The Integrated Industry: Software Fact or Fiction?

By: Staff Writer

The Integrated Industry: Software Fact or Fiction?

Agent entrepreneurs make decisions every month about which menu/reporting company they should recommend to their dealers and effective DMS integration is crucial to this decision.

For this reason, Agent Entrepreneur spoke with some of the leading menu/integration providers to discuss the state of DMS integration. Although roadblocks still exist, progress is being made.

No doubt, it is an interesting time for software providers and DMS companies. This relationship continues to evolve as software companies look for efficient, affordable, secure ways to access the data they need.

IAS, an ancillary product provider and third-party software developer, has been able to access the DMS companies’ open architecture by using their certification/approval program. Widespread acceptance and utilization of Internet web services has sped up development and allows for simple business-to-business communication.

“The DMS providers we work with have outstanding support and documentation for the interfaces they provide,” says Matt Nowicki, director of information technology for IAS. He says the same is true for the various product providers and administrators IAS works with.

However, some software providers are still wary of working directly with a DMS company and continue to use homegrown or third-party “hostile” interfaces to access data on the DMS.

“The problem with this is security,” Nowicki says. “Most dealers in America do not truly understand or appreciate the fact that most hostile interfaces expose their data in a very insecure way.”

It is now the law that dealers take measures to ensure the confidentiality of customer data and DMS providers share in the responsibility of this effort.

“If DMS providers don’t lock down their systems, they will surely be named in future lawsuits when the inevitable happens: customer data gets stolen en masse from a dealer’s system,” Nowicki adds.

The issue of security ultimately leads to questions about who owns a dealer’s data. This is an age-old question and the answer is not so straightforward: consider, for example, a customer’s Social Security number or birth date. The dealer certainly holds the data, but that does not mean he can do anything he wants with it.

“In our opinion, the dealer owns the dealer’s data, but we understand that many partners review and use that data,” says Patrick DeMarco, president of Ristken Software Services. “The ownership of the data is less important than how various partners use that data to provide better services for the industry.”

The sensitivity of some customer and employee information should make dealers think carefully about the kind of interface that is in place and the potential that exists for data to be exposed to third parties.

Standardizing and Streamlining the Process

Bob Corbin, president and CEO of IAS, says data standardization is still a concern today. How one product provider defines “in-service” data can differ from provider to provider and from software application to software application.

To address this issue, IAS supports electronic rating and contracting for many VSC providers using its certified interface.

“IAS private labels products and software for many providers that simply don’t have the resources or desire to invest in what is necessary to accomplish this degree of standardization,” Corbin says.

Fortunately, multiple data entry of the same basic customer information into disparate software applications is becoming a thing of the past.

While a streamlined process is already possible, the involvement of multiple vendors is still an issue, says David Trinder, CEO of F&I Administration Solutions. Until all the DMS providers open their systems to third-party vendors, full integration will always be a challenge.

DeMarco says, “The good news is that both the DMS providers and the application providers realize that eliminating double entry is a win-win solution.” Ristken has certification agreements with all the major DMS providers, which provides dealers with full integration.

“As we look to the future, I think you will see a consolidation of application providers who can provide dealerships with full integration capabilities,” DeMarco adds. “The main objective is that we all align our goals in assisting the dealers with selling and servicing vehicles.”

Importance to Agents

When an agent brings software to a dealer, the agent becomes the face of the software, even more so than the software provider. Having a functional, efficient and stable application is crucial not only to the dealership, but to the agent-dealer relationship.

The stability of the DMS integration component of any F&I application is critical, Nowicki says. If an application fails to communicate with a given DMS just one time, the F&I managers will lose all faith in its operation and might even stop using the application altogether.

While there’s no guarantee that any DMS integration method will work 100 percent of the time, relying on a direct link between the application and the DMS, with no hostile interface in between, is certainly the most reliable method.

In addition, a software vendor that has a direct relationship with a DMS vendor is not subject to the removal of hostile interface software installed through DMS “back doors”.

When looking at an F&I application from a product eRating and eContracting standpoint, it’s all about giving the F&I manager a one-stop shop.

If the F&I manager has to visit three websites to eRate and eContract because he does business with three providers, it’s not going to happen. Instead, eRating and eContracting from one website in a standardized way achieves the efficiency gains promised long ago during the birth of F&I warranty eContracting.

Ron Martin, President of The Vision of F&I and VisionMenu, explained that F&I managers need integration that is seamless. The agent has the dealer’s ear many times, but a disgruntled F&I manager can make life very difficult for the agent if he wants to. The recommendations that agents make need to be ones he or she can count on.

“The DMS integration and product pricing integration simply have to work, period!,” says Martin. “We made a decision to allow StoneEagle Group to extract data from the DMS for us. This is something we weren’t good at, and they were, which allowed us to focus on our strengths. The end result was the seamless integration that the agent needs to provide excellent sales tools to the dealer.”

An independent agent brings something very important to a dealer: uniqueness in a specific market place. Sure, agents will reach out to sources available to them (i.e., aftermarket products, software systems and training), but it is uniqueness in choice that sets them apart from their competition.

Moving Toward a Paperless Office

To achieve an ideal DMS-integrated environment, the dealer will play a key role in securing his own system and forcing software providers to develop direct agreements with each DMS provider. This need will only become more critical as a growing number of parties try to access sensitive customer data.

Likewise, an ideal product-integrated environment would include the electronic generation and submission of all documents used in the F&I department. Generating electronic contracts has been a priority for a number of years, but there are still challenges to overcome.

“Part of the issue [with generating contracts electronically] is that there is a lot of paper that gets printed in the F&I office other than product warranties including odometer statements, the LAW contract, etc.,” IAS’s Nowicki explains.

Fortunately, when full integration finally becomes a reality, there will be few losers in the industry. Third-party “data brokers” and those that refuse to switch from a hostile interface will not fare well, but everyone else will benefit.

“DMS providers may feel like the losers at first, but they will be the winners in the end because dealers will no longer be so upset about their approach to integration,” Trinder says.

Furthermore, certified vendors would have stable integration, dealers would maintain secure data and the F&I department and other end users could count on a reliable interface.

Achieving these ideals would translate into faster turnaround in F&I with more accurate results. Cancellations would decline, chargebacks would be eliminated and errors would be minimized.

Despite the barriers that must still be overcome, Nowicki is optimistic about the industry’s ability to achieve these ideals.

“I expect that by the end of this decade – 2020 – either all or the vast majority of F&I offices will be paperless, at least from a backend processing standpoint,” he says.

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- has written 879 posts on Agent Entrepreneur.

Staff writers for Agent Entrepreneur are professional journalists. Industry-specific information is reviewed by topic experts to ensure accuracy.

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