#212 - The DNA of your DMS w/ Allen Dobbins

You are listening to the Independent Dealer Podcast with hosts Luke Godwin and Jeff Watson.

Hey, boys and girls, children of all ages, everybody out there. It's another episode of the Independent Dealer Podcast brought to you by Buckeye dealership Consultant. Today we have Alan Dobbins, one of the, I guess founders of the independent dealer DMS space and a used car dealer of his own. His own right back in the day. So, Alan, thanks for being with us. Introduce yourself to everybody out there who may not know you.

Okay? Thank you guys. I appreciate you having me on here. I'm Alan Dobbins. I have been in the automobile industry for, gosh, started in when I was right out of college. So my father was an auto dealer and I worked in his car business. And then eventually over time, I evolved and got more interested in computers because we went through some automation that we needed to do in our own dealership because we had multiple locations, we needed to tie those locations together. And we bought some software and the developer and I got together and worked on that, and then we ended up becoming partners. Over time, he left and I continued to push Autostar forward and did that for 25 years. In between that, I also owned a company called Sigma Payment Solutions, and that was eventually sold to repayment. And I've done some other things like Secure Close, which was an automated closing, electronic contracting system and closing system, which is out there today and doing well. And I've owned a software development company, did some software development for actually this industry and IDA20 group system is one of them. And lately what I've been doing is some consulting. And I've been involved in a, you know, DMS acquisition recently and help gave give some advice to make that happen. And so that's really what I'm doing today.

I like how he said he evolved because, Jeff, you know, all of us are Neanderthals. If you're a car dealer, you are a Neanderthal, just to let you know that.

But Alan has been on that cutting edge of trying to force technology into the dealerships. And we might be resisting it a little bit, or some of us dealers might be resisting it, but Alan's the one that's bringing it to us so that we can be more efficient, more effective, smarter. I mean, like you guys talked about, used to keep payments on ledger cards. I mean, we still have some dealers that do that. I used to keep track of all my payments in Excel. You know, heaven forbid, my computer crash.

You know, you use Excel. There was somebody last week that posted on the Independent dealer Facebook group. And the guy had, like, what, 500 accounts? He was still keeping on ledger cards. Yeah, that blows my mind. I mean, my dad was way behind, but I think we got off of that in, like, 94.

I lost sleep. I lost sleep over that post. I laid in bed thinking of him, like, if those ledger cards get lost or burned, he is just done for.

My dad would carry. My dad would carry.

I can.

I can still remember the. The little notebook that, you know, that you could take the. The three. That three. You know, you could take it in and out. I still remember my dad. I mean, like, he. He carried that around everywhere he went. I mean, that's. That's how he took care of the dealership. I mean, what the heck, Alan? I mean.

Oh, no, we did that.

What your dad was doing.

Oh, yeah, we did that. We carried little ledger. I mean, I had these little. I guess there were five by whatever they were, cards that were in a slot, and I'd pull them forward, and I'd get the one out of there I needed to get, and I'd write the receipt on one of those boards, tear it off, hand it to the customer, and they'd leave. That was. That was how it worked. Delinquency was. We let that. We sit down and we write out how many wants each, literally all the time on a piece of paper, and we cross them off as we got done with them. I mean, we didn't use Excel or anything when I first started doing that.

And then what year was that, when you think you got into the. I mean, you're slightly older than me, not much, but what year did you get into the car business?

Well, my dad started when I was 17, so that would have been 1983.

You're a lot older than me.

Never. Yeah.

You know, my introduction to the car business was actually pretty brutal. My father, you know, he didn't believe on. And, you know, helping the fan, helping the guy in the family go inside the office to start to work and learn the business. My. My dad's idea was, hey, listen, you know that car that's sitting out back, that's sitting in an ant bed? You need to go out there. It's 106 degrees in Texas. The blacktop is black. And you need to get in there where there was blacktop and put a piece of cardboard down and roll under there and pull that transmission out. And by the way, there's an ant bed right underneath it. So you'd have to get out really quick and dust the ant beds off. You Know the ants off your cardboard and then throw it back under there and get going again. So that was my job. My job was pulling transmissions and cleaning parts and doing all kinds of stuff in the shop. I actually ran a mechanic shop when I was 19 for another guy.

You did evolve from Neanderthal to where?

Well, I quit. I quit my debt. My dad wouldn't pay me. Yeah. So I quit and went down the street to work doing state inspections because that guy pay me more.

