A dealership's data processing system should not be on your list of headaches. Rather, it should be a tool that provides timely, accurate information so you can to effectively monitor and manage your dealership.
But many dealerships' data processing systems seem like a necessary evil for handling paper work instead of a valuable management tool. This problem affects every department's profitability on a daily basis. At the least, a poorly specified system can lead to poor employee morale and performance. At its worst, it can devastate your ability to obtain information needed to manage profitably.
Here are some suggestions on picking the right system for your needs:
Get feedback from staff
When negotiating for the purchase of a system, it's critical that senior management — before meeting with a vendor's sales representative — invite other important dealership personnel to voice their needs and opinions.
Include the controller, or office manager, all department managers, and an outside third party such as the dealership's accountant or an auto-oriented technology consultant.
A formal meeting of senior management and department managers should focus on the needs of each department and address any complaints about the present system. (Though perhaps warranted, venting should be kept at low decibels.) Department managers should have had a previous meeting with their personnel so that feedback from all levels of dealership operations.
Look for what fits you
Those staff meetings should provide most of what's needed to tell the sales rep the system specifications for each department. Remember throughout this whole process that you are dealing with a sales representative.
The input from your accountant or outside consultant will likely be the sole source of information about potential system shortcomings. Their previous exposure to various systems helps. They can provide pros and cons, and may be able to suggest enhancements.
There are other major issues to consider. Dealers often overlook data retention and archival storage concerns.
How many months of transaction detail will you need to access regularly? Does the system have the required capacity?
The latter deals with the permanent retention of detailed data for future reference. Permanent retention is an issue that the IRS has raised recently. Some vendors' systems do not always meet the IRS regulations. Other vendors specialize in archival systems that can meet most dealers' needs and also satisfy IRS requirements.
Get staff up to speed
Inadequate staff training is often the most troublesome issue in transitioning to a new data processing system.
It can lead to processing and recording deals, loss of control of receivables and inaccurate information. All these, and more, will cost dealership dollars. Be sure the vendor commits to providing adequate and clearly specified training.
Make sure your prospective vendor provides your staff with ongoing technical support. You cannot afford to have your operations bogged-down because of unsatisfactory technical support. This is a critical consideration. Also beware: technical support and training can vary for each vendor on a geographical basis.
Make sure it works
Know the system is working properly before the installation team goes.
The accounting department can only do its job if it receives timely and accurate information from each of the operating departments. So, it's probably the controller who's best to determine that the system is working properly.
Each department manager must be completely satisfied with the installation and with the training of his or her staff.
It could be difficult to get the installation team back once they have left.
How much should you pay
Don't let the price overly influence what system you select. What looks less costly may be expensive in the long run. There are different fees to consider. In addition to the initial hardware, other costs include software licenses, monthly hardware maintenance charges and monthly support charges.
Although some may disagree, my experience has been that all cost components are negotiable.
Review the quoted prices with an industry consultant. You might talk to other dealers to learn their experiences with the system you are considering. Your apparent savings on your initial cost could easily dissolve if your employees cannot quickly resolve operating problems.
It's a big investment. Picking the right data processing system for your specific dealership requires preparation, planning, consultation and consideration of all available options.
Paul J. Gans, CPA, a partner with the accounting firm of Weisberg, MolÈ, Krantz & Goldfarb, LLP, advises dealerships on auditing, taxes, finances as well as information technology hardware and software. He's at 516-933-3800, ext. 22.