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NADA offers tips on IT vendor products, services

November 15, 2010

The NADA has developed a list of cautionary points for dealers to consider when selecting IT vendors’ products and services for use in your dealership. The list is excerpted from an NADA publication, "A Dealer Guide to Selecting IT Vendors."

When shopping for an IT vendor to meet your dealership’s business objectives, the NADA warns to beware of:

 

Whiz-Bang Features. It may seem great to pick from a palette of 256 colors to configure your screens, and each screen can be a different color. But ask yourself, do you really need it? Will it make the application more efficient, or will it prove a drain on the help desk?

 

Showing you what they want you to see. A vendor wants to present his product in the best light. This can mean showing you all the impressive features and not showing you the things that you might not like.

 

Cheap Software, Expensive Implementation.  An implementation can cost you two to 10 times the cost of the software. Be sure to inquire about the cost of implementation.

 

Concurrent License versus Named Users. Make sure you understand the license terms before going too far down the sales process. You do not need a surprise just before closing the deal.

 

Help Desk. Does the vendor have a help desk with 24/7/365 support? Does the staff have strong communication skills?

 

Real References. Check the references to make sure they have had dealings with the vendor. Request references only from the retail auto industry.

 

Research and Development Cutback. A good indication of an organization’s financial condition is the level of spending on R&D. Ask the vendor about the organization’s plans for future upgrades and the current commitment to R&D.

 

Other Software. Always find out what other software is required. It can cost a significant amount of the overall price of the software if you have to buy user licenses for other software.

 

Maintenance Costs. Assume that the list price of a piece of software is $100,000, but you buy it for $70,000. Maintenance is quoted at 15 percent. What would you expect to pay next year for maintenance? Is it 15 percent of $70,000? Is it 15 percent of $100,000?

 

Contract Surprises Make sure you get a copy of the contract before you make a commitment to buy and have your legal people review it. The contract is open to negotiation until it is signed.

 

To order the complete "A Dealer Guide to Selecting IT Vendors," go to www.nada.org/mecatalog or call the NADA at (800)252-6232 ext. 2.

 

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