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5 Technology Mistakes Dealers Can’t Afford

With just a few tweaks to your IT budget, you can reduce spending in some areas and spend more on mission-critical technologies that boost your productivity and profitability, while keeping your business secure.

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Erik is the president and founder of Helion Technologies.

In today’s world technology is mission critical to your success, and as business owners, you can no longer afford to view information technology (IT) as a responsibility to be handed off to the “IT guy.”

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Ten years ago, you could get away with piecing together an IT infrastructure using equipment purchased from big box stores and “small business” carrier services from internet and phone providers. Today that’s not the case. To successfully sell and service vehicles, you need a secure, high-performance network.

One problem I’ve noticed is that many dealers overspend for some technologies and underspend for others. Here are five mistakes dealers often make when it comes to technology spending.

1. Internet and Phone Carriers

Recently we discovered that a dealer had been paying $6,500 per month for an internet connection that should have cost $1,500 per month. That’s $60,000 a year wasted.

Many dealers overspend thousands of dollars for phone and internet service; primarily because they don’t take the time to understand what they’re paying for. Multi-store groups have negotiating power and should use it to get better rates, as well as to consolidate carriers.

Never sign five-year contracts with vendors; 36 months should be the max. At the end of each contract, don’t automatically renew. Bid out your business to see if you can get better rates. Examine usage reports for phone lines you’re not using, unnecessary long-distance bundles and devices or fax lines no longer in use.

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2. WiFi and Network Equipment

Time is money in the service department, and insufficient wireless bandwidth is detrimental to your bottom line.

In the last few years the number of connected devices in a typical dealership with 80 to 100 employees has more than doubled. This trend is accelerating, so in the next few years expect the number of connected devices in your dealership to double again. Combined with the rise in connected cars, this greatly increases the demand for bandwidth.

It’s hard to believe, but some dealerships are still using off-the-shelf residential routers to try and keep up with this massive bandwidth demand. These routers are woefully insufficient for today’s wireless needs.

If you don’t have enough wireless, sales and service processes get bogged down and productivity suffers.

To determine whether you’ve got enough wireless coverage, get a site survey. This gives you a “heat map” of your property that shows where coverage is strong, and where you need more.

The average dealership today needs a minimum of two dozen enterprise-grade wireless access nodes. Additionally, make sure you have gigabit network switches and a fast internet connection — ideally, fiber optics — to handle the data throughput.

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3. Software Licensing

Are you 100% sure that your dealership is running licensed software on all your PCs? In recent years the Business Software Alliance (BSA) has increased audits of small- to medium-sized businesses. If they discover unlicensed software, you can be fined thousands, if not millions of dollars.

If you’re trying to reduce your IT budget, this is the first place your IT staff might try to cut corners. Recently a dealer was asked by the BSA for proof-of-purchase for all their software. It turns out that to save money, the IT staff had been pirating keys for Windows and Microsoft, and had installed unlicensed versions on more than 200 computers. The dealership paid over $1 million to settle the BSA’s claims. This is an area where cutting corners doesn’t pay off.

4. The Cloud

Most dealers don’t leverage the cloud the way they should be. Where do you think your valuable data is safest — in the closet on a server managed by your IT guy, or in the cloud managed by security experts at Microsoft? If you chose the latter, you’re correct.

Leverage the cloud for email, file sharing, applications, data backups, file storage and more. Cloud-hosted servers are more secure and less expensive than on-site servers.

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5. Cybersecurity

Whatever budget you save in other areas, invest in security. Many dealerships have experienced cybersecurity incidents resulting in the loss of thousands and even hundreds of thousands of dollars. It turns out that 91% of all data breaches start with an email phishing attack. You can have the best firewall and anti-virus software in the world, but they won’t protect you against phishing attacks.

When we send test phishing emails into dealerships, we see an average 30% of employees click on the links within the emails. All it takes is one person to enter login credentials where they’re not supposed to, and your entire network is compromised.

This puts your money, your customers’ personal data and your brand’s reputation at risk. In one study, 84% of consumers said they would not purchase a car from a dealership that had compromised their personal data.

Again, this is an area where dealers should not skimp. Hire an outside service to conduct a risk assessment to find out where your network’s vulnerabilities lie.

With just a few tweaks to your IT budget, you can reduce spending in some areas and spend more on mission-critical technologies that boost your productivity and profitability, while keeping your business secure.

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Erik Nachbahr

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