Ohio dealer Kim Borcherding would rather switch than fight. But in the last few months she was doing both.
Borcherding was in a data tussle with Dayton, OH-based Reynolds and Reynolds Co., the nation’s No.2 dealer-management service provider and office management software firm.
She runs Borcherding Pontiac Buick GMC in Cincinnati and is a wind-down Pontiac dealer. General Motors Co. pulling the plug on Pontiac will mean a 60% loss in business for her, she estimates.
Borcherding has been a GM dealer in the Cincinnati market since 1973 and a Reynolds customer since 1990.
She says Reynolds had been denying her access to her dealership data, saying she owned the firm money, since she announced she was switching to another DMS provider, ADP Dealer Services.
To get out of her contract, Borcherding was willing to meet the payoff debt R&R requested. She says she wired $310,575 on a remaining 3-year contract to R&R in late April.
After she pursued legal action and sought an emergency court injunction, R&R finally released her data in May, Borcherding says. The dealership is still in the process of making the data conversion with ADP.
Borcherding does not feel victorious, though. There was at least a month of “total disruption and chaos” and lost business, she says. “I lost all the way around.”
She did not sign a release freeing Reynolds of any other further damages or future legal actions.
One problem is Borcherding, like many dealers, had an “application on demand” service contract with R&R. That means there is no server in the dealership. Instead, affected dealers get hosted data-storage services.
Since its 2006 merger with UCS, she says R&R is fine at back-end support – accounting, finance and insurance and payroll – but lacks good customer-facing applications, vital to customer-relationship management.
“I was unable to deliver a quality customer experience on the front line of sales and service,” she says.
So a few months ago, Borcherding began to sever the R&R relationship and switch to ADP. But she first wanted rights to all her dealership data.
She says she could not proceed with the ADP conversion without all the data, critical to serving customers and running the business. She had access to some data, but R&R wouldn’t provide the service to extract it.
“Reynolds said they are not required to perform any extraction service,” she says. “Unfortunately, the data that we had access to was not complete enough to do a full extraction for conversion.”
For example, she couldn’t access service or sales history, payroll or general ledger or trial balance history without additional electronic FTP (file transfer protocol) tools.
“How much does it cost to extract data?” she asks. “Virtually nothing.”
R&R, citing computer security issues, also has resisted other firms entering its systems to extract data for a newly acquired dealer client.
The issue for dealers seeking to part ways with a DMS provider is, “Whose data is it anyway?”
“I own the data, and they are playing games with me,” Borcherding contends.
R&R says it has no blanket statement on customers who choose to leave, but that dealer contracts govern their relationships.
“Our practice is very simple,” says R&R spokesman Tom Schwartz. “Is the bill paid in full or not? If a customer chooses to go to another vendor, we try to cooperate with the data conversion, but the customer account must be paid in full.”
He says the data belongs to the customer, and he doesn’t see it as an issue because R&R and other providers routinely interact with the new interfacing service provider in data transfers.
“The dealer has complete access to the data, so does the new vendor,” he says. “The data is not held. It’s the dealer’s data. R&R typically works with the new vendor who runs the data,” he says.
But many dealers besides Borcherding report encountering roadblocks when they try to switch from R&R to another provider, particularly since the UCS merger and especially if it means opting out of an existing contract.
Robert Brockman, the owner of UCS, a smaller competitor, engineered a $2.8 billion merger with R&R, then privatized the once public entity.
Legal experts say it’s not easy to get out of an R&R contract.
The other Big 3 DMS providers (ADP and DealerTrack Inc.) also offer app-on-demand services. “But so far R&R is the one that has issues with dealers trying to extract data and move away from them,” says attorney Mark Counts of Counts & Bonacci, LLP, a Houston firm specializing in dealer representation.
Borcherding says more than 10 dealers have told her they have experienced similar situations with R&R.
Her fear was in “moving forward in conversion without the customer data or history. “We would go out of business,” she says.
One industry consultant, who asks not to be named, speculates that her situation represents only the tip of the litigation iceberg, and that more such cases are in the wings.