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Is Cloud Computing Right For Your Dealership?

Jan 13, 2014

Since the advent of large mainframe computers, business computing has been associated with physical machines located on the business’s premises. But that’s beginning to change with the rising popularity of “cloud computing.”

Cloud computing refers to the use of on-demand computing and data storage resources located on remote servers via the Internet. It can include hardware (such as servers), software, data center storage space, applications and networking components.

In reality, cloud computing isn’t all that new — online accounts with Amazon, Google and Flickr are located in the cloud, for example. But more dealerships today are starting to recognize the benefits. In fact, you may be using a cloud-based dealer management system without even realizing it.


Many computing resources used by dealers today can be accessed via the cloud, including dealer, sales, website, customer relationship management, digital marketing, accounting and financial reporting software.

The biggest potential benefits of cloud computing include the following:

Lower hardware, software and tech support costs. Instead of buying elaborate hardware systems to run expensive software you purchase, you can essentially rent the computing resources you need and run them on inexpensive desktop and laptop computers. You’ll pay a monthly or annual subscription fee that includes the software license and typically tech support, as well.

More IT resource and staffing flexibility. Cloud-based computing resources are scalable and can be added or removed by the hosting services provider quickly and easily, based on your current IT demands. For example, bandwidth and storage space can typically be increased or decreased almost instantaneously with a simple phone call. And there’s no need to hire IT staff to manage and oversee on-site servers and software.

Automated backup and software updates. All data is backed up in the cloud continuously, instead of having to be backed up manually. And software updates are done automatically, saving staff time and eliminating the risk that updates won’t be completed when needed.

More data security. Some dealers fear that their data security will be compromised in the cloud, but in most cases the opposite is actually true. Reputable cloud services providers have invested in the most sophisticated data security technology available today, including high-grade firewalls, intrusion protection devices and 24/7 monitoring equipment. In addition, they test their security via periodic audits conducted by independent third parties.


Consider these keys to cloud computing success:

Choose your cloud services provider carefully. Moving from on-premises, server-based data storage to cloud-based data storage requires a different mindset. You’ll be unable to physically look at and touch a server box and say, “That’s where my data is stored.” This makes it critical to choose a cloud services provider you can trust, and build a strong relationship with your provider as a true business partner. Ask potential services providers for the names of two or three clients you can speak with about the provider’s level of security, responsiveness and technological sophistication.

Define your RTOs and RPOs. You need to decide on your recovery time objectives (RTOs) and recovery point objectives (RPOs, or the most critical data points for your dealership) concerning the backup and recovery of your data in case of an emergency. Then communicate these to your cloud services provider, who should be able to work with you on an individualized basis to ensure that your objectives will be met.
Decide on the right type of cloud solution for your dealership. There are several cloud computing models to choose from, so it’s important to understand the differences between them and their advantages and disadvantages. The model you choose will affect your level of security, compliance, accessibility and cost. See the sidebar “3 cloud models” for details on common cloud options.


Most dealerships should consider cloud computing for at least some of their computing, business application and data storage needs. Talk to an IT consultant about the potential benefits of cloud computing for your dealership.

Sidebar: 3 cloud models 

There are three main cloud computing models you can choose from:

  1. Public cloud. Your computing infrastructure and data are stored in the cloud services provider’s general data center, along with other customers’ data. This is generally the least expensive model, and it’s also very scalable, because you pay only for the space you use. But customization in accessibility and security is limited — for example, the cloud can be accessed only through the Internet, not directly.
  2. Private cloud. Your computing infrastructure and data are isolated and managed just for you — you don’t share space with any other companies. Not surprisingly, this model is more expensive than a public cloud, but it can be custom designed to provide higher levels of performance, availability and security for dealerships that need them. Private clouds usually offer stronger service level agreements (SLAs) than public clouds do, often including remuneration for downtime.
  3. Hybrid cloud. As the name suggests, this model combines public and private cloud usage. For instance, a private cloud could be used for line of business applications and the dealer management system, while a public cloud could be used for the digital marketing system.

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Dawn Rosoff

Dawn Rosoff has extensive knowledge of accounting and technical reporting standards who works with professional service companies, manufacturers, distributors and automotive dealerships on accounting, management and tax-related issues.

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