The Cloud Decision Point

By Dorothy Creamer, Managing Editor | April 08, 2014

Two and a half years ago, global hotel management firm Interstate Hotels & Resorts (www.interstatehotels.com) was at a decision point. Its infrastructure was aging and the cost of maintaining legacy systems was just too much to justify. After reviewing the alternatives, the company opted to wade deep into a cloud-based infrastructure. Chief information officer James Lamb was brought on board and led a wide-spread transformation that would span storage, business intelligence, e-mail, disaster recovery, and more. Today, Lamb is reporting that the migration is paying back, fiscally, and paving the way for the company’s future.

“I joined Interstate about two years ago to oversee the transformation of the IT function. The purpose of that makeover was to change the focus from strictly day-to-day operations to business-driven innovation,” recalls Lamb. “This was not IT for the sake of IT. Technology is changing at an exponential rate; and to be able to focus on the technological advancements that we should be looking to adopt was one of our key objectives.”

The decision point
Internal servers were end-of-life and out of capacity. The company wanted to improve its business continuity and disaster recovery capabilities across its nearly 400 properties. After reviewing a number of alternatives, the decision was made to migrate to the cloud. Lamb admits that the definitions of “cloud” and the reasons for adopting it run the gamut: from allowing access to certain servers and storage over the Internet, to avoiding having to purchase expensive infrastructure, to being positioned to rapidly adopt emerging technologies.

“It’s all of those things, but for us it was about positioning us to keep up with the constant downward pressures on the cost of processors, memory and storage,” Lamb admits. “The legacy cost of storage can be quite high. Leveraging the cloud, you can procure storage for pennies on the dollar compared to what you may be faced with trying to do this on your own. When we looked at our transformation, the traditional approach would have cost many times what it ultimately did to go to the cloud by partnering with best-in-class suppliers.”

Ultimately NaviSite (www.navisite.com) was awarded the contract in March of 2013 and the deployment process began.

Three objectives, four platforms
Lamb identified a philosophy based on three basic principles that Interstate sought to achieve through the transformation. First was to be able to identify technologies and practices that are relevant and appropriate to support teams in their effort to drive performance for owners. The second principle was scalable service deliveries. This included looking for ways to automate repetitive and manual process and employ self-service models to remove bottlenecks typically associated with staffing. Finally, Interstate wanted to leverage third-party suppliers. Interstate wanted to focus on strategic IT decisions to meet objectives, and partner with best-in class suppliers to do the heavy lifting for deployment and operations.

Interstate ultimately migrated four major platforms to the cloud. Its proprietary business intelligent platform, IHR1, had to be rolled out by a firm date in order to support that year’s budget season. It was the first system that was rolled out on the cloud and included the build-out of an easily-accessible mobile website that gives owners the ability to monitor results and hotel performance 24/7 in real time. The BI rollout was followed by the migration of the Infor Lawson (www.infor.com) back-office system, and then the entire e-mail platform, coupled with a provision that Interstate could build out a new intranet site on Sharepoint.

Interstate operates in a hybrid cloud, where the company is sharing its data center infrastructure, but not co-mingling data or servers with anyone else. Interstate is able to leverage its supplier’s infrastructure for those things that are more commodity-based versus those things that need to be segmented off and specifically dedicated to Interstate. This way the hotel company doesn’t have to buy a complete storage area network, but the area is segmented and secure on that shared piece of infrastructure.

The company has two state-of-the-art data centers, one on the west coast and one on the east coast, to provide business continuity and a disaster recovery solution. “We could have catastrophic loss of our primary data center and have our apps up and running in our secondary data center in no more than four hours,” Lamb explains. “Our email server is contracted to always be available — at least with the capability to send and receive email. That’s critical given how important email has become to day-to-day operations.”

BI benefits:data access at fingertips
IHR1 is a full suite of business intelligence tools and the mobile app is a sub component that provides access on iPads and iPhones in a format that is optimized for display on mobile devices. The mobile component of IHR1 offers an intuitive graphical interface to give at-a-glance information and the ability to pull up reports and view them in detail from anywhere. Owners can view a high-level summary dashboard on key performance indicators either across their portfolio or on a specific hotel.

“IHR1 is heavily integrated into the way we manage properties,” Lamb states. “We use that information on a daily basis to focus on how we are performing. We also look at year-to-date data, comparing against budget forecasts from last year to make sure that we are driving performance.”
Lamb stresses that this wasn’t a mobile rollout for the sake of mobile. “Rather than just dreaming up something and forcing it upon an owner or user community, we solicited input and feedback during the design phase to determine what would have the most value for an owner and used that to guide what information would be available, how it would be displayed on screen, and how to make it as useful as possible.

