The Light Is Green: NADA 2008 Highlights: Should I change my DMS? (Part 1)

San Francisco trolley If you missed NADA 2008, read this series of articles that recap the major issues covered at this year's event.

The National Automobile Dealers Association represents 19,700 new car and truck dealers. Every year, NADA organizes the world's largest convention for auto dealers, where thousands gather to see the latest products and services geared to dealerships, attend workshops on best practices, and hear industry leaders.

This year's event was in beautiful San Francisco and spanned 80,000 m2 (700,000 square feet), included 700 exhibitors and 36 workshops, and received 24,000 attendees from all over the world.

Should I change my DMS?

Renowned DMS expert Sandi Jerome held of one of the more interesting workshops at NADA 2008, focusing on how to dealers can validate the change to a new and better dealer management system through a simple step-by-step process:

Evaluate current technology
Create a technology budget and calculate ROI
Understand available technology, mainly newer DMS systems and CRM tools
Reduce costs with technology budgets and by avoiding mistakes

Why technology fails

The main reasons surrounding DMS system letdowns at dealerships are staff talent and training, the inability (or perceived inability) to afford a new system, the lack of goals when deploying a new system, and problems with the technology itself.

When a new DMS software solution is deployed, everyone needs to be on board. If just one key manager is not on the same page, the project will fail.

Some of the main drawbacks with traditional DMS systems are their slowness, mainly caused by Windows interfaces grafted on top of old systems, and overall lower productivity compounded by the fact that dealers have more employees than before.

Why a new DMS system?

In addition to today’s imperative of reducing monthly costs, there are many reasons dealers invest in a new dealer management system.

But before making any decisions, dealers should be very clear about what they would like out of their new system. They may want to increase vehicle sales, increase service business, improve customer service and satisfaction, increase staff productivity, and improve collections.

A list should be made, and DMS alternatives graded accordingly in order to find the best fit for the dealership

Special care needs to be taken with staff training as each member has their own unique knowledge and special needs based on their experience. Hands-on on-site training, that is sitting next to the user as they use the system themselves, looks to be the best way to train users. Class training is a less effective method.

Most DMS providers are currently focusing on improving and diversifying their training initiatives.

A new (and good) DMS system pays for itself

Dealers need to learn two vital things:

How to budget for a new IT investment

A new DMS system has initial software costs (licenses and training) plus several associated costs such as hardware upgrades, increased Internet bandwidth. DMS monthly costs include software support; new staff needed to fully leverage the DMS, such as a CRM Manager; and increased printing and phone costs related to increased marketing activities.

How to calculate the ROI on a technology investment

ROI Ms. Jerome provided a blueprint to help dealers understand in what areas they could expect increased revenue thanks to a new and better DMS system, in order to compare against the fixed and initial costs discussed before, and thus calculate the estimated return on investment. The speed with which a dealership can recoup its investment in a new DMS system was eye-opening.