So, Alan, you've been in it, you've seen it all. And you started to develop autostar, which is kind of your. Your baby, right? I mean, I guess that's kind of the. Where you took technology and really pushed the DMS forward. You know, there's quite a few companies that were out there and some, you know, different platforms. What did you see was the need and where did you see that your product was filling that like, what was the catalyst to actually. I mean, because developing a software and an I and a dms, that's got to be brain damage. I don't know why, the cost, the headache, the hassle. I don't know when you ever recoup your expenses from building something like that. But what was your thought process on it?

It's brutal, you know, I mean, I could tell you over time it was pretty brutal. But you know what? I like challenges. And so I. I thrive on challenge and fixing things. That's really my two favorite passions. So if I see problems, I like to fix them. I like challenges that can't be done. It's just how I am. But I would say in. We actually bought some software and, you know, it. It did a good job. It's funny, I was in college and I took a programming class when I was in engineering, and I didn't graduate out of engineering school, but it was my very first time to sit in front of a computer. I was. I was really a kid who lived outside. I didn't live inside. And so, you know, for me to sit in front of a computer, I was like, what the hell is this? You know, And I took my first programming class and I absolutely hated it. I mean, hated it. I swore that if I had to sit in front of a computer the rest of my life, I'd kill myself. And so, you know, I talk my professor into giving me a circle to get me out of there so I could transfer to business school. And that's kind of where I went from there. And, you know, I absolutely hated it. But you know what's interesting is When I actually got in the business and started working with my father in the soft first software application we bought, I actually learned a little bit about that programming. And I started working in that with him and I started getting more passionate about that and less passionate about the auto side of it because he created much more of a mental challenge for me to try to solve those problems. And being that I had my background in the business, that really, really helped. And so, you know, as far as when you get your money back, that's a very good question. You know, you spend an awful lot of money. And I'll tell you something. When autostar was being constructed, I got to a point in Autostar where I was in debt. $400,000 in credit card debt and 100,000 in bank debt. My sales were a million 60 a year. And we only 35% of my revenue were services. The rest was hardware. And that's a zero profit. So. And I had employees, of course, and I was literally borrowing every paycheck. That's how I lived, you know, I lived on a credit card. And when I introduced the next part of autostar and I decided the last version of Autostar and I decided to take it online, my employees were like, dealers aren't gonna sign up for that. They're not gonna let you have their data. And so I did all this research and I thought, okay, you know what, I've got to change the model. My average revenue per client at that time was $57 per month per client. I have about 600 and something clients and only 50% of those paid. The rest were on non support. They, they didn't have support, they didn't get updates and all that kind of stuff. They just kind of winged it. And so I decided, you know what, I thought I've got to change it. If I don't change it, I'm done, I'm out of business. And so I went in and decided to go to the subscription model, which nobody was doing. And that was in 2003. And I put the software online. It was in 2003. And I went to my customers and I predicted when I did this, I would lose 50% of the paying customers. So of the half, only 50% would convert. And that was my prediction. It turned out to not be that way. But it was pretty stressful because what I did was I said, okay, if you guys are right, then we'll see what happens. So what I did was I went in and said, okay, here's the price for buying the software. It's the same price if you, we host it. It's the same price if you host it. Which one do you want to do? 85% chose for us to host it. Oh yeah, they go, you mean we don't have to do a backup? We don't have to do anything? You load all the updates and you're going to charge the same fees. We were like, yes, sign me up for that.

Now I recall that and I want to just back up and tell. There's a lot of young, younger dealers that listen to this. You know, in the, in the mid 2000s I think is when a lot of regional software started happening. And this was, I mean every state would have a different DMS, am I lying, Alan? I mean it was DOS based. Every state had a different. Texas probably had 40 of them, who knows. And it was, it was a nightmare. You couldn't get serviced this, that and other. And I started looking and I remember, I remember looking in one of the magazines and saw autostar. I remember seeing it and I said, well, this is what we have to do. And I think I was on probably at the very end of the server based autostar because I remember, I remember the change. Super simple. It was, it was so simple to me. It was so refreshing not to have to worry about my data being on my own server. It was revolutionary. And at this point in time you couldn't even imagine somebody not wanting to do that. So there was 15% of people who said no. I mean, what were they thinking?

Alan?

You know what, these were companies that were pretty large and their interests were different. So some of them were very, they had technical people that just did not agree with it and they felt like they could do better analysis with the software locally, they could do remotely. Some of them had their own programming agendas. They actually had developers on staff. They would actually access the data and do programming. That was really their agenda. It was really very few of those. And we, we, but we had some of the largest customers in the country, dealers in the country using our software at that time. We had U.S. auto sales, we had, you know, a whole bunch of other ones and we decided that we would just accommodate that. Then eventually we decided we wouldn't because it became much, much it became way too difficult for us to do that at some point it was very difficult to support them because they would be on a version that would be two or three versions back because they would make the independent decision not to install them.

