The Certification Story: Added Security, or Added Dealer Costs?

More and more of the leading DMS providers are moving towards certified integration programs, touting falsely added security features and warning of dangers in allowing third parties access to DMS data. Some have referred to this certification as an  “invisible tax” on dealership’s DMS data. This tax has been fairly inconspicuous in the past, but those golden years are OVER. The DMS providers mandating these programs are already starting to serve termination notices to vendors if they do not become certified.

The first major concern sweeping the automotive industry is the financial impact of widespread certification. If these programs are allowed to take control of the industry, those “data taxes” will increase substantially (somewhere in the ballpark of four to five times larger than current fees). What’s worse, these fees are often hidden between the lines, forbidden from vendors to display as many of the larger DMS systems require adherence to strict non-disclosure agreements.

Why is DMS vendor certification so expensive compared to other free market options? Will all of the great technological solutions be willing or even able to pay this tax to access dealership data? These are questions that vendors and dealerships alike need to consider.

Third-party solution providers are caught in a difficult position. They can either agree to pay the fees to the DMS certification program (which most vendors will not be able to sustain) thus passing these expenses on to the dealerships. These aggregated data expenses could increase dealership costs by $10-15 thousand per year per rooftop or likely even more!

The alternative, unfortunately, is that most vendors will not be able to sustain these expenses, nor will they be willing to accept such consequences. Third-party solution providers will refuse to pay these fees and will opt to work only with dealerships using DMS providers that don’t tax dealer’s data, because any additional certification costs make their solution unprofitable. Exorbitant fees will take away the freedom to choose fostering free market competition amongst third-party vendors. Even though dealership data clearly belongs to dealerships, the DMS providers’ certification programs appear to be money-making attempts, driven by their own needs to bolster profits and support inflated stock values. The real damage here (besides the dealer once again having to foot the bill) is preventing the flow of data from reaching intended recipients. The value dealerships gain with programs offered by solution providers is immeasurable, and certification is stifling these innovative advancements!

The other major concern is the fact that these certification programs are being instated under the false pretense that their purpose is to eliminate risk when in fact, certification does not provide dealers with additional tools to increase visibility to where data is going, who is receiving it, nor how often. Technology is allowing dealers and businesses to collect more and more data on consumers, and certain steps must be taken to ensure clarity on what is occurring and what is permitted to occur. What role does their certification actually play in minimizing potential threats? Is there any real indemnification with this certification? The plain and simple answer is no. This is not “added security”. It’s just added fees.

Without any cyber liability indemnification, fines and consequences are inevitable when data comes from certification programs. And certification will still require the management of multiple vendors accessing dealer data feeds.  

So what can be done?

It’s simple. Dealers need to take data into their own hands. Invest in cloud resources to create large storages of data that can distributed without interruption. Choose a dealer-driven solution that increases data security and gives the ability to maintain the utmost visibility and control of data feeds. Dealers should be able to look at their data as their most valuable asset, and control the process through which that asset moves. Costs for the movement of data should be reasonable, and the flow of innovation should offer free market alternatives to support emerging companies and technologies.

In the end, does the certification currently being forced by the DMS companies really support and benefit dealerships? What guaranteed value is added by these empty certification taxes? The security of data is of the utmost importance. Dealers deserve the right to share data with any third-party solution providers of their choice confidently, consistently, reliably, and securely. And let’s not forget, tax-free.

I’d love the opportunity to continue the conversation on the implications of certification, or to discuss your current dealer security model.

Steve Cottrell

CEO & President, Authenticom, LLC 

Originally published in the August 2015 issue of AutoSuccess