In June, AE Magazine published an article titled "The Integrated Industry: Software Fact or Fiction?" which outlined the industry's long standing challenge of integrating various mission-critical software applications with the typical dealership management system (DMS).

Sharing data with the DMS is an important requirement for providers of F&I products, and streamlining this process ensures accurate data, fewer errors, reduced costs and improved customer service. Until very recently, the lack of direct, complete, and transparent integration into the dealer’s DMS meant continued security issues, costly hardware, and a slew of inefficiencies for F&I providers.

These are precisely the issues that drove Open Dealer Exchange, LLC-a joint venture between Automatic Data Processing, Inc. (ADP) and the Reynolds and Reynolds Company—to acquire a comprehensive solution that would transform the industry and provide F&I aftermarket providers with solutions critical to growing their businesses.

The result is the Provider Exchange Network (PEN), the industry’s sole provider-focused DMS interface. PEN was created to streamline the F&I process by establishing direct connections to the dealer’s business partners, and as a provider-oriented network, automating provider functionality within the DMS. This initiative is an industry first in allowing full data sharing between the DMS and the provider, challenging the historical integration model that was clearly in need of modernization.

Modern Software Model for Minimum Errors, Maximum Efficiency

Data sharing with the DMS is important because this is where the F&I manager prints contracts for aftermarket products and adds them to the vehicle sale transaction. The dealer’s accounting staff also relies on the DMS to authorize payments to the provider in virtually every sale. For product providers, DMS integration means presenting rates, preparing forms, and originating contracts electronically. Automating these processes reduces errors and saves time and energy for all parties involved—providers, dealers, agents and vehicle buyers.

Yet until now, providers were as efficient as their weakest link. Incompatible systems and an inconsistent exchange of digital versus paper information took a significant toll on provider opportunities. Although progress was being made, the industry was ultimately in limbo as providers clamored for a better solution.

One solution is for the provider to supply rates to a complementary system, such as a menu or a desking system. A menu system is a particularly good choice, because these systems are designed to enhance the sale of F&I products. Some providers even invest in their own dealer-access “portal” sites. These sites typically support the three key selling functions, as well as reconciliation, remittance, and a variety of other features.

All of these solutions depend on DMS integration. Without it, the F&I Manager must reenter DMS data into one or more extra systems, and then circle back to the DMS to ensure that all products are represented correctly in the vehicle sale transaction. This is a particular headache in the case of insurance products, where the premium may depend on the prices of other products in the deal.

Provider-oriented systems like menus and dealer portals can do part of the job, but still depend on the DMS. What providers – and dealers – need is two-way communication between the provider and the DMS.

PEN’s digital pipeline has filled that void and defines industry protocols by directly integrating the provider with the dealers' point-of-sale (POS) system—streamlining the sales process and reducing costs through rapid, accurate and secure transactions in a paperless process.

"Integration with the DMS is vital so that dealers don’t have to re-enter customer and vehicle information," says Gary Volino, Chief Operating Officer of Safe-Guard Products International.

Chris Morris, Senior Director of Product Planning at The Reynolds and Reynolds Company, said, "Because it allows the F&I manager to work in a single system, we see PEN as the optimal way to handle F&I products on the DMS, maintain the integrity of the dealer's process, and ensure the security of customer information."

Secure Transactions for Customer Confidentiality

Ensuring the confidentiality of customer data is not only a sign of integrity, it is the law. In the automotive industry, this means that dealerships, DMS providers and F&I product providers have shared responsibility for protecting vehicle buyers' sensitive information.

Today, product providers' use of "hostile" third-party interfaces to access DMS data can jeopardize customer information and put providers at risk for lawsuits.

PEN solves this problem because rather than extracting DMS data to support a third-party application, it provides an application programming interface (API) for use by the DMS so rating and contracting functions are incorporated into the DMS. There is no intermediate system or security risk, and all customer, vehicle and financial information is sent directly from the DMS to the provider.

Matt Nowicki, Director of IT for IAS, and Patrick DeMarco, President of Ristken Software Services, have both stressed the importance of using a certified interface to protect the dealer’s interest in data security.

Paperless Process for Convenience

Amid today's electronic-focused mindset and rapidly evolving technology, it doesn’t make sense for agents to continue to carry thick ratebooks and boxes of contract forms. PEN eliminates this by serving as a single interface where a dealership can rate, contract and submit all of their F&I products electronically to reduce cost—and conserve forest resources.

PEN pre-populates all forms using DMS data and loads them into the PEN forms library. Or, for providers who desire paper contract forms, there is the option to supply forms using their own web services. By pre-populating the forms, PEN ensures the correct forms are used instead of relying on the dealer to choose the correct form.

PEN's electronic contracting feature pushes the contract to the provider at the time of sale. For agents and providers, this means that dealers always get the correct rates. Agents can spend more time promoting products and consulting with dealers.

Providers hosting dealer portals typically employ a Service Oriented Architecture (SOA). This means they can connect to PEN using the same web services that support their portals. Again, this is not DMS integration in the traditional sense, because data traffic between the provider and the DMS bypasses the portal. The provider will receive completed contracts from both PEN and the portal and, thanks to SOA, there will be no difference.

"We are starting to see the DMS providers tightly integrating with menu solutions, where PEN is providing the data integration," states Volino. "In this case, the Safe-Guard Portal is only used to verify and remit funds for the F&I products, but we suspect over time, the remittance process will be more tightly integrated within the DMS."

This modern, electronic contracting system results in cleaner, more accurate deals, increased customer satisfaction, and potentially faster funding for the dealer.

What It Means for the Industry

There is no doubt that the last couple of years have been tough on the auto industry. An integrated solution that lessens the workload and enables providers, agents and dealers to stay focused on their core business—reaching more customers and selling more products—is ideal in today’s environment.

Recognizing the challenges the industry was facing and the great need to provide a comprehensive solution for streamlined data sharing, PEN's main objective is to automate provider functionality within the DMS, transparently and without disruption to the F&I process. This unique approach turns the old integration problem on its head because instead of the provider seeking integration with the DMS, the DMS will now be integrating with them. The industry will continue to benefit from this model and embrace it for maximum success.

For more information on the Provider Exchange Network, please send an email to info@ProviderExchangeNetwork.com.