Yeah.

And we had gotten to the point where our updates were consistent, reliable we weren't having problems. So we were like, guys, you got to stay current. You know, we got to do good regret. We do really good regression testing. So we're not, you know, breaking things that, that worked before. So, you know, we feel like you need to be on the hosted version. We ultimately had to force them to do that and they did.

Hey everybody, real quick, make sure you are signing up for Buy Here Pay Here United. It's the upcoming Buy Here Pay Here convention in Las Vegas where we're going to be talking of all things CRM. We're going to be talking about how to have the best dms, how to have the best policies and procedures for your internal controls and the way you run your dealership.

Yeah, you know what's funny? And Alan's talking about this during the podcast about Steve Levine and these people. They're all part of Buy Here Pay Here United. They help put all this together. And, and it's going to be a great way for Buy Here Pay Here dealers to learn. Is that the Bellagio April 10th through the 12th or something like that?

Sounds right.

Great rates at, at the Bellagio and really, really inexpensive cost for to bring your whole staff. I mean it's, it's one price and then it's 199. I think it's 499 for the first and then 199 for each additional. Just going to be a value across the board. Thank Jeff. Yeah.

And if it's going to be very unique. So if you've been to other conventions in the past, this is just going to be different. So if you're looking to just get a different perspective and a different format and different ideas and different sessions, this is going to be the one to go to. It won't be the same old, same old. So jump on buy here payhereunited.com get signed up right now. We'll see you there in April.

One thing real quick, just a technical side of it. This might be a little too geeky for some out there, but to me it's kind of, it's interesting. And I'm definitely not a computer geek by any stretch of imagination. I can turn a computer on. Back when you had this data on your server, I mean, AWS didn't exist back then. How was this hosted? Was it just a bunch of servers that at your business? I mean, how does that work now?

We put it in a data center. We had it in a cage right in our own cage and 8 by 8 cage and data center. And we had about 400 devices running all that. We had probably, I don't know how many servers, 40, 50 servers, something like that. We had multiple database servers. We had a whole bunch of sophisticated switching so that if you like, let's say one of our connections went down internally, the traffic would be automatically rerouted through other connections. So, you know, we were down only four times in a year. Actually wasn't even a year. That was over like a two year period. Over a two year period. And two of the times the data centers, power distribution units failed on our place. It wasn't us. So, you know, it was. So we really did a good job. We really had a really good team. And they were lean. We only had four people in that department. And they did a phenomenal job of making those systems run and keeping them going.

So, Alan, I want to talk about the future because I know you're a guy that's got ideas and you've got the vision of what these things are going to look like going forward. Because you were a pioneer back in the day, right? You move things forward and you see, you know, maybe that kind of technology interaction with dealers is kind of plateaued. You know, I think all of our dealers, we're all seeing that we need it more because Covid pushed all that forward. But maybe we're not getting it yet. But before we get into the future part, I want you to talk about the unit economics of a dms. How do you make the dollars and cents work in that situation? Like you said, you were making $54 on or $59 on a customer. When you switched over to the subscription model, you made a little bit more. And the reason I say that is because so many dealers, we look at it, we're like, oh, you're paying X amount for these guys. And you know, I'm paying $10 a month to get dealer center or something. You know, it's like, it's like A, you get what you pay for, and B, if you really had a DMS that did everything you wanted it to do, you'd be paying $5,000 a month or $10,000 a month to have all of those little services brought inside. And this is something that I argue a lot about dealers is we love to buy little plugins. We love to pay $50 or $500 a month for some new little thing that's going to connect and do this. This one books it, but this one shows us days in stock. But this one's going to give us an underwriting scoring model, but this one's going to upload 360 pictures to our website, and this one's going to help sweep our floors. Like, we will be nickel to dime, 50 to $500 at a time, but we won't just step up and pay $5,000 for one software that does it all.

I wrote down a question to ask Alan in a minute. Why can't we have a super app, DMS? It does everything. I will pay $5,000 a month. I'll say right now, Alan, you make it happen and I'll pay $5,000 a month.

