The Underappreciated Foundation
The Underappreciated Foundation
Guest writer John Anderson reminds us that the only constant is change. In “The Underappreciated Foundation,” we take a look at technology and innovation, and the Dealer Management System.
In the ever-evolving landscape of technology and business systems, observing the new wave of arrivals is always fascinating. In an environment where change is the norm, numerous opportunities arise that spark excitement. Tracking market disruptors like Heave, offering on-demand equipment services, and other innovative startups, is particularly thrilling.
Understanding the Complexity of Dealerships
However, alongside these innovators, the industry also sees its share of newcomers who often lack a deep understanding of the specific nuances required. These entrants often have names crafted by marketing firms to sound like the perfect solution to any problem. Each year, someone introduces a “new and modern” Dealership Management System (DMS), promising digital dealership transformations with the latest technology stack, developed in record time. The issue is that these entrants often lack the pedigree and deep understanding required for this extremely specific business.
An equipment dealership is a nuanced enterprise. Success in this field demands more than just money and theory; it requires a profound understanding of equipment distribution, market comprehension, and decades of knowledge. The same holds true for your DMS or business management system. It is not glamorous or attention-grabbing until you fully understand its role and importance in daily operations. Even then, it remains a utilitarian and disciplined tool, essential for organizing the organization. Yet, every year, new contenders enter the market with the latest dealership management tools, hoping to entice you with short-term gratification while overlooking foundational needs.
The House Analogy: A Closer Look
Let’s use a house as an analogy. Your business system is the house, with crucial but often overlooked utilities in the basement. You need a robust accounting package capable of handling multiple product lines, branches, and international divisions, scalable to your market. It must meet specific reporting requirements for your manufacturer and stakeholders. This enterprise accounting is sophisticated, much like an electrical panel—vital but underappreciated.
Similarly, your parts inventory, sales, and control systems are like the water services in your home, deeply embedded in the foundation, providing essential information to the enterprise. A simple parts record for a stocked part includes a minimum of two hundred data elements, covering ordering formulas, weighted averaging, stocking criteria, price fluctuations, sales metrics, and more. The intricacies of remanufactured and core parts, coupled with necessary manufacturer interfaces for ordering, warranty, and programs, add to the complexity. It is far more than just a parts catalog or lookup functionality.
Why New Entrants Often Fall Short
So, what do these freshman providers bring with their “New DMS”? They offer furniture for your house, paint, decor, and some appliances. We have analytics only because we have data in the foundation. We have new ways to check in rental equipment because of the foundational equipment control and accounting systems. We boast a state-of-the-art CRM application because we have customer records dating back years, fed by all foundational systems in the DMS. When someone says they integrate, it often means they lack the skill, knowledge, or time to build it themselves and will integrate with existing systems. This approach has merit but remember that the hierarchy of systems and the foundation is critical. It’s not always plug and play.
The core applications of a DMS are sometimes seen as dinosaurs, perceived as incompatible with next-generation requirements. However, they are not outdated; they are highly sophisticated repositories essential for the entire business. They are the ultimate archive and gatekeeper, crucial for the operation of a modern equipment dealership. Try unplugging it for five days and witness the chaos it creates.
The Future of Dealership Management Systems
I once heard an industry expert predict that the DMS will become obsolete, replaced by a suite of “best of breed” applications connected in the cloud to provide comprehensive tools for running a modern dealership. I disagree. That’s like trying to build a car from various parts without considering the need for a frame and wheels. Forward-thinking is valuable, but the reality is you still need a solid foundation, whether it’s local or in the cloud.
So, next time you go down to your basement or consider your foundation, appreciate it for what it is. Remember, without it, the house above has nothing to stand on.