“As we evolve and improve upon [IHR1] there is a multitude of data available for analysis,” Lamb continues. “There is a constant ongoing effort to harness the power of data and translate it into meaningful actions that can be taken at hotels to improve performance.”

Benefits of virtualization
Lamb contends that as the industry continues to see increased regulations, such as PCI, it’s easier to deal with those considerations in a highly controlled data center versus on property. The time-to-market is also significantly reduced. “With premise-based deployments you have to deal with the configuration that exists at each individual hotel,” Lamb explains. “If you have a portfolio of 100 hotels, you are potentially trying to roll something out to 100 different configurations. A cloud-based model means you deploy it once and everyone has access to it. That improved productivity is crucial to being competitive in today’s marketplace.”

Another benefit Lamb notes is that Interstate was able to adopt short term contracts on partnerships which ties into the depreciation cycle of technologies. “Signing up for three years as opposed to five or ten years, typically becomes a cash cow in the out years,” Lamb muses. “Migrating to the cloud allowed us to leverage our suppliers’ investment in world-class infrastructure.”
One of the earliest benefits Interstate realized came in the annual budget process. “Budget time is always crazy, with people doing all manner of things to get their budget in on time,” Lamb notes. “We saw a great deal of stability and performance so that people were able to do that in timely manner, without a lot of issues.”

Lamb believes that the propagation of virtualization technology in the data center is what’s really making a lot of this possible. Historically, if operators wanted disaster recovery they would essentially pay someone for hardware that sat there unused just in case it was needed. With the advent of virtualization, hotels are basically keeping a copy of production images and the production system in a secondary data center. That virtual environment allows companies to use it when needed, but not pay for anything more than storage during the time it’s not needed. “That’s a disruptive technology within the data center environment itself,” Lamb says. “We see that going on and couple it with the constant downward pressure on the cost of computing resources; you see what vendors are doing in terms of their next-generation server designs to drive down costs of providing those servers in the data center. It lines up with the strategy that we want to keep pace with — to provide increased processing capacity and power at a constant or declining cost of service.”


 

5 Tips for EFFECTIVE CLOUD PARTNERSHIPS

When it came to finding the appropriate technology partner, Interstate initiated a structured bidding process focused with the end in mind. Interstate looked at a wide swath of suppliers from a broad spectrum and began the process of meeting with six vendors.  The initial meetings were set up to discover what each vendor’s capabilities were relative to Interstate’s needs. “Based on these interactions there was evolving understanding on both sides,” Lamb explains. “Just as there are things that we don’t know, there are those things that potential partners think they know or are making bad assumptions. Our whole process was geared to improving understanding for both parties.”

Open Vendor-Operator Dialogue
Vendors were narrowed down to four contenders to go through intensive workshops. This offered opportunity for dialogue between Interstate and the suppliers to make sure that Interstate’s perspective was in-sync with what was available in the marketplace.

Bidding Transparency
Potential vendors were then put through multiple rounds of competitive bidding – almost a reverse auction model. Interstate created what they called a “bid book,” which contained all the items that would ultimately wind up in the contract. Partner hopefuls had to classify items as either: accepting, not accepting, or accepting with modification. There was a list of 650 or so requirements around Interstate’s expectations for the project, illustrating not only what each vendor was going to provide, but the price point at which they were willing to deliver. “By having all four vendors provide that same information we were able to make sure we were doing an apples-to-apples comparison,” Lamb explains. “This method allowed the competitive pressure of the marketplace to factor into the willingness of suppliers to ramp up to the level of service we wanted to achieve through the process.”

Once the suppliers in contention were whittled down to two, they entered into  a contract negotiation phase, where they would then operate on the items on the bid books that they had either rejected or accepted with modification.

Clear Demands
Lamb reveals that some of the providers were unable to stand up to the service level that Interstate was looking for and while they may have been competitive from a price standpoint, the quality of the bid didn’t meet Interstate’s demands. “Our approach was to ask for the moon and let the competitive market dictate what these suppliers were willing to stand up to,” Lamb asserts.

Managing Expectations
The bidding period was also a learning process for Interstate. Lamb admits that if Interstate asked for something and none of the suppliers were willing to step up and provide it, then they knew they were asking for too much and might have to modify the perspective of what was feasible based on the competitive marketplace at that point in time. However, if three of the suppliers could deal with a request or make slight modifications and only one was holding out, it showed that there was a willingness in the market to deliver at that level and Interstate was justified in pursuing it.

Begin With the End in Mind
“Have a very clear sense of what it is you’re trying to achieve at the outset and then leverage that as a starting point for dialogue and allow that to improve the understanding on both sides,” Lamb advises. “You’re pursuing a partner relationship with the suppliers that you’re engaged with.”

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