The answer is yes, you can have that. The. The issue is this. I mean, you can. You can definitely have that. When I left autostar, we were introduced. We were about to introduce our, what we call Fusion 2 product. People thought it was too late and this and that, and they were complaining about that, but the reality was it was coming. So In September of 2015, it was supposed to be released at Innovate. We were going to start doing installs in the spring. So that application would have had. Now think about this, okay. Have you ever turned heard the term erp? Erp? And so in the. In the enterprise world, they call it Enterprise Resource Planning, but basically it does supply chain. What? Supply chain inventory. You know, you guys are basically in a. You basically are an area or erp. You got CRM, accounting, you know, sales, inventory, servicing, Servicing and service. Okay, they have field services in that world. They have all kinds of things. So if you were to think about the enterprise world, it's not any different than your world. So what we did was we were actually using an ERP platform that we basically scuttled parts of it, and we rewrote the whole application sitting on top of it. Because what it did was it gave us a lot of a base platform to work from. What we were doing to do that was we were doing it to bring in our accounting, okay, Our CRM, our sales, our inventory, our loan origination, our loan servicing, our everything into one platform. And so everybody would have had basically one interface to click on and to do all these different things. Dealer Socket decided that they wanted to stay with IDMs, which was finance Express at that time, and continue to advance that and shelve that product. Actually, if they had gone and finished the product, that product would have been the only product in the market today that did all those things that you're talking about, and there would have been no equals. There would have been nobody. They couldn't even have touched it.

Well, why wouldn't you finish product. I'm sure it's expensive to do those type things, but. And dealer socket of course has their own CRM and their service and all this. So maybe it didn't make physical sense for them to do it. Um, but it's got to make sense because it is a 5,000 plus dollar a month deal here. I mean, why can it, why is it not here?

Honestly? Because the percentage of you is less than the percentage of those.

Gotcha.

So do you remember how you said in your most recent podcast, you said I'd pay $35 an hour for a tech versus $20 an hour for a tech? Well, you said you wanted to do that because you wanted to do it one time. You wanted to do it, right? You didn't want to hire two employees, right? Well, you know what? That's the way it should be. You should want to buy the best that you could possibly buy at that point in time that's available, that services all your needs. And what I find more often is that people aren't willing to do the research that it takes to pick a product that fits their needs the best. So buying a dms, very emotional decision for a lot of people. It's emotional because it's painful. Painful, that's right. It's emotional because they may be judged by it by their peers. It's emotional because it costs. Because it costs whatever it costs. And they don't want to be judged. They didn't spend enough money, but they want to be applauded because they spent enough to accomplish what they did what they needed. But most people don't ever know what they need until they need it.

You know, so how, how does a dealer do the research, Alan? I mean, we're, again, we are the Neanderthals. And I agree with that. And I know nothing about computers, thank God. You know, Steve Jobs knows how to make one of these things and make it easy because, you know, it made my life bearable. But if I'm just. If I'm a dealer and I've got two or 300 accounts and I want to grow, where do I go? What's the resource? How can I figure out what to buy and what it's supposed to cost me?

Boy, that's a good question. I actually have advocated for quite some time that there be two DMS products in a single company. One for a small dealer and one for a large dealer. One of the things that I had problems with was we tried to go down market and introduce a product that was for smaller dealers and actually take features away, but provide what they needed to be able to do their business. And that was an unmitigated disaster every time we tried to do it.

Interesting.

Yeah. And the reason we couldn't do it was because some of the complexities that were in Autostar that gave you some of the power later still existed in some of the smaller stuff. And there was a lot of requirements for entering data into certain fields because we did that, because we wanted good reporting. So one of the, One of the things that goes along with that is that our attrition rate in the small dealerships was significantly higher. So it'd be like a repo. Right. And the attrition rate was that way, not just because they were small dealers. I don't think that they necessarily. I think they may have thought some of the product was too complex at that level and that they needed something simpler. Even though. Do you know, we even had. We did a promotion where it was DMS for free, for life. We did one that was $99 a month. We did one that was $49 a month. We tried every. Every strategy known to mankind to try to figure out what the right formula was, but ultimately what we found out was that, you know, we really just need to stay in our. In our lane.

Yeah. You know, do you think that the commitment was so low? You know, when that commitment and that cost, if you're not paying anything for it, it has no value to you, so it's very easy to give it up or switch it or do something else, and you didn't have maybe a big cost to get in it. I know that I'm stuck where I'm at because it would cost me so much to convert my database and relearn and reintegrate and redo all these things that it's like, meh, you know, you.

