Rick Sternitzke, CTO of Swisscom Hospitality Services, Cloud Computing for Hospitality – what’s behind it?

In the general IT world, “The Cloud” is often perceived to be a revolutionary concept that moves existing property operations from the physical world into the virtual realm. However, we often oversee how the concept of Cloud Computing draws on proven concepts of our computing past. By implementing the Cloud, we are just coming full circle to almost 40 years of on-line and near-real-time computing.

Do you remember the “dinosaur” times when there were only mainframes and minis? These computers were expensive, required a dedicated staff of professionals to operate and did not naturally scale across multiple locations.

The only mechanism available to run multi-site or hierarchal companies was to tether (connect) locations via dial-up modems or via dedicated leased lines. Certainly, both scenarios were less costly than a mainframe or minicomputer on every single site, but they were not without their limitations, namely poor telecom connectivity, slow speed and no local processing power (limited to text processing only).

Applications software was proprietary, expensive and required constant care and feeding by an army of professionals. (I actually worked a while in a shop requiring us to wear white lab coats while in the computer room.) It was a closed world. But 1980 was a precursor to Cloud Computing because:

• Major computing resources were located away from the client/user
• Systems were managed by professionals
• Systems were maintained by professionals
• End users had minimal investment in site hardware
• Site hardware was easily replaceable by smart hands.

In the hotel of 1980, there was at least one “Terminal” and a printer. The terminal was a combined video text display and a keyboard, or sometimes even a teletype or smart connected typewriter. All computer processing was done on the mainframe; the rest was done on paper by the front desk clerk.

The Advent of the PC: Moving processing power to the user

Camping on the success of the minicomputer for math intensive applications, the IBM Personal Computer was released in 1981. The adoption and “opening” of the PC, plus the success of Apple and other early proprietary desktop computing platforms transformed the “point of computation” and moved the focus from the mainframe/mini to the desktop. This caused a mass migration from the terminal to the PC. But the applications were mostly still running on the mainframe because the PC was just emulating or acting as a terminal. Yet, the impact was huge. So we went very quickly from a vertical systems architecture to a horizontal one.

Once there was compute power on the desktop, the distributed computing model known as Client-server was born. The local processing engine was now capable of manipulating and acting upon a vast number of data elements one-at-a-time or all together. Looking at things today, this really moved the industry in the opposite direction from “The Cloud.”

Nevertheless, major companies – hotel brands and reservations entities included – still needed their big central systems to provide processing for a broad range and number of remotely located clients, PCs or terminals. So while the big mainframes were whirring away deep within their data centers processing millions of activities per day, the PC quickly replaced the terminal in many end-site locations. Meanwhile, the software industry was also changing to accommodate models that could better take advantage of the combination of mainframe and PC. But to understand this shift, we need to think in terms of “transactions”.

Modern information processing organizes all our work into transactions, with families of little transactions taken together creating larger operations. The best way to experience this in our industry is to decompose the check-in process in your hotel. Each small activity (called an atomic activity or atomic transaction) has an information gathering, modify, exchange and or dissemination action. The hotel desk personnel may undertake anywhere from five to 25 of these atomic transactions to perform a check-in process or activity.

It is this idea that most business practices can be decomposed into families of transactions that allowed the concept of networked systems to evolve. And it is this very concept that has led to the actual state of most hotel system environments today: normally about 30 to 50 discrete and separate systems that communicate transactions to each other. Some are located at your hotel, and some are not.

The Internet and the virtualization of resources

With the proliferation of the Internet in the mid-90s, web-based mechanisms of transaction processing evolved. The World Wide Web and other browser-based technologies soon became the primary vehicle for input/output software, with a growing community of developers driving standards, in sharp contrast with the previous generation of software developers, where everyone created their own transaction types and styles.

Most importantly, however, the new web-based transaction processing allowed new computing resources to exist based on something other than their physical address or a dedicated piece of wire. As a result, we were now able to accomplish work (transactions) with remote entities without pre-coding their physical server location or making hard connections between machines to get them to communicate.

For a hotel this means that it does not need to have every application running locally or on mainframe any more. In fact there is not even a need for the hotel staff to know where an application is running – so long as there is good connectivity via the Internet and the local device knows the name of the resource that holds the application. This really constitutes a Cloud-based solution: First, it is Internet-portable, so you can run it at any Internet hosting facility. (Please note that a central data center, run by the brand, owner or operator, normally does not fall under this category.) A second important feature is that all connecting systems (onsite and offsite) must be Internet-compatible, as well. This is exactly why Cloud Computing has a difficult time penetrating our industry.

