More dealers are using Internet-delivered applications to help run their dealerships.
These days it's rare to find a dealership that isn't using the Internet to conduct at least some aspect of their operation, often with the help of an application service provider (ASP).
An ASP can offer advantages that we'll look at in a moment. First, let's define ASP. It's often used, not always understood.
An ASP is essentially a company that offers Internet access to software that would otherwise have to be housed and maintained at a dealership.
It can provide dealerships significant information technology cost advantages because an ASP hosts, maintains and upgrades the equipment, ensures application and data security, provides data backup and storage for dealership e-business program applications, and delivers these applications across the Internet.
That means a dealership using an ASP only needs in-store PCs and Internet access to run its e-business program.
So why is using such a provider more advantageous than dealers hosting their own servers? Reasons include:
- A qualified ASP develops, installs, hosts and supports e-business programs on its own servers, so the dealership's total cost of ownership is substantially reduced. The ASP model allows dealers to concentrate on their core competencies of selling and servicing vehicles.
- The ASP model offers an alternative to either paying an excessive price for clean data or being in the dark about customer information. Not only can ASP-enabled data mining gross dealers more money, it can keep them from losing money. An ASP can reduce marketing costs by eliminating the waste created by bad data.
- By simplifying integration and allowing for real-time or near-real-time sharing of data that would otherwise be stuck in disparate out-of-synch databases, the ASP model provides better reporting, enabling you to make better decisions.
- The ASP model eliminates IT expenses associated with in-store hardware.
That's the short list. But a word of caution: Choose your ASP carefully. You're not just looking for a technology provider. You need a provider that understands the automotive business and is seriously committed to developing new technology..
Business needs and market conditions change and evolve continually. Any ASP that's worthy of your business should have a world-class enterprise infrastructure using best-of-breed technologies. They should have a demonstrated track record of application performance and reliability.
If your e-business program isn't helping you move forward, then it's actively holding you back.
As dealer management systems are rewritten to take advantage of open architecture and communication standards, dealers will benefit from having access to best-of-breed applications to run all aspects of their business.
These applications will merge, leverage and share data (data that today often resides in multiple data stores) and they'll provide dealers with richer, more accurate and more actionable information about customers and prospects.
I predict that in the future dealership business solutions will be based almost exclusively on the ASP model. It won't be an overnight transition, but the ASP model is clearly the way of the future.
The long-term cost savings, valuable data mining options, and program flexibility offered by the ASP model all represent clear competitive advantages for dealers. Let's face it, it doesn't matter how on the ball you are if your dealership's technology is a ball and chain.
John Holt is president and CEO of The Cobalt Group, a provider of e-business software and services to the automotive retail market.