Know, that's a very valid point because as Luke said, he would pay $5,000 a month to move. And in your. Again, in your most recent podcast, you just talked about the pain of switching to a CRM or, you know, should I change or should I not change or should I change DMS providers? The thing is, is that there's an intrinsic cost associated with staying the status quo. And if you find out that there are enough gaps and enough issues that you can justify that, then it may be. It may justify change. One of the things that I've been working on with a friend of mine is potentially providing mini apps, little small apps to bridge the gaps in these DMSs to fix the areas that are the weakest and let you subscribe to just those. So let's say, for instance, their repo processing is insufficient or bankruptcy handling is insufficient. There's so many different ways that we can get data now from all these different providers. If they don't have APIs, that's not even a roadblock. There's ways to get data from the providers and actually put it in these systems and track it. It would be loaded into a secondary database, and that secondary database would do its thing. It would push some stuff back. And you could take. There's ways to do that nowadays in this world using things like something called rpa, robotic process automation, and some different things like that. But, you know, it's. So there may be ways to mitigate some of the issues that you have today without spending all the money to change DMS providers completely. But here's where you get the best. The best answer to that question is you hire people like me to help you analyze the DMS that you have and to look at what's available out there and to try to find the right one. And if there's not one, you take time and you wait till the right one shows up, because there's no use changing twice just for the sake of changing.

Oh, man, it's absolute brain damage.

And there. And there's a lot of people that will go out and just change by pure emotion because they hate somebody. Yeah. Or dislike them. Now, if. If you. If you aren't getting the service you need and you're. It's actually affecting the ability for you to run your business, you should change. I mean, if you can't get what you need and you're not getting any feedback or any information that helps you be successful, then you should probably change. Because there are people out there that do probably an adequate job that will provide you the level of service and support you need. I mean, you know, one of the things I think we did really well at autostar that I'm proud of. And a lot of that had to do with the staff that ran that department. And it goes to Richard Hudson, who, you know, owns Ignite. And I actually started Ignite and sold Ignite to Steve Levine and Richard Hudson. And Richard was phenomenal. His team was absolutely phenomenal at providing, you know, because he cared personally about it. It was almost like a personal insult for somebody to insult the level of service they got out of his team and, you know, said Autostar. 75% of the people that worked at Autostar were not in Sales, they were all, they were in the service side. They were in professional services, programming and support. So very small percentage of our operations were sales and marketing and administrative. It was all geared around supporting the client.

And for sure it was, I mean compared, I mean not that dealers socket even provide service, but the autostar service was, was outstanding. Let's, let's go down that rabbit hole of switching DMSs. Alan, your team brought on, I mean I don't even know how y' all would begin to do it, but we went from a DOS system, DOS based system to autostar. Y' all transfer the data. It all worked exactly how it was supposed to. Then when we migrated actually from autostar to the dealer socket, we're one of the first dealers to do was a nightmare. And I would figure it'd be easier going from here to there, but who knows if it was or not. It took me two and a half years to get historical data. It's just all these things that create, create such bears for dealers to have to do this. You know, what should a dealer expect when you're transferring data and switching these things? I mean, how do you prepare for it? Sorry to break in again, but this time is to talk about Buckeye dealership consultant Jeff. What do you know about those guys?

So if you have set up your reinsurance company for 2022, which I hope you got that prepped back in November, December, and you've got your reinsurance company set up, you started out with your basics, like you know, your service contracts, your CPI product that you're offering to your customers so that you're keeping more of that money internally, right? There's, there's places we can send money out and we rely on these other companies to pay claims and they're doing the exact same thing that we could be doing internally with additional products, right?

Like yeah, I mean you can sell.

A VIP package, right, with like key replacement and windshield insurance and tire road hazard type stuff.

What's great about owning your own reinsurance companies, you can stand out from every other dealer up and down the street, right? You can offer a 12 month, 12,000 mile warranty on every car you sell, which would blow the competition away probably in your town with Buckeye dealership consultant, they can teach you how to do these things and build the products. Like you're talking about a VIP treatment every time you buy a car. I mean just that's advertising right there, Jeff. And you're going to stand out. You're going to outsell the guy next door and you're going to make a lot of money doing it.

Yep, yep. Call the guys at Buckeye. Get set up too.

