Analyzing DMS Bills
The Gillrie Institute is currently involved in about 40% of all the dealership computer deals negotiated nationwide. The intimate knowledge gained in these consultations, together with the database it fuels, positions the Institute uniquely for analyzing DMS bills for our clients and seminar attendees.
There are usually two major questions dealers have about their computer (DMS) bills:
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How does my bill compare to what other dealers are paying for similar services?
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Does my bill continue to reflect all the discount and benefits I originally negotiated?
The Billing Analysis
To answer the first query for our dealers we execute a line by line analysis of their current technology bills. We compare the charges to the objective norm that we have established from thousands of other bills we have seen recently. This benchmark deal represents, not the best deal we have ever seen, but the deal that can be routinely negotiated with our help. While our goal in new negotiations is to help our dealers “beat the benchmark”, our goal in the analysis stage is to find ways dealers can reduce their costs.
Once a dealer knows how much he may have “overpaid” for the technology, he will make better future choices and be prepared to set the tone for the next negotiations cycle. Additionally, we will identify the items that many dealers find they can do without and list the potentially “cancelable” maintenance that can immediately reduce a dealer’s costs. DMS vendors will often stall, ignore or unilaterally disallow cancelations. In these cases we can often provide strategies that will achieve the desired results, utilizing other leverages and our knowledge of the terms of the vendor contract. In consultation with the dealer we can establish a plan to protect his technology investment by utilizing other proven modalities. It is often not necessary or even advisable to change from an existing DMS vendor. In many cases, with proper analysis and consultation, we can achieve reduced costs without the turmoil of a global DMS conversion.
The Contract to Billing Analysis
It is an unfortunate reality that a dealer can negotiate good prices and what appear to be acceptable contract terms, thinking he has covered all the contingencies. Today’s contracts can be difficult to understand and, in some cases, a dealer may not even be aware of all the clauses to which he has agreed. The use of “referenced contracts” that only appear in online versions has become rampant. A dealer agrees to be bound by terms he never even sees.
When we perform a comprehensive contract to billing analysis for a client (a regular part of our service), we examine the DMS vendor’s bill in its historical context. Has the bill increased? Are the increases justified by the contract? Sometimes the special terms that were negotiated when the agreement was signed are “forgotten’ by the vendor’s billing department. Usually when this type of error is made, it results in the dealer paying too much. A dealer’s payables clerk, no matter how highly motivated, will not have access to the original contracts and will not be familiar with the protections it may afford. At Gillrie, our experience guides us in rooting out any discrepancies. Our clients not only have had their bills reduced but hundreds of thousand of dollars in refunds have also been received.
Here are a few of the common problems (but definitely not all!) that we find in these reviews:
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The dealer bought a new solution (e.g. CRM) and the DMS vendor was unable to make it work as it was demonstrated. It falls into disuse but the dealer continues to pay for it. Because we know what works and what doesn’t, we know which questions to ask a dealer’s staff to detect this sort of issue.
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Fewer users are on the system because of estimation errors or downsizing of the organization. Whether the number has increased or decreased, issues can arise. Can the dealer cancel unused capacity? If capacity has been added, does the pricing follow the negotiated terms of the original contract?
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Old hardware or software has been replaced by new but the dealer is being billed for both iterations. In these very common cases, a refund is due and the excess maintenance must be removed from future bills.
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The contract calls for a yearly assessment of certain costs (e.g. laser costs, credit checks etc.) so that adjustments can be made. DMS vendors rarely miss the opportunity to raise their billing based on these reviews but somehow we often find that the reassessment has been “overlooked” when it would result in decreased cost for the dealer. .
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New networking solutions have been implemented but the old system is left in place, thereby doubling costs.
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A new data connection (T-1 or such) is added on top of an existing service. The dealer pays for both. This is especially dangerous because more than one vendor may be involved and both are “providing service”. Refunds may be hard to obtain in these cases. Vigilance is the only protection.
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The original system was priced and configured by a vendor’s salesperson but when the installer begins his work; he finds conflicts, problems or incompatibilities in the proposed components or software. An installer chooses to leave old hardware or software in place and “work around it” to make his job easier. The dealer pays for an enhancement that has not even been installed. In theory, the salesperson should be informed and should make an adjustment. Such an adjustment might tend to draw attention to someone’s lack of professionalism (or reduce sales commission). Do you think this type of adjustment gets made if the dealer doesn’t notice? The culture of the industry has been to say nothing and let the dealer pay for equipment that was not installed. One dealer we helped got a refund of over $175,000.00 in a case like this. He had paid for item he never received for four years!
In conclusion…
Dealers are rarely equipped to accomplish these sorts of audits on their own and DMS vendor reps will offer no help. Obviously they are seriously disinclined to help a dealer find ways to reduce his bill. (In some cases they will find 1% of the problem just to appease the dealer so he will stop searching for savings). Even when exceptional dealership personnel, with the best intentions set out to find these very complex issues, they will spend inordinate amounts of time and energy to without achieving the success we can achieve quite easily and inexpensively. It’s simple. It’s been our only job since 1992 and no one else can do what The Gillrie Institute can do.
Our sole job at Gillrie is to help dealers. We don’t have any other agenda. The Institute distinguishes itself by maintaining its position as the only consultant in the industry that does not have a business or financial relationship with any DMS vendor or other partners. By completely eliminating any conflict of interest, the Institute concentrates only on the needs of its dealer clients.
