By Dr. Peter Agel, Global Segment Leader Hotels, Oracle
Converting to dynamic, centralized, pay-as-you-go computing is helping hoteliers improve profitability, lower cost, and meet skyrocketing consumer expectations.
Like every consumer-facing business today, the hospitality industry is confronted with unprecedented—and ever-increasing—expectations on the part of its customers. To stand out from the competition, hoteliers at every price point are striving to provide a smoother, friendlier, and more personalized guest experience.
In order to do that successfully, an organization needs to identify, adopt, and integrate new technological capabilities as soon as they become available. Otherwise, each new development becomes a negative differentiator—something you can’t do but the other guy can.
Ideally, the office of the CIO should be the leader of this process of ongoing innovation. Assuming this role has been a challenge for CIOs in the hospitality industry, however, because of the fragmented nature of the industry’s approach to IT. Typically, each individual site has an IT staff running its own servers, doing its own maintenance, upgrading its own software, and collecting its own data.
And even in companies who have a centralized system, hotel staff can and do bypass it in the interest of, say, getting a guest checked in quickly. If there is no record of a certain guest in the hotel’s own database, rather than take the time to check with the central data repository, a busy desk clerk may simply create a new record on the spot.
In such an environment, it is extremely difficult to upgrade system capabilities without adding a lot of bolted-on point solutions, which in turn makes the system even more difficult to maintain and scale up.
Opportunity for Innovation
Cloud technology offers hospitality industry CIOs, an opportunity to leapfrog over these structural difficulties by moving, organization-wide, to a simplified environment that is secure, stays current, and can scale rapidly. Through its cost efficiencies, it can also enable them to develop and add on their own proprietary innovations.
And by replacing the traditional, decentralized hotel-chain IT structure with a centralized, easily maintained and upgraded system, it offers these CIOs with an opportunity to move from being the guy who keeps things running to someone who works hand in hand with the organization’s business stakeholders to drive innovation.
And the case for innovation in this industry is not hard to make. The entire travel sector has been feeling the after-effects of the economic crisis, while online travel agencies, which did not even exist 10 or 15 years ago, have disrupted hotel chains in terms of distribution cost and customer relationship management. Hoteliers have responded with a recent push toward building direct relationships with their customers, aiming to develop a lower-cost distribution channel and greater opportunity to merchandise and upsell.
Creating these relationships, however, has yielded challenges of its own. Hoteliers are inundated with bits and pieces of information, which collectively promise to unlock vital insights into their business but lie scattered and inaccessible throughout the chain’s operation. What is needed is a digital technology management operation to pull all this data together into one repository where it can be tapped quickly and easily by any qualified user and shared enterprise-wide in an instant.
Greater Security and Data Integrity
Nonetheless, moving from local IT to the cloud is a major change, and there is an understandable hesitation in the industry about making what can appear to be a radical step. While some hotel companies are aware of the advantages of the cloud and are working toward making the transition, a greater contingent is likely held back by concerns about system security and data integrity. A centralized function that is off site seems simpler but triggers key concerns: What if I lose power? What if I lose my data?
Though seemingly counter-intuitive, it can be argued that these problems are less likely to occur in a cloud-based system. By its very nature, data processing in the cloud is distributed across a large network of servers, which means it is less likely that there is a single point of failure. This redundancy, coupled with 24/7 global support for the systems, enables major suppliers of cloud-based services to run at higher uptime than many local IT systems.
As for data integrity, a cloud-based system could handle all customer records in one place, automatically merging and updating them virtually in real time - providing a more robust customer database than decentralized systems. To protect this asset, major suppliers offer encryption, virus scans and whitelist support. And it is common for these protective systems to be continually maintained and upgraded, which is not always the case with local IT operations.
Arguably, the greatest benefit of the cloud is taking responsibility for IT out of the hands of local hotel managers, allowing them to devote their attention to guests. Moreover, by creating a complete central customer database, the cloud enables hotel managers to provide even better, more personalized care as well as offer ancillary products and services.
“An organization needs to identify, adopt, and integrate new technological capabilities as soon as they become available”
On the enterprise level, the cloud makes it possible to stay abreast of business and technological developments without having to make unexpected investments in IT infrastructure. Along with these reduced implementation and ongoing resource costs come automatic and universal software upgrades. Other benefits include increased power, storage capacity and performance, and a drastically shortened deployment process.
With the tumultuous challenges facing the industry today, it’s no wonder hoteliers are kept awake at night with weighty questions: How can we broaden our array of services or enhance interactions with customers? How can perishable inventory - a room that stands empty for a night is revenue lost forever - be better distributed? How can work efficiency be increased?
Fortunately, some answers can be found in the cloud.