Your Data May Be Unsafe

We all have seen what can happen in a catastrophic event. Just look at Hurricane Katrina and the havoc it wreaked on dealerships in Louisiana and Mississippi.

Buildings and cars can be replaced. But what about a dealership's data?

If you have an ASP (Application Service Provider) solution (in which your dealer-management system server is hosted offsite by a vendor) your data probably is safe.

Most DMS providers offering ASP have built redundancy into the systems ensuring clients' data is secure and backed up properly in the event of a natural disaster.

While ASP is gaining popularity, about 90% of dealers still have the DMS server in their stores — with all of their customer, parts, financing and accounting data on it.

In such situations, the dealer is responsible for backing up the data on the server. Normally this is done nightly by downloading the data onto a backup tape.

So what about those dealers hit by one of the many hurricanes or tornados in recent years? Were they able to recover their data to restart their businesses?

It might depend on where the backup tapes were stored. Experts advise dealers to perform daily backups and store the tapes offsite. But many dealers still store the tapes at the dealership.

That doesn't solve the problem, though. Even if the tapes were stored offsite, did that location have any damage?

The problem extends beyond natural disasters. Backup tape technology is ancient and often has problems.

While inexpensive, the backup tape system creates challenges and security risks.

Tape back ups may fail to record the data correctly. For example, what if the tape backup routine runs but the information does not record to the tape?

I know of a dealer trying to restore his system from backup tapes that were bad. The last useable tape for data recovery is several weeks old. Imagine losing several weeks of transactions and trying to work with your vendor to salvage information.

Tape back-ups are vulnerable to theft or loss during transport. Where exactly are your tapes stored and how secure is the access to this storage area?

If you entrust backups to employees, are they familiar with the process and can they be trusted to do the task? Just one instance of no back up could prove disastrous.

Onsite or offsite storage may be inadequate to protect the tapes in the event of a fire, flood, hurricane, etc. For example, many safes I see these tapes stored in are fire resistant, but not heat resistant. There is a difference. The storage locker needs to be both.

In today's environment, the privacy stakes run high. Many states require the consumer to be notified in the event of a breach in security or loss of data.

With all of these issues we have just discussed, it may be time to switch to an online backup system that is managed through a Web-based connection with the DMS vendor.

If you decide on backing up your data through an online system, the following issues need consideration:

Data Encryption

Only the customer or data owner should have access.

When to Encrypt?

During storage and any transmission of the data.

No Transmission Lag

Data must be offsite and centralized as soon as the backup is complete.

Central Management

Look for ability to centrally manage the backup and restore processes from one or more locations.

Managed Service

Look for a managed service to leverage the enterprise level protection without a huge investment.

Data Compression

This allows for faster backup and recoverability of the data.

Talk to your DMS vendor about moving to either an ASP solution or an online backup system to secure your data. If you decide to stick with backup tapes, have your vendor evaluate your current processes and see if you need changes.

Meanwhile, we've talked with several DMS vendors about the issue and they currently are reviewing how they can better help their customers manage the backing up of their data.

CPA Wayne Fortier is a dealership consultant with Dixon Hughes PLLC. He is at 919-876-4546.