.·Ask each vendor to demonstrate products to you and your key managers.·Make sure the proposals received are detailed, with each item individually priced.·Get a terminal/PC schematic.·Don’t limit your proposal because you think you can’t afford everything on it.·Include sufficient capacity for future growth.·Include remote access to your system.·Check the proposal for omissions of related costs—data archiving, for example, or interfaces for factory communications, parts cataloging, training, etc.·Identify and explain any update charges.·Get detailed laser-printer pricing schedules and forms set-up charges.·Consider training and network rewiring costs.·Be aware of existing leases and other contractual obligations.·Know the lease rate or APR.·Consider data archiving and disaster recovery procedures.·Set a time limit for the proposal.·Decide whether to keep your current DMS or acquire a new one. The NJ CAR Telecom Program has partnered with a vendor who can review your current DMS bills, recommend potential solutions for your dealership, and negotiate with DMS vendors for the contract terms and pricing.For further information please contact Terry Driscoll or Jenny Ward at NJ CAR, 609.883.5056, ext 408.