ADP 9400 vs 9200

[Matt Parsons]

Being that I work for one of the world's largest IT providers, your suggestion to ask other industries about their average IT spend is a bit unfair. Specifically, most industries look at IT spend as a percentage of revenue. Being that car dealers sell one of they most expensive retail items available (with the most probably being real estate), you have to be very careful in making this comparison.

The good news at the end of the day is that with the advent of ASP solutions and the move to common off the shelf applications, this industry segment will see reductions in IT costs for the average dealer. Every model we run with these two factors in place bears this out. It just makes sense that by consolidating users onto larger systems and reducing licensing costs, sys admin costs, data storage fees and others (combined with very inexpensive communication options) that dealers will see an advantage as this new model plays out.

As a last response to Kevin's comments about the consolidators not writing their own DMS. I believe most would albeit for one sticky issue - factory communicaitons. This is the artificial barrier in the industry that keeps new solutions from being viable. Without 'DCS' functionality (integrtation), new offerings will continue to be thought of and possible built, but are doomed to failure.

[Chuck Hartle]

Matt,

I would have thought that ASP would fit the bill, especially for the smaller dealerships that couldn't afford that 9400 or ERA Advantage Box. However, I have referred five dealerships to inquire into ASP and the pricing was as much as 30% more than what the dealer was paying currently.

You would think the consolidation to ASP would be a smart and cost effective alternative, but it has turned out the the computer vendors are trying to maintain their high profit levels by nickle and diming the ASP to a very expensive alternative. When does this change?

Chuck Hartle

[David Cates]

I would think the only way DMS vendors could lower prices as they move to new platforms and business models is if they can proportionally reduce the expenses associated with developing, implementing, and supporting the new models. Whether they can do this or not remains to be seen, and whether the lower costs of sales, if attained, will be passed on to dealers also remains to be seen.

[Matt Parsons]

Chuck, it all depends on how the ASP environment is being implemented. It is my understanding that some of the DSP's are struggling to consolidate clients on to shared servers and if this is true, and all the dealer is purchasing is 'their' box hosted at a remote data center, I would expect the cost to increase. We are fortunate that EDS has been providing ASP solutions to clients for 40 years. This environment plays well to our strengths as an IT provider. A good example of true ASP is our recent Saturn announcement that will consolidate all 450+ Saturn retailers on to several large IBM AS/400's. This platform is perfectly suited for ASP and allows us to substantially reduce costs due to the sharing of items like Operating System license fees, Application license fees, systems administration services on a few boxes, and the list goes on.

ASP is cheaper for the majority of dealers! This is being proven out by some of the smaller players and will soon be proven out by several of the 'big' guys. NADA should be a very interesting event this year with lots of announcements in this area.

[EFConn]

Another thing to consider when talking about ASP and all of the "additional" Internet and Security charges is the emergence of STAR and former Olympus documentation. Most if not all OEMs are also moving their DCS to Internet and S.T.A.R. Standards. (see this week's Automotive News)

Perhaps a more detailed discussion thread around S.T.A.R. would be a good idea in the near future. With "open" DMS Integration Standards and one "central" Internet connection for a Dealer's DCS and ASP Dealer Management System, costs for all IT related connections should go down, however, for some smaller Dealers, the costs for local support of PCs, Internet Security and other things may go up.

Just my thoughts...

[partstom]

Matt,
I work at a Saturn store.I've heard our cost will be going up with the ASP model. ??
As you stated the incremental cost should go down, not up.Any thoughts.
Tom

[Realist]

There is a lot of talk about how the computer companies are getting rich by overcharging, but it that is true,why haven't new startup companies been successful? Why haven't the OEM owned systems been successful? Why did Ford get out of the dealer computer business? Why wasn't EDS ever successful at it? Why is Toyota getting out? Why isn't Arkona viable? Anyone remember ATS?

The fact is that dealer systems are very complex. The accumulated knowledge and experience of the suppliers cannot be duplicated by a startup. The products that the established suppliers offer are truly worth what they cost IF you utilize them.

If you want to look at what drives up the cost of our dealer systems look to the factory projects that the suppliers are forced to participate in with no return on their investment. Who pays for boondoggles like FOCALpt, MOPAR5300, RapidPlus and many more we never see? Dealers do!

The big 3 computer suppliers have no magic hold on dealers. Dealers continue to use their products and pay the price because no supplier can provide a comparable product at a lower price. You can play around with the numbers, but you get what you pay for.

ASP is not cheaper. All you save is the cost of the server, but that is largely offset by the cost of shifting the operations tasks to a host site. It is a better alternative for small operations that cannot or will not perform required tasks such as loading software or running backups regularly, but it is certainly not going to be less expensive in the long run.

STAR isn't likely to help the situation. In fact, it could make it worse. What will it cost suppliers to move from the existing OEM programs to the standard programs? What will it cost OEMs to get there? Who will end up paying for it?

We will.

[Matt Parsons]

Realist, I have to take exception to several comments made in your posting.

First you state that EDS has not been successful in this space. The question would be what is your criteria of success? EDS has tens-of-thousands of automotive retail clients worldwide, this is an area of business for EDS that employs 1,000's of team members worldwide, and is a growing revenue base for the company. We view it as successful and very important area of our overall support of the entire automotive industry (from Design to Sale).

Secondly, ASP saves cost in more than just the hardware. A natural savings comes in the area of software licensing and operating system fees. Many programs can be licensed once in an ASP environment versus hundreds of copies being deployed to distributed servers. Other areas that may seem obscure but are critical (just ask any dealer that had to restore a system after a critical failure and they did not have a current data backup or full system save) is disaster recovery and system backups.

The ASP debate can go on and on. The proof is in the pudding as they say. Market pricing of ASP for some may be more than they are paying today. Keep in mind some dealers are sitting on technology that is 5-10 years old, have applications that are unsupported, have CPU's with no maintenance on them, etc. The question is if ASP is cheaper than a similar 'version' of non-ASP. Don't get caught in the game of comparing solely to what you are paying today for solutions that are not comparable in functionality. This would like comparing the cost of a 1990 vehicle to that of a 2002.

[jdaniel]

Another post away from the original topic, but in response to those chiding dealers for sticking with the R&R and ADP- every year at the NADA convention I talk to several of the "little guys". The conversation usually goes like this; they ask what franchises we sell, I say Jeep/Chrysler and they invite me in, then I say "and Volvo" and they stop in their tracks, then I say "and VW" and I find myself alone, back out in the aisle. The little guys do not offer everything the big boys do! There are some fantastic alternatives to R&R and ADP, but manufacturer communications issues dramatically narrow the field for many of us.

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Jack Daniel, MCSE+I, CCNA
Systems Admin
South Shore Imported Cars

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