The hospitality industry is catching on to the idea that cloud technology can make enormous sense. Why buy and maintain expensive software when someone else can do it for you?
By: Simon Smith,
Asian Hotel Technolgy Magazine, July 2011
The recent announcement by Apple of the launch of the iCloud is testament to just how mainstream cloud computing has become – it is already an indispensable part of the way that businesses use software, and for a software-heavy industry such as hospitality, it is set to change the landscape altogether.
InterContinental Hong Kong’s IT manager Stephen Fung points to several benefits of using the cloud: it eliminates the need for PC upgrades as well as multiple software licensing fees; it reduces the need for IT support, including installation, systems upgrades, hardware upgrades and so on; it shortens deployment times; and it allows staff to connect to any of the hotel’s software systems as long as they have an internet connection. What all these points boil down to can be summed up with one word: cost. Moving to the cloud enables small to mid-size hotels to achieve the cost and efficiency advantages of larger organizations without the need for capital heavy investments, according to Pranabesh Nath, industry manager, ICT Practice, Asia Pacific, Frost & Sullivan.
“A mid-size hotel can potentially have all of the premium customer service features of a large hotel at a fraction of the cost. For a lot of small to mid-size hotels, buying expensive on-premise solutions is not even an option – thus they are always hampered in one way or another,” says Nath. When making the decision to move systems to the cloud a clear distinction is made between front and back-office applications, with some in the industry believing that back-office systems will be the first to make the transition. “The common belief is that the front-office systems are so critical to guest service delivery that even the slightest risk of system unavailability from a hosted solution is too high to outweigh potential benefits of lower CAPEX and OPEX [financing options] costs and other operational benefits,” Greg Stockdale, managing director of Hong Kong-based Avasara Consulting points out.
Stockdale continues: “Ironically, standard operating procedures already prepare most hotels for this risk, euphemistically called system ‘downtime’, with reports and other support systems. So for hotels with access to reliable communication infrastructure and sound operating procedures, there is no additional operational risk when comparing hosted versus property solutions.” Despite this, there is still resistance in moving certain front-office applications to the cloud, however, when it comes to back-office the business value of hosted solutions versus the risk is moving in favour of the cloud.
Nath bears this out, noting that the biggest concern for many hoteliers when moving to the cloud would be the impact it would have on front-office applications dealing specifically with customer services. “Since customer service is the most critical aspect of a hotel, I’d expect there to be a lot of hesitation, especially when awareness is low on the security aspects of cloud solutions targeted at guest facing applications. “Losing sensitive customer data is always the biggest fear; loss of control of that data is another. There are always risks when your data is outside your firewall, but the risks are statistically small.” Nath suggests that hoteliers handle these problems with a phased approach of deployment, moving non-critical applications to the cloud first.
Others, such as Dan Shey, an analyst with ABI Research, question the nature that cloud deployment will take. “For hotels, you have to ask how does data and information affect meeting their primary mission of providing the best room rental experience? When I stay at a hotel I want a speedy check-in, reliable Wi-Fi service, and a clean, functioning room. So a slow check-in because my reservation is in the cloud somewhere would be a problem. “I highly doubt that the biggest hotel chains use the public cloud for their website. As hospitality begins to offer their own branded mobile apps, they will want to offer the best experience so I doubt systems and databases will move to the public cloud soon,” said Shey.
Some companies, such as the InterContinental Hotels Group (IHG), have dealt with the uncertainties that surround using the public cloud and given themselves greater control by building a private one. “IHG is building a private cloud-running loyalty programme, its analysis of current guest activity information and historical records, and pushing out promotions suited to individual guests run on customer relationship management (CRM) systems. Also IHG’s core revenue management and room yield system are running on private cloud. All of those systems involve highly proprietary information that IHG isn’t willing to risk in the public cloud at stage one,” explains Victor Huang, director, corporate security solution division at Trend Micro. Huang notes that shared cloud resources, such as the network and storage, introduce a risk to the customer and the possibility of data leakage if the proper security controls and measures have not be enforced.
IHG has more 600,000 hotel rooms under seven brands, including Holiday Inn and InterContinental. “IHG used a mainframe system before they moved to software as a service (SaaS) and cloud. They re-write their application using Java which will help them to move the application to the cloud and adopt SaaS service. That will let it run on industry-standard hardware, which means, among other advantages, IHG won’t have to hunt for increasingly scarce mainframe talent,” Huang says. “IHG expects the cloud to keep improving,” he continues. “It’s building its next generation data centre capacity in a way that’ll make it possible to connect to Amazon or a similar public cloud for additional capacity.”As more hotels adopt the cloud, more service providers have adapted as well.
One example is Revinate, which provides social media and online reputation management for hotels. Revinate has found that the cloud provides a quick, efficient and reliable way to scale support to thousands of customers across the hospitality industry. “Cloud computing allows us to launch new clients very quickly,” Michelle Wohl, VP of marketing and client services at Revinate says. “Without having to do any service integration. Revinate is available to any client who has a user name and password, and can be accessed on any computer with internet access. This is very helpful for hoteliers who are often not at their own desks all day like more traditional office workers.” “While I can’t speak for all hotels, the hotels we work with recognise the efficiencies that can be realised from cloud computing. It requires almost no internal support and no integration services. The fact that Revinate is SaaS has never been a dealbreaker during the sales process, which shows just how far SaaS has come,” Wohl notes.