Where Are We Today?

The hotel is by definition a complex IT construction. Most system environments have evolved intermittently rather than systematically. You are probably running a combination of 1980s, 1990s and more current technology. Some of your applications may have hardly evolved since you installed them. Why is that? Simply because some of your software vendors were never enticed to open their wares to interconnection.

However, our industry is changing. Almost every class of application and their associated software is changing to a web-based model. It is conceivable that only Internet-ready software might exist a mere five years from now. Does this mean that in five years time, hotels can move all their IT to the cloud?

Hardly so. Unless all you run is email and a workplace application on your PCs. But a hotel IT environment is far more complex than that. And as long as the most critical applications – such as PMS an Affinity/Loyalty – cannot connect to the Cloud, the virtualization of resources will be limited to some specialized systems like yield management, call rating, resort event scheduling.

Look at this simplified sampling of service platforms and see how multiple elements typically relate to one another:

• Systems – Connections & Interactions
• PMS – Talks to every other local system, Reservation, Yield, Accounting
• Voice – Voice Mail, Rating, PMS, Reporting, Yield, Accounting
• HSIA – Affinity/Loyalty, Entertainment, PMS
• Entertainment – Affinity/Loyalty, HSIA, PMS
• Controls – Affinity,/Loyalty, PMS
• F&B, Services – PMS
• Keys – PMS
• Locks – PMS

Also, some hotel systems will always need to be on-property to operate devices (like door locks) or provide media/control (like HSIA or entertainment). So the notion of a complete hotel without any local control systems or processing systems is not likely to happen any time soon.

Realistic Expectations From the Cloud

Then what are the prospects for Cloud Computing in Hospitality?

Above all, what we can expect to gain from the Cloud is greater flexibility. I mean increased flexibility in deploying new hotel sites, as our computing resources do not need to be deployed nor maintained locally. Shifting central processes above property undeniably makes our operations lighter and potentially reduces our running cost, as we benefit from Software as a service (SaaS) and pay-per-use models. Especially for hotel chains or groups, cloud computing opens the door to markets where operating a hotel may be very difficult, given the cost and shortage of qualified IT staff.

Other main characteristics of the Cloud include:

• Systems are managed by professionals
• Systems are maintained by professionals
• End users have minimal investment in site hardware
• Site hardware is easily replaceable by smart hands.

Professional support translates into a number of user benefits: His software is always up-to-date through the Web, and a professional back-up plan can be drawn up to ensure highest service availability. At the same time, centralizing record storage in a controlled offsite environment adds to the ability to better secure critical data.

You will recognize that most of the listed benefits are a cut-and-paste of information from the Mainframe age; they actually represent our computing past. The only major new ingredient is scalability. For the rest, there is not much that’s conceptually new about Cloud Computing. We are simply putting some new names on some well-known concepts.

Opportunities to get started with the Cloud

Cloud computing works best when there is no existing legacy to mate with. When the Brand is new, all decisions can be taken from scratch: You can select only those platforms that conform to the Internet model and can live off-site from the property. This is a unique opportunity to introduce cloud computing at startup time.

At Swisscom, we have been fortunate enough to work with some of the industry’s new brands that embrace the Cloud without any bias. For instance, Dutch hotel chain citizenM has moved central reservations, property management, CRM processes and data as well as its Voice over IP application into the Cloud. The chain has set out to grow from 3 to 20 properties within the five years only. There is no time (nor money) for individual system deployments really.

New builds are generally an interesting case for Cloud Computing, especially when a hotel group wants to standardize certain functions or guest services across the board. However, in most cases the new-build property will need to connect with legacy HQ or brand required systems, which all too often do not support Cloud-based solutions yet.

At existing properties, the Cloud becomes an option when certain applications reach the end of their lifecycle. This way, you can move towards the Cloud by replacing single subsystems one at a time. For example, you can select a single a voice or vmail platform and bind it to your other existing legacy systems. However, the single subsystem approach will always be limited by the actual applications landscape in a given hotel.

Summary

Cloud Computing is sure to come to Hospitality but it will arrive slowly. While the concept has been successfully tested by new hotel brands, whom it has given a head start, most hotels are not in a position yet to simply move certain systems above property level. For existing brands and hotels, there is safety in making small steps to off-site solutions. You can box your risk and test if that method of operation will work for you and your property. And while you check it all out, you can actually control your cost.