Well, mock conversions are a good test. Multiple conversions ahead of time are a good way to start to make sure that you're getting what you think you're getting. I don't think most dealerships have the capacity and the resources to truly run side by side, but you have to make an internal commitment to allocate people to the new technology and take those mock data conversions and run reports. So you want to take a stat, a static point in time when you do these things. Run every single report you can out of your old system and then go back into the new system since it's going to be converted to that point in time and try to start just checking things and go down a checklist. Is this right? Is this right? Is this right? Is this right? You know, things like little things like recency and balanced aging and, you know, contractual delinquency, whatever you want to call it, and all these other things that come into play, you know, interest earnings, interest income, you know, principal balances, deferments, I mean, all these things affect these balances. And in the historical side of things, probably one of the reasons they had they put that off is that's, you know, autostar was able to track post charge off recovery transactions, recovery payments, and we could even amend those multiple times and keep ledger cards running concurrently. That creates a little bit of a challenge in conversions, especially as it relates to things like static pools and all those things as well. And if you have a legal department or something and you're trying to track that information and you actually send people to garnish wages and do those things. Some of that stuff was tracked in autostar. So all those things create another level of complication. And you know, I was talking to somebody recently about this and I said, how are you going to convert their data? And I'm not going to tell you who it was, it didn't matter, but. And they told me and I said, well, how are you going to do this with a hundred percent compatibility and convert 100% of the data when you don't even have those features?

Yeah, those fields aren't even built in. Where's that going?

No. So what are you going to do? Yeah, so I think one of the things dealer socket suffered from was they, they, they didn't have that same level of functionality. And so some of the data that they couldn't convert or didn't convert might have just been because the, there's nowhere to put it. Yeah, exactly.

That was the biggest issue I had was when you have a payment arrangement or a change. We weren't. We were calculating off the hist. What was the original contract? Right. Date, amount, interest rate, amortization schedule. They weren't accounting for the fact that I changed that amortization schedule.

You know, where did you come from, Jeff? What was your deal pack?

Okay, so that was again, big mess. But Alan, dealers now that are changing say they're switching from one to another here. There. Is it still a practice where they should be paying to have their data brought over to the new system or should most DMS is be doing that as a service?

Boy, that's a great question. If you were in outside the dealership space, the rest of the world pays for those things.

Okay?

And the reason. And they pay a lot of money for those things. And the reason they pay for them is they have. Well, first of all, they can't afford the loss. Second of all, they know they don't have the technical people on staff to analyze the data that it's coming from to the new software to make sure that the functionality is there and to make sure that there are no holes. So, you know, part of the data conversion is not just to identify the data that you need to run forward, it's also the data to identify the holes. So you know how to accommodate for them. Because there's not ever going to be a like for like situation. Now if I was writing another DMS right now and there were there, those holes would be filled. You know, I mean, one advantage I have is I've done it now multiple times, so I have a lot more ability to see different things. Plus, since I've been away from it, it's very interesting once you get away from things, you could sit back and look and go, okay, do we do that correctly? Was that really a good thought? Was that the best way to do things? And one of the things I find I found out by looking at a lot of these different dms, especially in this acquisition scenario, because I looked at probably, I don't know, six different companies and I got demonstrations on all their products and this and that. And one of the things you find out is that there's not a lot of requirements for entering data in a lot of systems. So for instance, I don't necessarily have to choose, make a selection. When I add an expense, I don't have to put a vendor in. I don't have to do certain things. I don't have to Put a, maybe a repair code if you wanted to use that or whatever. I don't have to do these things. And if you don't have to do them, how are you going to report on them? Yeah, that's the thing is if we don't have to do something, our people aren't going to do it.

Yeah, dang right they won't. So you said something and I think that this really needs to be talked about for dealers out there who are thinking about doing a conversion. I ran side by side Autostar with IDMs for a month and that is probably the best thing you can do because luckily we did it in December. So we were able to just take the whole month of December and make sure everything was working. And then on January 1st it was idms full steam ahead and we were able to, if there were issues we could figure them out the whole year coming forward. But that is definitely something that everybody out there listening. You got to run them side by side, you got to compare the numbers, you got to make sure it works because that we didn't do that. I'm not sure where we would have been that December.

How did you do that? You were a simple interest company, right?

No, we were rules of 78.

Okay, that makes more sense now.

And we are now, we are now in simple interest, but back then we.

