Cloud computing is transforming the way IT departments deploy custom applications during lean times.

Published: 17 Dec 2010

Cloud computing is transforming the way IT departments deploy custom applications during lean times.

It is being highlighted that by offering a fundamentally faster, less risky, and more cost-effective alternative to on-premises applications, cloud computing will forever change the economics of hospitality information technology.

One of the most overlooked advantages of cloud-based applications is how much faster and less expensive it is to scale to multiple applications. Because cloud development is based on subscription pricing, there are no additional costs to deploy additional applications to existing users. And because all applications are built on the same platform, pre-existing application services such as authentication, data objects, UI layouts, and logic can be reused across multiple applications. This approach results in economies of scale in which each additional application deployed decreases the overall costs of the applications.

Benefits

The major benefit that is typically associated with cloud computing is cost. Studies show that cloud computing can offer massive cost benefits when compared to on-premise alternatives. A Frost & Sullivan study shows that for many organisations, IT costs can be halved when cloud computing alternatives are selected.

Earlier this year, Gregg Hopkins, president and CEO, Libra OnDemand, mentioned that many hospitality organisations have already made, or are in the process of shifting to cloud-based solutions.

Sharing why cloud computing is the right technology strategy, he mentioned that with cloud computing, companies can speed up time to value. Cloud computing streamlines all stages of the application development cycle – requirements gathering, design, coding, testing, application delivery, and training – with a fully integrated development environment. This environment provides complete, prebuilt applications and project management services. Also, it requires no up-front capital expense: Cloud computing platforms are based on subscription pricing. This approach is a major departure from the traditional IT procurement process.

Also, with cloud computing, there is no software or hardware to purchase initially. Once the application is built and deployed, the vendor manages the burden of operational maintenance. Performance tuning, patches, and upgrades are delivered as part of the service, with minimal demands on the property’s IT team. As a result, your IT team can focus on delivering business value instead of keeping busy with standard maintenance and administration tasks.

Centralised infrastructure environment

It is highlighted that for a hotel’s IT department, cloud computing offers more flexibility in computing power, often at lower costs. With cloud computing, IT departments don't have to engineer for peak-load capacity. Also, companies no longer have to purchase assets for infrequent intensive computing tasks or new hotel openings.

From hotels’ perspective, Barry L Shuler, CIO and IT Consulting Principal, Design Management Associates, and former Marriott CTO, said, “All major hotel chains will be moving to an infrastructure environment that is as “centralised” as possible, in terms of application software. Things like reservation systems and loyalty programmes have long been centralised. In the future, PMS, Revenue Management, Accounting, HR, and other systems will be centralised - or at the very least, probably three or fewer instances.”

“In the early going, this is going to be in these large hotel companies’ “own” data centres. Whether the space is owned by them or leased is really not relevant. What is relevant is that they have dedicated infrastructure and make capital investments for their capacity needs.. The emerging public cloud providers give these large chains an opportunity to put a hybrid model in place,” Shuler told EyeforTravel’s Ritesh Gupta.

Shuler added that part of the capacity for their application and web hosting will be in the cloud. With the earliest cloud hosted applications being those that are more of a “utility” nature, like finance, HR and other back office systems. Their more competitive applications, the front office ones, like their loyalty programme, reservations, property management systems, revenue management, guest satisfaction and the like, will be the last to migrate.

“Partially because these applications are highly tailored to the brand strategies. And partially because many of these applications are written in older languages and run under even more ancient operating systems. This makes it difficult for them to migrate to the public cloud in the near term,” explained Shuler.

“These older technology platforms also frequently do not scale to support a large number of hotel properties from a centralised strategy perspective. So, to migrate this front office functionality to the “cloud”, whether public or private, will require significant redesign and rewriting of existing custom-developed applications, or replacement with Commercial Off The Shelf equivalents. In either case, it is a huge risk and an equally significant investment of time and money to accomplish the ultimate “cloud” strategy. But, it will happen. Eventually,” he said.

With cloud computing, hotels can extend the life of their existing systems with new innovations, improve time to market of new systems, and create competitive advantages faster than ever. According to Shuler, this might have validity for some industries, it is far less valid for the large hotel chains in the hospitality industry.

“And the smaller chains and individual properties will never really be cloud users in the sense that they would run their own application software - that they either custom-developed, or licensed - in the cloud. Much more likely is they would be a potential customer for Software as a Service which would be hosted in the cloud,” said Shuler.

“For enterprise class application systems for hotel companies with over 500 properties globally. I do not see the cloud infrastructure environment as something that will extend the life of existing systems with new innovations or improve time to market.”

These large companies are moving into a “commercial package” mentality, but they are a decade or more from getting there across their application portfolio, said Shuler. The problem is a lack of modern language, scalable, high (and unique) functionality applications that hotel companies can license “off the shelf” to replace their ancient, but fast-running and fully depreciated legacy applications.

“The final thing that makes it very difficult for hotel companies to move to centralised application environment is that the owners of the hotel real-estate have to foot the bill. It is next to impossible to get these large real estate companies, each with their own agenda, to agree on a technology strategy where they are “sharing the cost, and the functionality” with other owners and hotel properties. This, probably more than technology itself, is really the issue. And it is why I feel the hotel industry will probably be one of the last to grasp and fully utilise public cloud service providers in a big way,” said Shuler.