Automation/Computers/Technology
Should You Upgrade Your Computer System?
By Sandi Jerome
Many dealerships are in the second, third or even fourth buying cycle of their computer systems and they are starting to wonder if it is really worth it to upgrade their current computer systems. There are numerous reasons why you should upgrade along with many reasons why not.
Reasons why you should upgrade your system:
Savings. If your computer company is reducing your monthly support because you're buying new equipment that is easier to maintain, that might justify upgrading your system. Let's say that you're currently paying $800 a month for the support on your CPU and hard drive. If the new CPU support will only cost $500 a month, then you can afford to pay $36,000 for a new CPU (most have a useful life of three years).
Speed. Some of the new systems are faster. For example, a new 9200 or 9300 model from ADP is about four times faster in processing speed than the older models. Remember that this is processing speed and it doesn't mean that everything is faster-your modems will still be slow sending stock orders, terminals will transmit the same way and printers will print at the same speed.
Factory Integration. Some of the manufacturers will dictate which model of computers will be compatible with their communications systems. Some of the computer companies will not write manufacturer interfaces for their older models. This means that you're forced to either upgrade or change computer companies.
Enhanced Software. Often, when the computer companies write new software versions, they will only allow you to put that software on a new model of their computer. Make sure that you need these new enhancements and are not just getting caught up in the excitement of a new version.
Space. You might be running out of disk space, and your old system might require additional memory and a hard drive that costs more than the price of a new CPU and hard drive.
Here are some of the reasons why you should not upgrade your system:
Price. Many of the proposals show a monthly savings if you upgrade, but these savings can be misleading. Since the new lease payment will be less than the old lease payment, the monthly cost seems less. If you don't upgrade your system, the lease payment goes away entirely, and you'll save even more.
Old Technology. You might be committing to three to five years of the same technology that you already have, when another type of system is just around the corner. If you choose to go on a "month-to-month" support agreement instead, you'll have the flexibility to take advantage of the newest technology when it's available. There is really no harm in signing a one to two year agreement since this gives you time to shop, install and convert your data to a new system.
Space. This might seem to be a repeat of the above reason of why you should upgrade, but often your space problem is caused by old and duplicate data. But as a warning, before you drop service customers because they haven't been into your shop for two years, make sure you download that data to a PC for customer retention follow-up. Send me an e-mail if you need help in this area. The same guideline goes for old accounting data; there are companies that will put this information out on CD for you on a monthly basis. Most importantly, before you change your car deal storage from one year down to three-six months to save space, get that valuable data out to a PC. You can pick up lots of space by eliminating duplicate customers. Make sure you reuse the same customer number each time you sell a customer a car or have it serviced. If your customers live in the same household, using one customer number will save on drive space and mailing costs.
In addition, your system will run faster if it has less customers to search through every time a new repair order or parts ticket is written.
The final question is-if the cost of upgrading your system is the same or more than buying another completely new system-should you "jump ship" to another company? My answer is usually no. There are hidden costs in switching systems such as the loss of productivity, data conversion problems and training issues. A computer system conversion is typically a bad situation for everyone involved-and your employees will use the computer system as an excuse for almost everything: higher expenses, lost sales and lower profit margins. It's best to stick with what they are familiar with instead of switching systems just to save a few dollars-otherwise you'll pay one way or another.
Sandi Jerome is the manager for consulting service for Jeff Sacks & Associates. sjerome@dealeronline.com
