It's Your Data: Manage and Control Its Access on Your Terms

It’s a new day for dealerships in the industry. “Big data” has paved the way for dealers to use their extensive consumer data repositories in strategic ways, tapping into emerging technologies and innovations that grow business and enhance the client experience. Dealers have an opportunity to rethink their business models. A growing number already manage their data in a secure, compliant environment flexible enough to meet frequently-changing business needs while maintaining uncompromising data security.

Changing Business Models

The business model is changing in our industry and big data is leading this charge. Dealers find themselves in a position to control data in a cost-effective manner that recognizes the value of unrestricted, but controlled, third-party vendor access to data, which spurs greater innovation.

Overlooking this opportunity could deliver stiff consequences for many in the industry. Case in point: the story of Eastman Kodak. While the photography behemoth was first to develop the digital camera, it was slow to embrace the new technology. Steve Sasson, the Kodak employee credited with inventing the first digital camera, said in a 2013 Huffington Post article that, “…the fundamental business model…was undermined by the new technology…In some ways, [the technology] cannibalized [its] already existing business…” Kodak’s “existing business,” however, was not where the industry was heading, based on technological advancements and consumer demand. Kodak was ultimately forced to file for bankruptcy.

We can learn from Kodak’s miscalculation. Big data and supporting technologies are changing how we do business. Organizations that recognize and embrace this will reap the rewards, instead of finding themselves stuck in a model that no longer fits the market. There are issues for dealers to consider and questions that should be asked to ensure the security of dealers’ data repositories and to understand why the industry is shifting – and what the costs are if we don’t move forward.

How Secure is “Secure?”

Ensuring the security of confidential and private consumer data is not only critical, it is the law. The Federal Trade Commission (FTC) has made it clear that processes and procedures must be in place to safeguard consumer data. With this in mind, every dealer should ask, “What is my DMS vendor doing to ensure there is not going to be a security breach?” along with a follow-up inquiry to the DMS provider: “In the unlikely event that something does go wrong, what is your liability to us?” Many may be surprised by the answer.

Confronting Competitive Ambitions

In a marketplace where data security remains top priority, and unrestricted, but controlled, access to consumer data is vital to the success of our businesses and emerging innovations, there are issues to consider regarding leading DMS providers. These companies offer “one-stop-shopping” experiences for dealerships, relieving them of managing and controlling their own data. But what is the true cost of these services to the industry as a whole?

Certification programs offered by these DMS vendors claim to provide dealerships with added security assurances and dissuade them from granting third-party vendors access to data. It has been suggested these costs are simply fees (referred to as “hidden taxes”) paid by third parties to maintain access to dealership data. Any review by these DMS vendors of third-party vendor solutions appears to be competitive in nature, with no focus on security; it is simply a fee paid to maintain the title of “certified”. These fees have risen dramatically, with no evidence of what the increases provide. These increases affect dealership costs, because third-party vendors who pay the exorbitant prices to retain certification to access data cannot absorb the cost and are forced to pass them on to dealerships. This, in turn, affects the consumer.

The other cost associated with these fees is the stifling of innovation in the industry. Vendors that cannot or refuse to pay these hidden taxes are often threatened with interruptions to their data feeds. In other instances, smaller vendors seeking certification are told to come back when they have a larger customer base. Still other vendors with competing solutions to those of these larger DMS providers have been told that it wouldn’t be right to empower another vendor in an already-crowded space. Third-party vendors are essentially forced to work solely with dealerships whose DMS providers do not impose taxes on dealer data. This reduces third parties’ market space significantly and suppresses innovation that, in an unrestricted market, may offer great value to our industry.

One of the scenarios above also brings up conflict of interest concerns. Some leading DMS providers actually have solutions in the marketplace that compete directly with third-party vendors. These are the very companies that determine whether third-parties gain (or retain) access to dealership data. This is a huge conflict, which has gone unchecked.

It’s Your Data – Maintain Control of It

These realities should serve as a wake-up call. Dealers work to keep their consumer data secure and, true to their entrepreneurial spirit, want the best solutions available in the marketplace. They also want data control and ease of use of their DMS. The takeaway from all of this: It’s your data. Manage it on your terms.

Today’s technology enables dealers to do this. Dealers can maintain their own DMS, gaining complete control over how data is used, who is accessing it and what they are accessing. Because dealers are on the line for breaches, they must keep a tight rein on this information. This approach also allows designated vendors unrestricted, secure access to data on your terms, and in a way that supports innovation. Allowing this exchange to take place at the same cost for everyone levels the playing field, allowing emerging technologies to enter the marketplace, giving consumers more choice and letting the market determine who survives.

It’s a new day for dealers who see value in emerging technologies, seek to keep costs down and desire a better way to control access to data and maintain security. Are you in?

Originally written by President & CEO Steve Cottrell for AutoSuccess, December 2015.