DMS Vendors Put to the Test

I have a prediction. Dealer-management systems (DMS) are going to become one of the hottest topics in 2007, and likely will be the hottest topic at next month’s National Automobile Dealers Assn. convention in Las Vegas.

The last several years, though, the DMS has been a real snoozer of a topic. No offense to the vendors, but the market has not changed much in decades. For years, the Reynolds and Reynolds Co. and Automatic Data Processing Inc.’s Dealer Services Group have controlled nearly 80% of the market with 20 or so other companies scrapping for the remaining 20%.

But in 2006, things began to get much more interesting as several events along with new technology indicate the market likely will change more in the next three years than it has in the past 30. And that means you need to know more than ever before just what is going on in the marketplace, so you can make financially sound decisions when choosing a DMS vendor.

Easily the most earth-shattering event was Universal Computer Systems Inc.’s thinly disguised takeover of the much larger Reynolds and Reynolds.

And then there was Microsoft Corp.’s announcement in July that it is entering the market, although no one yet is sure what that means. SAP, another player with lots of muscle, also is eyeing the North American DMS space.

Meanwhile, the market is opening up for several smaller vendors as OEMs such as Hyundai, Volkswagen, Toyota’s Lexus Div. and Nissan’s Infiniti Div. now allow their dealers to choose a DMS from several firms rather than restricting them to a Reynolds or ADP offering.

General Motors Corp., however, seems to be going in the other direction, limiting its integrated dealer management system (IDMS) initiative to Reynolds and the tiny Quorum Technologies. Chances are, the UCS acquisition may cause GM to rethink its strategy.

All of these events create numerous questions for dealers. There may be answers.

On February 2, in Las Vegas, Ward’s and Dixon Hughes is hosting a free panel discussion with five DMS vendors – ADP, Reynolds, ARKONA, Quorum and Microsoft. We are inviting dealer principals, general managers and CFOs to attend. (For more information, visit us at http://wardsauto.com/about/WDB-DixonHughes.htm).

Some of the questions we will address include:

1. What does the UCS acquisition of Reynolds mean for the industry? Will it be business as usual for Reynolds, or will the UCS way of doing business become the norm? What about those notorious UCS 12-15 year contracts? Will they finally go away?

2. How will ADP respond to the acquisition? Will the midlevel vendors be able to grab significant marketshare?

3. Where does Microsoft fit in? Will it be a fringe player or will it offer a DMS solution that actually competes with what is already out in the marketplace?

4. What platforms will be most prevalent? Will we see more windows-based products and open database architecture? How does accessing the data for a dealer change under newer technology?

5. Which DMS providers, citing protection of your data, are launching initiatives that likely will limit the access your third-party vendors will have to that data?

7. Which new product offerings will help you manage your business more profitably?

8. Is VOIP – Voice Over Internet Protocol technology, pioneered by ADP in the dealer market, worth the investment?

9. How can the DMS help you manage the increasingly complex record-keeping requirements being implemented by the Internal Revenue Service?

The session will be held at the Renaissance Hotel from 1PM – 4 PM followed by a cocktail hour. Wayne Fortier from Dixon Hughes and myself will moderate the discussion.

For more information and to register, visit us at http://wardsauto.com/about/WDB-DixonHughes.htm. You may also call 877-357-2727.

When you register, you also will have the opportunity to submit questions for the panel. We look forward to seeing you and trust the event will be of great value to our readers.

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