Were not reason I say that is different systems. This is a good example. So if you take Autostar for instance, it used a 365, 366 day calculation for its simple interest to come up with its exact days, which means it adjusted in leap years. So you could have a situation where you have payments that are due December 26 and the next payments due. You know, I don't know, March, that doesn't matter. February, January doesn't matter. Well, it would calculate a 366 day year for those transactions that were doing leap year and A365 and the non leap year and combine them together. A lot of systems out there don't do that. They do just a straight up 365 day year. I mean, so it's, it's a much more complicated calculation. But when you get into that, you find out that, you know, you can't exactly always match up between the systems. So you also have to look at those things. How are the settings and how is the software built? What's it, what's its tendency, what's its, what's its primary function for how it manages these little scenarios. And you know, that gets into compliance and you Know, I mean, people, you know, people don't. And I hate to talk about autostar, but one of the things we did was we had a compliance department. We had a. We had in house counsel that did nothing but compliance. And that's Steve Levine, who's obviously at Ignite Consulting now, and he was great. And we had a whole compliance track at our annual conference. Well, compliance is probably A lot of software providers out there seem to want to put compliance 100% on the dealer. Okay. And I was speaking to a dealer recently about an issue Texas, which is a really big issue. And he deals with sales tax, and it deals with interest on sales tax and some different things like that. And there was a software provider, they got in trouble here. And I'm not gonna name names, doesn't matter. But, you know, the software provider, you know, was taking more of the stance of, you know, our customers are supposed to, you know, check these numbers and do this and that and all that kind of stuff. And it's pretty typical for them to do that. I would say when it comes to forms, it is the primary responsibility of the dealer to check his forms because there are so many things that a dealer can change on the other side with the forms provider not knowing anything about it, that that can affect it, you know, and people don't realize that dealers get sued not over the form itself. So a lot of people get excited about, I use law, I use this. It's not the form that gets you sued, it's how it's completed or how it's not complete. Yeah, they get you in trouble. I mean, there's a dealer that got fined $25,000 as a good example because his forms were just offline by one line, you know, and yeah, he got in trouble for that. So you can get in trouble for the smallest things. And. And does your DMS provider actually take any kind of proactive approach on that? Could tell you a personal conversation I had with a dealer in doesn't matter what state, but very high profile dealer actually. And I completely disagreed with the way he wanted to put his pickup payments on his retail installment sales contract. He wanted him in the fed box. And I said, okay, we can put him in the fed box, but we're gonna have to change and do this, this on the math. It needs to be in the total payments, not the amount financed. Da da da, da da da. I go all these rules. He says, I'm wrong. So I said, okay. So I have him sign a document saying. I said, he is he and his Brother sign a document saying they understand that I've told him this. Well, a couple of years later they get a, they get a letter from an attorney from two people. The letter from two people means that that's a class action starting and you know, and that's what it was about. And it was a statutory violation. It would not have been anything but that. But statutory violations carry a lot of damage, got a lot of damages. And the attorney was not smart enough to figure out that it really, that statutory violations was that that violation itself was across the board. And so he settled for, he settled with his clients for like $20,000. They would have, the whole company would have done a business as a result of that. And obviously, yeah, so compliance is huge and people don't realize that. And so I think the software provider has a duty to do the best they can, especially today with security. You know, there's all these latest security rules and what, what the CFPB and the FTC and all those people are putting on dealers right now for managing security. Most, most hacks and security issues come from within. They don't come from external, believe it or not. They start within. They start within with keys and things like that. So your, your software provider for instance, will have may encryption key or something that they use to encrypt data. Okay. That encryption key, you know, should be stored encrypted, but it should be stored also off site so that nobody has access to it. Probably randomly generated this and that. But all, all these keys, there's a lot more to that than I'm talking about. But to make it simple, if somebody has access to that key, they have access to decrypt the entire thing. So how well that software company protects their own security, their keys and those things within their software is extremely important. And it's a very small people number of people that need to know. But now they're getting ready to put evidently some rules on you guys that you're going to have to dedicate a security officer or something like that to your business which is going to cost more money and they have to write up a review and then you. But you're going to have to depend on your outside provider to do part of this. And I don't know that a lot of that, a lot of the software companies out there are prepared to basically go on the block and show what they are doing security wise to protect you.

Yeah, yeah, it's definitely. They don't want to have a lot of liability. But you mentioned a really good thing that Things are changing, you know, the whole landscape and the CFPB and digital security and rights and all the stuff that us dealers start getting mixed up in. But Alan, talk to us about the future. With the couple minutes we have left, where do you see dmss going? You know, what do dealers need to be looking for? You know, I always joke, like, I'd love to have just like if someone could just white label the Carvana website DMS interface. I mean, it seems like they have a solution, start to finish, right? They're retailing. It comes in the car, you pick your payments, you do your financing all online. So. So their dms, their website, their underwriting, their contracting, it all seems to be in this seamless, you know, that we see the front end of it, some seamless interaction with the customer and all this digital retailing conversation that we have, it's got to be tied into your dms. That's gotta be a part of it. I mean, do you see that as kind of being where the future of these things are going?

