by Matt Parsons » Tue Nov 27, 2007 5:19 pm
OK, I am sure that there are many opinions but a rule of thumb that I think works is 1-2% of total expenses directed towards your DMS.
Now, with that said, here is what gets tricky. What do you consider DMS expenses? You may say that is easy to identify as it is anything and everything billed to you by your DMS provider. This is where I heavily disagree. Although some DMS providers only offer the basic or core modules such as Parts Inventory Management, Accounting, Sales Inventory Management, F&I, and Service, others offer dozens if not hundreds of additional offerings. For example now that I work for ADP (coming from a provider with a much more limited array of offerings), I have heard dealers say that their bill is too high for their DMS. When we sit down and tear the bill apart and categorize purchases, what we often find is that the dealer is purchasing items such as their phone system, used vehicle history reports, credit bureaus, and marketing/advertising services from ADP in addition to his core DMS. When we look at the core DMS versus a competitive offering, ADP was within a reasonable range for the core especially when you take in to account the support and training services that come with the systems.
Hope this helps.