DOLLARS AND SENSE

Walk in any dealership today and you'll find a CPU (central processing unit the mainframe computer). It's the brain of your computer system. Each department operates by communicating with the CPU through green screens or, in more recent years, personal computers. Application Service Provider (ASP) solutions give the dealer an alternative to housing this mainframe in your dealership. If you choose

Walk in any dealership today and you'll find a CPU (central processing unit — the mainframe computer). It's the brain of your computer system. Each department operates by communicating with the CPU through green screens or, in more recent years, personal computers.

Application Service Provider (ASP) solutions give the dealer an alternative to housing this mainframe in your dealership. If you choose to go with an ASP strategy, a mainframe will be kept at a remote location by your vendor.

The vendor performs all maintenance on the CPU, and they will maintain the network between your dealership and their remote location. All for a price, of course.

Many dealerships have shown an interest in ASP product lines. But dealers should look at the expense and do the proper assessment before deciding in which direction to go.

It would seem that the major DMS players would like to be your 100% turnkey solution for everything that connects to a dealership PC. This includes everything from your traditional DMS system to Internet access, email, networking, website design, and customer satisfaction/retention.

What can you expect to see in an ASP Proposal?

  • Housing the CPU (central processing unit — the mainframe computer) remotely.

  • Performing required maintenance/upgrades as needed

  • Loading of all Parts Masters, Labor Time Guides, VMS updates, etc.

  • Performing regular backups of the system

  • Management of the network between the dealer and the vendor

  • Regulated Internet access through the vendor's network

  • Email services

  • Maintenance on personal computers in the dealership

DMS vendors tout their product as a savings over conventional leasing of a computer system. A typical sales pitch you may hear:

“Let us manage your network, your mainframe computer, and all of the equipment. You will no longer need someone to perform backups every night or load update tapes. In fact, you may no longer need IT personnel at all! Couple this with the fact that there is no longer a lease to pay and you will see huge savings…”

But let's sort things out.

There is no lease per se; there is an agreement for services, complete with price increases and termination provisions. Dealers will continue their responsibility for monthly support fees — including support for any hardware located at the dealership. Below are some other myths and the truths behind them.

Myth: Your monthly payments will be less.

Fact: Recent proposals have indicated that any significant difference in price will be an increase over in-house solutions.

Myth: You will no longer need in-house computer or information technology experts.

Fact: The management of a dealership system and database are but one role of a technology department. ASP will not replace your controller or systems administrator.

Myth: Your data may be “held hostage” at the end of your service term.

Fact: Service agreements address the release of data at term's end.

Myth: You will be forced to use your DMS provider for internet or email access

Fact: ASP offerings can be tailored to accommodate any networks you already have in place

Should you go the ASP route? First ask yourself: “Do I want to manage my computer system in house or have someone else take care of it off site?”

You must take inventory of how your computer system is managed now. This does not require any great technical knowledge. Simply ask your computer expert — be it your controller, CFO, systems administrator or a consultant — how his or her job relates to managing your computer system.

If you're comfortable with your current technological resources and the results you are getting from them, then you would probably want to continue with your current setup instead of switching to ASP.

A benefit of keeping the CPU in-house is that your employees will grow and evolve. They will learn more about technology and become more adept. Over time, your people will become more of an asset to you as they utilize more and more of the computer system — obviously giving you a better return on investment.

But for smaller dealers and others who have not made the investment in their own computer experts, ASP offers a chance to keep pace without investing heavily in in-house personnel.

There are pros and cons on each side. Ultimately, individual circumstances will dictate which way to go.

If you are considering an ASP product line, take some time, go through the aforementioned exercises and consult technology advisors before giving your “final answer.”


Don Ray is a Senior Member of the George B. Jones Dealer Services division of Dixon Odom PLLC, a national accounting and consulting group for automobile dealers. He's at 901-684-5643 and [email protected].

TAGS: Dealers Retail
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