The MLS Wars: Where We Are to Date
Questions & Answers Re: Sandicor’s MLS System Hardware Update Delay (March 25, 2016)
Sandicor is a real estate technology company which operates San Diego County’s regional MLS for over 18,700 real estate professionals.
Q1. What’s the Overall Problem?
A. Sandicor’s attempt to update its MLS system hardware has been delayed for six weeks by the actions of one of its shareholders, who is attempting to control Sandicor and micro-manage Sandicor’s staff. Although Sandicor has now been able to initiate the hardware update, this delay may affect the responsiveness and reliability of the MLS system for an undetermined period of time after April 2016 and until the update is installed.
Q2. What Needs to be Updated?
A. Sandicor’s MLS system has two types of data: (i) MLS data and (ii) system operating data. Sandicor’s system operating data runs on hardware that requires replacement. In particular, Sandicor needs to replace its primary storage array network (the “SAN”) manufactured by Hewlett-Packard (“HP”).
Q3. Why is the Update Required?
A. Sandicor’s SAN is old but operational; Sandicor’s MLS downtime for all of 2015 was about than 8 hours. However, per Sandicor’s 2014 Operating Plan, Sandicor planned to replace the HP SAN in 2016. HP provides software and hardware support for the HP SAN. HP notified Sandicor in mid-December 2015 that HP will no longer provide software support after May 2016 for all of their customers who have the SAN model that Sandicor utilizes. Because Sandicor’s current support agreement with HP ends in early April, Sandicor expects that it will lose HP software support for the SAN at that time. Sandicor staff therefore recommended purchasing a new SAN that will provide increased reliability, fault tolerance and a substantial increase in performance based on newer technology.
Q4. What Will Occur if a Problem Arises Before Sandicor can Replace the SAN?
A. If Sandicor has a software-related failure on the SAN after Sandicor loses HP’s software support, Sandicor may not be able to recover the operating system in a cost effective manner. Unless and until Sandicor can repair the storage array or install the new SAN, the MLS will operate from Sandicor’s Disaster Recovery site in a degraded state and run sluggishly.
Q5. Is any MLS Data at Risk?
A. No. A software-related failure on the SAN affects the servers that the MLS system runs on, but should not result in any loss of MLS data.
Q6. Do Sandicor’s Board and the Majority of its Shareholders Support the SAN Purchase?
A. Yes. At the first Board meeting after Sandicor learned of HP’s cessation of support services, the Board voted in favor of replacing the SAN. Similarly, Sandicor’s Budget & Finance Committee promptly approved the SAN purchase. In addition, the shareholders for PSAR and NSDCAR also approved the SAN purchase at a special shareholder meeting called in February.
Q7. What Was the Reason for the Delay?
A. The cost to replace the SAN is a capital expenditure. Under Sandicor’s governing documents, Sandicor cannot incur such expenditure unless it obtains approval from its Board and at least two shareholders holding a supermajority of the shares. Although two of Sandicor’s three shareholders (PSAR and NSDCAR) promptly approved Sandicor’s purchase of the SAN, they hold a minority of the shares. The Greater San Diego Association of REALTORS® (GSDAR) must also consent to Sandicor’s purchase of the new SAN. GSDAR did not give its consent until March 23, 2016, six weeks after Sandicor requested it.
Q8. Why Did GSDAR Oppose Sandicor’s SAN Purchase?
A. GSDAR has criticized Sandicor’s staff for its delays in discovering the need to replace the SAN. Even though Sandicor has attempted to act, GSDAR then declined to rely on Sandicor’s staff’s proposal. GSDAR therefore hired its own consultant to review Sandicor’s proposal. Based on that review, GSDAR delayed approving the SAN purchase because GSDAR believes less expensive options are available. However, Sandicor believes GSDAR’s consultant failed to adequately consider the heavy data load generated by Sandicor’s MLS system. For example, both Sandicor and GSDAR’s consultant obtained bids from the same hardware vendor, but only the bid obtained by Sandicor was based on the specific product requirements of Sandicor’s MLS system. Therefore the replacement SAN that GSDAR proposed would very likely underperform and cause materially increased MLS system degradation.
Q9. Did Sandicor Unreasonably Delay in Acting?
A. No. As noted previously, Sandicor first identified the possible need to replace its storage hardware system in its 2014 Operating Plan, which Sandicor distributed to its Board and Shareholders in late 2013. Sandicor’s staff also provided preliminary pricing estimates to replace the SAN at its October 2015 and November 2015 Budget and Finance Committee meetings, and presented final costs at the January 2016 Budget and Finance Committee meeting. Sandicor similarly discussed such matter at the October and November Board of Directors meetings, and presented final cost estimates at the January 2016 Board meeting that was delayed into February. Finally, Sandicor provided notice to its shareholders at the 2015 Annual Shareholder meeting in October and again during the February 2016 Shareholder meeting. In addition to replacing the SAN, staff also investigated and provided an alternative option of moving the MLS system to the Cloud.
Q10. Does GSDAR’s Other Criticism Have Merit?
A. No. Sandicor’s Director of Information Technology has conducted extensive research on the issue, and looked at various vendors, technologies and alternatives to the SAN. Sandicor’s staff knows its MLS system better than any third party consultant. Sandicor’s recommendation to replace the SAN is the most cost effective approach while protecting the integrity and reliability of the MLS system for the benefit of its users. Unfortunately, GSDAR did not trust Sandicor’s recommendations.
Q11. What Happens Next?
A. Sandicor has now begun the process of replacing its SAN. If Sandicor’s operating system incurs no software failures before such process is completed, Sandicor’s users will notice no difference in the functionality of the MLS. However, if Sandicor does incur a software failure before the replacement SAN is installed, Sandicor will attempt to minimize its effect, and will also post updates on its website and cause notices to be sent to all of its users.
Q12. What are Sandicor’s Goals?
A. Sandicor is an information technology company charged with operating the MLS. GSDAR is a trade organization. Sandicor wants GSDAR to stop interfering with Sandicor’s core business, as GSDAR does not have the expertise, experience or knowledge to operate an MLS.