Office 365: Car Dealer Revs Up for Growth with Microsoft Cloud Service

In many ways, Hendrick Automotive Group of Charlotte, NC, is an ideal cloud customer — a growing midsize company with a lean IT staff.

And lean it is. Hendrick’s IT group of 13 people serves all of its 7,000 employees at 75 car dealerships across the U.S., which includes people in sales, accounting, service technicians and the auto parts department. (Hendrick is the seventh largest Automotive Group in the U.S. and sells every kind of car except Ford).

“We’re running a multi-billion dollar a year company with 13 IT people. You can’t get much more trim than that,” says Robert Taylor, Hendrick’s Director of IT.

A Microsoft shop, Hendrick has been running all its Office 2007 email, collaboration and productivity apps on-premise (Exchange, SharePoint and OCS). Of its 7,000 employees, 4,500 of them are on the corporate network at any given time, and as the Hendrick dealerships have grown over the past few years, an on-prem model began to stunt IT’s ability to help the company grow.

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“If the Mr. Hendrick walked in tomorrow and said I just bought 20 car dealers, how would we accommodate that?” says Taylor. “The lead time for something like that is months, but with a cloud service, if you need to scale you push a button.”

An Out-of-the-Box Cloud Candidate

Taylor and team realized the best decision was to reallocate resources toward a cloud model for email and productivity apps and recently approached Microsoft about moving to Office 365. In addition to simply having an overburdened IT staff, Hendrick is also a good fit for the cloud because they don’t do much customization within Exchange and SharePoint.

“We operate pretty much out of the box,” says Taylor. “There’s not much additional value we add to Office 2010 by managing it ourselves. It makes us a good candidate for the cloud.”

Hendrick’s goal is to migrate to all features of Office 365 (Exchange, Lync and SharePoint) eventually. But the more immediate goal is the messaging components, says Taylor.

“By the end of next year all of Exchange and Lync will be in the cloud for us. If it can go to cloud, it should go.”

SharePoint the Laggard

SharePoint, however, may take a little time, says Taylor.

Hendrick’s dealerships are mostly autonomous and IT serves them as if they are 75 different businesses. Each dealership has its own SharePoint intranet and MySites for individual employees, and are free to use them in their own way — whether it’s managing documents, tracking the paperwork that went with the “Cash for Clunkers” program or simply gathering relevant news articles and videos on a MySite page.

“Because we are always spinning up new SharePoint sites, we’ll probably take a hybrid approach there,” says Taylor.

“As an IT person you have to accept that users are not going to move at your pace with SharePoint. But we don’t do much customizing to SharePoint. We’re not using add-ons and plug-ins; it’s fundamentally Web sites with information. So we will move all of SharePoint to the cloud eventually, but it will be the last to go.”

It’s Not (Only) About the Money

Like many mid-size companies, Hendrick is pursuing the cloud because it is struggling to maintain the resources to support its users and protect the company from a disaster.

“Microsoft, or a cloud vendor like it, can support us on a world-class enterprise system designed for hundreds of thousands of users,” says Taylor. “We are managing servers designed to support 5,000 users. We own the hardware, but the hardware can fail. Microsoft is the expert on these products; they developed them, and they can manage them better than us.”

Any cloud discussion leads to the subject of cost-savings. But Taylor downplays the money issue, emphasizing that its on-premise operation is run as inexpensively as possible. Yes, Office 365 may be cheaper, but more importantly, it will allow the company grow, he says.

“If you need to scale, you’re going to pay more either in the cloud or on-prem,” says Taylor. “The cost of moving to Office 365 is not much different than adding staff or hardware, but we can’t deliver the services as well and as quickly as Microsoft.”

However, there is a huge element of trust involved in a cloud migration, he adds, and it is essential to be fully invested and have a good partnership with Microsoft or whoever the vendor may be.

“Microsoft has to deliver on its promise. Outages are going to happen. It’s all about how you deal with them. They will happen on-prem to us or will happen in a Microsoft facility. But we can’t afford to have a giant data center with people monitoring servers 24 hours a day,” says Taylor.

“So why not let somebody with more resources do it?”

Shane O’Neill covers Microsoft, Windows, Operating Systems, Productivity Apps and Online Services for CIO.com. Follow Shane on Twitter @smoneill. Follow everything from CIO.com on Twitter @CIOonline and on Facebook. Email Shane at soneill@cio.com