Keep On Teaching

What are the most important features dealers should expect from their dealership-management system (DMS)?

ARKONA President Richard Holland: An efficient toolset, which enables them to run their businesses day-to-day. The solution should meld into their business practices — not the other way around.

Many dealers claim they use approximately 50% of their system's capabilities.

Holland: System usage consists of two separate issues. The first is computing power. Several dealers are in a situation where they purchase a system and then, over time, their company grows and their CPU (central processing unit) utilization spikes.

The dealers' servers or their systems really can't handle the increased level of traffic and still provide adequate performance. With our on-demand ASP (Application Service Provider; an off-site, jointly used system server) model, degradation in system performance is not an issue because those banks of servers are continually upgraded and updated to maintain the performance levels expected by our dealer clients.

The other issue is really indicative of the dealer environment. With a 20% to 30% turnover rate in dealership personnel every year, new-hire and recurrent training is an ongoing concern. Let's say the average current employee retains 70% of what they learn during the installation process. At the same time, a new employee may only retain 30%-50% of what is trained. Important information isn't successfully transferred, and it costs the dealership.

We see our dealers' employees coming up to speed and maintaining their effectiveness through attendance at our dealer symposiums, through our parts service and training, our webinars and our online web training. We want to touch the dealership on a monthly basis to assess where the dealer needs auditing and process control assistance.

Many dealers say their monthly bills from their DMS vendors are confusing, and sales reps often cannot explain the bill themselves. How does ARKONA address this issue?

Holland: Every customer has a 30- to 90-day out clause for termination on convenience. To ARKONA, that means we have to earn our business every month if we want to keep it. Never putting customers in a position where they have to evaluate another DMS system because their contract is coming due gives us the ability to retain those customers.

Because they are so simplified, our invoices are difficult to misunderstand. Part of it goes back to our core philosophy that we want to make the entire tool set available to the dealership so there is not a line item for just every little feature and function set in the application and some associated charge.

How does ARKONA help the dealer manage all of the data and turn it into meaningful reports to run the business effectively?

Holland: Since we store our data in a standard technology platform, dealers are able to query data, pull it out, and put it into any Microsoft product whether it is Word, Excel or Access. The data can be then be manipulated and presented in any way.

Many dealers complain that extracting data from the DMS and providing it in a usable format is difficult, if not impossible.

Holland: ARKONA may be different from most other DMS vendors. First, we believe in retaining all the data, from the day the dealer goes live on the system. Any touch point — whether it is a phone conversation with a customer, a mailed survey, invoices, checks, or statements — is maintained.

Contrary to standard industry practice, our dealers can go back at any time and look at source documents or immediately produce accounting reports.

We place an emphasis on analysis of information. For example, we think reports are too static and we want a more dynamic tool. All information in the ARKONA DMS can be analyzed.

ARKONA has a wealth of analysis tools for dealers. Sometimes dealers will have a unique way that they want to look at their data. Since we store ours on a standard technology platform, dealers are able to query data, pull it out, and put it into any Microsoft product whether it is Word, Excel or Access. The data can be then be manipulated and presented in any way. It is really very simple.

What about customer data? Does it belong to the customer, the dealer or your company? What about rights to access this information?

Holland: We believe all customer information is absolutely and exclusively the property of the dealership. The only access that ARKONA has to the dealers' data is through the ASP servers. ARKONA will assist dealers in distributing data on their behalf to other service providers. If an ARKONA customer for some reason elects to go to another DMS provider, we are happy to publish the dealer's data in a format that would enable them to migrate.

I would have to see if we even address ownership of the data. I know we address confidentiality and that ARKONA will hold any information that we receive from the dealership as confidential. But as far as ownership of the data, I don't believe that it is addressed specifically. Definitely, ARKONA understands data belongs to the dealer.

Let's talk about an ASP environment. In a case like what happened in Louisiana and Mississippi recently with the hurricanes, an ASP solution would be desirable.

Holland: We are very high on it. I think we pioneered it. We announced it in 2001 that ARKONA was going to deploy on an ASP, and had an internal benchmark that, if we could achieve 50% penetration, we would regard it as an absolute home run. Of the clients that have come on with ARKONA, with the exception of 24 dealers, all are on ASP. We run about 650 dealerships on the ASP. We deploy it differently than some of our rivals do. We believe in a shared cost of ownership, so we have a very high-end service. Data is separated by dealership so it is unique and secured to any one dealership, but we have just three servers running with 650 stores.

What offerings does your company have to assist dealers with managing their human resource tasks and obligations?

Holland: ARKONA's solution includes an HR component that facilitates payroll tasks and several other fundamental activities.

How does your company partner with other third-party providers? For example, say one of your customers wants to use another vendor's finance and insurance or customer relationship management applications. Do you work with that vendor?

Holland: We've not had that experience with F&I. Our solution with the F&I tools has always been attractive enough that all of our customers have elected to use ours. CRM is fairly new for ARKONA.

ARKONA provides published data on behalf of the dealership to approximately 170 vendors. Since the data belongs to the dealership, it has to authorize ARKONA to distribute it on its behalf to other vendors. For us, it is really uneventful.

How does ARKONA help service personnel generate more revenue and make valid recommendations to each customer?

Holland: When a customer visits the service area of the dealership, the vehicle's VIN (vehicle identification number) is submitted to participating OEMs. Data is quickly received from the auto maker showing any open campaigns or recall initiatives that are not completed. These tasks are then added to the repair order automatically.

Scouting Report — What the dealers say:

Strengths

“ARKONA has been up front and honest. They have done the things they said they would do. They told me not to choose them because of the price savings, but rather based on their culture of being a partner in making our business run. We did, and we have been very pleased.”
— Buddy Bolton, owner, Bolton Ford, LA

“I like the accounting package's ease of use. It is easy to review and identify common errors such as cross posting errors because the data is presented in one simple view. And ARKONA is committed to support and training. They provide personalized attention and make themselves available.”
— Carolyn Cain, controller, Buddy Bolton Ford, LA

Areas Needing Improvements

“I spoke with my service manager and we agree a service-pricing guide would be our first choice.”
— Buddy Bolton

“More training with designing and generating reports, especially in their new Windows report-generator environment.”
— Carolyn Cain

ARKONA At a Glance

Philosophy

To provide to our clients a feature-rich solution with services to assist them to exploit it. Our observation is that the tools available to dealers have not kept pace with technological advances in other industries. We want to change that.

Dealerships traditionally have spent too much for what they get in return (for information-technology services and equipment).

We're providing an information system investment that is reasonably priced to our clients so that they gain competitive advantage in both price and function to their peers running an alternative system.

Headquarters: South Jordan, UT

Primary offering: Primary offering: ARKONA Dealer Management Solution (ADMS), built on iIBM Series platform and an ASP model.

Notable clients: Swope Family of Dealerships, Louisville, KY (51st on Ward's Megadealer 100) and Chapman Automotive Group, Scottsdale, AZ (40th on Ward's Megadealer 100)