Let the Cloud Wars Begin

Digital Dealer – Sandi Jerome

Oracle and Intel have recently joined forces by setting up data centers to test out Oracle servers powered by Intel chips. Oracle also announced that it would convince its current database customers to replace their IBM servers with Oracle-Intel ones instead.  This spells bad news for IBM who caused Warren Buffet’s Berkshire Hathaway a loss of value of 1 billion last year and 700 million this year. The joining of Oracle and Intel to dominate “cloud computing” matches the two tech warriors directly against IBM which sells mid and high-end servers and mainframes to companies like DealerTrack which has their DMS on IBM servers.  IBM, with over 20 billion in revenue, is a pricey solution for those who want their applications hosted on IBM servers.  They have dominated this server market for many years.  In fact, I invested in IBM stock long ago when I saw how much their servers cost my EDS and DealerTrack/Arkona consulting clients back in the early 1990s.  A war is starting in cloud computing.

You might ask, “What is Cloud Computing?”  In the simplest terms, cloud computing means storing and accessing data and programs over the Internet instead of your computer’s hard drive or network server. The cloud is just another name for the Internet. The term “cloud” goes back to those old proposals and bids you got from ADP and R+R that included a diagram showing your dealership connecting to the factory and other 3rd parties.  They used a puffy cloud to illustrate the Internet and often a lightning bolt to show receiving and sending information from various data centers in a cloud as it floats above us.

What cloud computing is not about is hardware in your dealership or corporate offices. It is a struggle to find all your old Office, ADP Reflection, or EraLink CDs when you buy a new PC. Every few years the DMS giants want a fee to upgrade their server when they “sunset” it out to their new version or require you to upgrade your PCs. When you store data or run programs from your hard drive or server, that’s called local or client/server computing. Some say this is better than having to always connect to the Internet; but what happened when your server or hard drive crashed or laptop got stolen?  Most DMS and CRM software is not truly cloud-based.  They merely took control of your server from your dealership – hosted it at their data center and you connect through the Internet with their proprietary software.  They now control your access and speed.  Some even add other dealerships to that same server and you share server space, thus reducing your access speed.

For a DMS to be considered “cloud computing,” you need to access your data or your programs over the Internet with any device or browser (like an iPad, Tablet or Smartphone.) The final test is the same: with an online connection, cloud computing can be done anywhere, anytime.  On the other side of the “lightning bolt” is a big puffy cloud; the data center that hosts your application.  This is where the mystery begins.  I spent quite a bit of time selecting data centers for the DealerStar DMS and studied their “uptime” reports, backup plans, connection methods, and of course security measures. It is best to have one center host the main DealerStar DMS in one part of the country and their backup data center with another company and connection. That way if one of the major Internet paths or the data center is gone with a disaster, they can flip to the other data center.  Let’s hope that California, Ohio, and Atlanta don’t go down at the same time!  Where is your DMS, CRM or other technology in the cloud?  Are they using one of the data hosting giants that are about to go to war or is it more of a “do it yourself” type of situation?  Yes, they might be a big company, but do they have the same people developing and managing their data center that wrote the code for the old “green screens?”  You might want to add this to the hundreds of questions that you are asking when considering any technology that has control over your valuable customer and financial data.


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