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ASP vs. In-House Servers: Which DMS Model is Best?

By Mike Esposito
The time has come. Your dealership’s DMS contract with a large, expensive legacy provider is ending. Your search for a new DMS partner is beginning. Which DMS is best?
The answer is: it depends what your needs are. One thing that’s certain is when it comes to making such a critical management decision, there is little, if any, room for error.
This article won’t go into detail about the process for choosing the right system (for a free ten-step guide, click here). But assuming that a dealership has already analyzed their current DMS expenses and potential cost reductions, assessed the market, created a “needs” list and drawn up a potential vendor prospect list, one of the first choices they may be faced with is whether to choose a DMS in an Application Service Provider (ASP) model, or in-house server model.
With ASP, the DMS provider maintains the network that houses all the software and data a dealer uses. Dealers do not have to purchase and maintain servers. Many ASP providers also offer a Software as a Services (SaaS) pricing model, in which the dealer licenses and pays for the DMS software on a monthly basis.
With a DMS in-house server model, the dealership is required to purchase and maintain a server, and to purchase the DMS software up front. The DMS provider typically installs the software during deployment.
Contrary to what dealers may hear from various sales representatives, neither the ASP nor the in-house format is the one, “best” technology. What is best for your dealership may depend on whether you have a single store, multi-store franchise, where your profit centers are, along with many other factors.
Following are the primary considerations when it comes to choosing between an ASP or in-house DMS:

1) “New” technology vs. “old” technology

Advocates of ASP claim it’s a new technology and the future of things to come. In reality, ASP is an evolution of a 40+ year old technology developed in the 1960s and known then as time share applications. Today, due to high-speed Internet connections and advances in server technology, ASP solutions are more viable and a popular choice for businesses in many industries.
The in-house client/server model, though hardly old but perceived by some as un-trendy, is in reality, a tried and true technology that is not going to disappear any time soon. Many businesses prefer to keep their computer operations in-house for several reasons, including reliability, cost, control of data, and more.
The bottom line is, both formats offer dealerships what is needed: a low-cost, effective DMS solution. The choice should not be made based on which technology is new or trendy, but on which system best fits the dealership’s needs and wants.

2) Monthly subscription vs. ownership

One advantage of ASP is there is no need for the dealership to purchase a server. Also included in the monthly cost are all software updates and enhancements, eliminating additional bills.
With the in-house server model, dealers are required to purchase a server as well as the software. Though legacy providers have been known to charge anywhere from $10,000 to $60,000 for high performance servers, today’s non-legacy DMS solutions can run efficiently on an industry grade server that costs no more than $4,000. As servers only need to be replaced every five to six years, the depreciated cost is often the same or less than an ASP monthly service charge if you add it up over time. Some vendors of in-house server solutions also do not charge additional fees for software updates, enhancements or new versions.
Another important price consideration is whether customer service and support fees are included with the cost of the software or monthly subscription price, or charged separately.

3) Speed

With a broadband connection, network access via ASP is very efficient. Yet the dealership is required to keep this high speed connection at all times. If the Internet connection is sluggish for some reason, access to the network may be slow.
An in-house server, on the other hand, runs at a consistently high speed. If there are problems with the Internet connection, it doesn’t affect access to the in-house network at all.

4) Dealership control of data

One potential problem with the ASP model is the dealership does not maintain control over its own data. No matter how much a provider may assure the dealer it will never happen, in the event of a dispute between dealership and vendor, it would be possible for the dealership to be cut off from its own data.
On the other hand, the in-house server model eliminates this concern. Dealerships maintain complete control of their data and network at all times.

5) Back-up of data

With ASP, data is automatically backed up and maintained off site. With the in-house server model, the IT person can choose to either manually back up onto tapes every night, or have the DMS provider do automatic, remote back ups, or both. In general, having the dealership’s data backed up onto off site servers is a good idea.

6) “Less” vs. “more” maintenance

ASP providers tout the fact their model eliminates the need to maintain a server, saves space and takes all the DMS maintenance off an IT worker’s hands. But since in-house solutions can run on a server the size of any other CPU, it doesn’t take much additional space, and in-house vendors can also provide all the needed maintenance remotely. With either solution, dealerships still need some form of IT support for their network.

7) Remote access to network

Many dealers are under the assumption that with ASP, they will be able to have full access to their network from any laptop, anywhere. In reality, ASP access from a remote location requires the installation of a Virtual Private Network (VPN) on a laptop. Remote access to the DMS is accomplished the same way with an in-house server model.

8) In the event of catastrophe…

It rarely happens, but ask any dealer who has been through it. It’s a nightmare. Whether a mudslide, tornado or hurricane, the last thing a dealer needs to worry about is the DMS. An advantage of ASP is that if disaster strikes, all the data is safely off site. All the dealership needs to do is re-establish an Internet connection. However, if there is a power outage in the area, it may not be possible to immediately re-establish the connection until power is restored.
When disaster strikes a dealership with an in-house server, the server may be lost. This is why the data should always be backed up remotely, and why most DMS providers do this automatically. In the event of catastrophe, the dealership can call the vendor who should be able to ship out a new server with all the updated information intact, overnight, if necessary. In the event of a power outage, if the dealership has a generator, it would be possible to set up the new server and network and resume business within a day or two.

Determining what’s right for you

It’s up to each dealership to determine which DMS system is right for their needs. Both in-house and ASP models have their advantages. In many cases either one would be a good choice, and in some cases, both. For instance, a multi-store group may decide to have a server in one store, then connect the other dealerships via ASP. But if a dealership has a single store, or two stores connected with a fiber optic cable, a single server may be the better choice.
Ultimately, a DMS vendor that offers both in-house server and ASP solutions provides the most flexibility. In the event that one model isn’t working out, or the dealer would like to try a different model in the future, it’s easy to change.

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