Oh, that's 100% the feature, but in it and actually should already be there. I mean, the reality of the situation is, is that all transactions today, I think need to be viewed as though the customer originating and originated him and started them. And I think the DMS providers or software development companies need to look at them as. Look at it as though we're not the ones that are originating the transactions anymore. It's our customers originating their own transactions. And our system should just basically sit back and manage all the controls. And once you get into that is all business involves workflow. Okay? The problem in this industry is that because the software that's being used in many cases is so archaic. Archaic that the latest, greatest workflow technology and rules engines are not. Are not being used in these applications because most of the applications are so old. And so if you wanted to have a specialized customized workflow for specific events to happen, there's really not a good way to do that in many of these software applications because you were stuck with the workflow the developer decided was important. Well, the problem is developers shouldn't be deciding all those things. There are certain things developers should decide that workflow is required. In other words, we got to get to this stage before we can actually close a sale, because that has an accounting impact or that has this or that impact on the business. But the process that sits in the middle, where we're taking the people through a contracting and approval process and all those things, there's definitely a Case for, for having customized workflow in those areas. And that's when, that's when you get your CRM. Your CRM needs to be so married to your DMS that you can't hardly tell where they begin and end. I mean, one of the things that, you know, that we were pushing for in the end was we had our last version of autostar, which you never got to see, but was built as a customer centric dms. We actually moved away from a contract centric dms. We wanted it to be customer centric. So the customer was the foundation of the beginning and that customer, everything spawned from them. So if you were to picture the customer in the center and we got all these different things that happened beneath, then that's how it worked. In most DMS systems today, the contract still lives in the center of the sale and then the customer is attached and you got all these things attached. Well, what do we know about our customer? We know our customer is really the center of our universe. Yes, inventory center, I get that. But accounting center, I get that. But the customer is our foundation and so everything is built upon him or her, whatever. And so we've got to be able to have systems that are more customer centric and customer focused. And then also we need better, you know, supply chain technology, which, you know, is a. I'll use that as supply chain versus just inventory management. Because nowadays we have a supply chain, we're buying everything online, we're buying stuff all over the place and we're getting it, that supply chain, you know, how it's transported to us, that supply chain. And I want to say one last thing before we get off this, but it's probably one of the most important things accounting is, is really important. People underestimate how much accounting is, how much, what the level of importance accounting is with these DMS providers. And you know, I think the thing I used to be frustrated by the most, if I was to look back at my time of doing this, was that the level of accounting knowledge within a dealership was not very high and they didn't place a lot of importance on it. This is not all of them by any means. And a lot of them did. They just didn't have the right people in place to do it. And you know, you don't need good books until you need good books. You know, that's when you go to borrow money or something else. And so you need really good accounting. While that takes actually hiring people that are qualified to do it. And what we would see more often than not is they would hire some accounts payable clerk from some business down the street and call her the, you know, controller, cfo, you know, and she know how to use GL account codes that were in templates. But, you know, I don't know if you know this, but the accounting in auto industry and especially in loan servicing and everything else is really complicated. I mean, reinsurance programs, all those kinds of things. It's complicated. And people don't, don't always understand that and take that into account. They think QuickBooks is managing their, their, their system because they basically use checkbook accounting. Well, that's not what this business is. And so that's another challenge for DMS providers is doing dealing with that.

Yeah, we lobby for that all the time. Get a good cpa, make sure they, they're checking your books and make sure they're training you on how to do them right. And the people, you know, that you've hired to do the internal. Well, Alan, we really appreciate you being with us and I know you'll be at some conventions this year. And dealers, you all need to go talk to Alan if you got any questions about dms. He is the man to point you in the right direction. And hopefully we can catch up soon at one of these conventions too.

Alan, I'd love it. Feel free to distribute my number and all that kind of stuff. And my email address will be fine. I'm more than willing to help people, really. It's probably what I love the most.

Yeah. And if people do need to reach out to you all, what's the best way for somebody to call your email you?

Well, calling me would be 817-991-1900. My email address would be allen a l l e n@allendobbins.com a l l E N again, D O B B I N S dot com.

Awesome. Thank you, Alan.

Thanks, Alan.

No, thank you guys. You guys are doing an awesome job. By the way, I listen to some of your podcast work. I mean that. You're really doing a good job. Yeah. Take care. Dealers helping dealers. Please leave us a review and subscribe the Independent Dealer podcast.