Cloud computing has been gaining a tremendous amount of buzz over the past year, trumpeted from sea to shining sea as the next big IT trend. The concept of relying on a hosted "cloud" to handle critical business functions is not new, but its growing popularity certainly is justified as companies seek out flexible and easy-to-consume solutions that won't break their IT budgets. The hospitality space is no different as operators are using cloud based applications to keep IT costs down, drive loyalty and become more agile when executing business strategies.
Unveiling the Truth
For Christine Sudmalis, president of FEILE Hospitality Group and former director of finance at Vail Resorts (www.vailresorts.com), cloud computing is indeed a buzz word. While she contends that Vail's IT staff is more knowledgeable about cloud computing, what is meaningful to her is the reduced cost of using a web-based solution, and the shorter implementation time to get up and running, all positive attributes of the cloud. "We are operating on a slim staff and the need to manage costs is important,"says Sudmalis, who continues to consult for the resort. "Our IT team was heavily involved in the selection process and had we chosen a server-based system it would have been a deal breaker for having a better solution for the 2010 budget year.
Vail Resorts operates 28 properties that they own, as well as properties under management. When a new property comes under management, Vail Resorts assumes their IT systems. As a result, it becomes difficult to consolidate and benchmark Vail hotels against one other across multiple disparate finance systems. Since Vail does not operate cookie cutter hotels, the consistency needed to maintain brand standards also becomes a challenge. Vail reviewed a number of IT vendors that could address these challenges, including the Prism Group and SAP. The company ultimately chose on-demand offerings from Adaptive Planning (www.adaptiveplanning.com) as it offered the flexibility and adaptability needed, according to Sudmalis.
"We knew Adaptive Planning was not a hospitality product offering, but liked that it worked across industries," said Sudmalis. "We wanted something where I could see every property at once and review the key metrics for our business," such as room statistics [occupancy, average daily rate (ADR), RevPar (revenue per available room) and ancillary revenue streams (food and beverage, spa, golf, recreation, retail)]. "Adaptive Planning allowed us to set up the model we wanted without customization of the software, the cost was low and we could get the data we wanted very simply.
The accuracy of Vail's forecasting model has vastly improved. Its March 2010 results came within .04 percent accuracy of its forecast. Sudmalis says Vail plans to expand its use of Adaptive Planning to handle capital planning and capital tracking in order to review owned versus managed budgets across the 28 different properties.
Compass Group (www.cgnad.com), one of the world's largest contract foodservice companies, deems cloud computing as much more than a buzz word. The company has been monitoring the cloud trend over the past 12-18 months, especially as the major tech players get more aggressive with cloud-based offerings, according to Mike Barner, vice president of field systems for Compass Group. "We think it will become more viable as it relates to our overall computing strategy. We've done some cloud-based initiatives in a true cloud environment such as e-mail filtering or leveraging the Microsoft DHX service. When billing or purchasing, we look to the software as a service (SaaS) model or an application service provider (ASP) environment. At the end of the day, our approach to cloud computing is a hybrid strategy," says Barner.
This hybrid approach means Compass, like many other companies, continues to keep core enterprise functions like enterprise resource planning and human resources on premise. On the other hand, Compass relies on best of breed vendors for its "Zipthru"brand, a customer-facing, hosted portfolio solution that includes POS, catering, loyalty, cashless, and direct messaging (text, two dimensional tags). "It's the internal compass brand whereby we will select who we feel are the best-of-breed solution providers within those various spaces and set up relationships with those providers, whether it's Infogenesis, MICROS, Cater Track, First Data,"says Barner. "Then we brand it internally as ZipThru Cashless, ZipThru Catering and so on. We use the appropriate supplier behind the ZipThru brand, depending on the requirements of the customer."
Compass customers include dining facilities in corporations, universities, sports and entertainment venues and hospitals. Barner says text messaging, branded as ZipThru Connect, is used to create couponing, nutrition info, marketing info or any sort of specific message to tailor to a given customer. Customers have the ability to opt in to receive this information.
"A majority of these solutions are SaaS,"says Barner. "We are licensing a given software solution that is being hosted externally by one of our solution providers and accessible in every case through an Internet connection. Web-based solutions are something that people are comfortable with today so we're trying to leverage that comfort with the solutions that we provide to our customers.
Dominos.com Considers the cloud
Founded in 1960, Domino's Pizza (www.dominos.com
) operates a network of company-owned and franchise-owned stores in the United States and international markets. In order to more efficiently meet seasonal and event-based spikes in customer demand, the company is considering an online ordering system using Microsoft's new cloud-based operating system, Windows Azure Platform (www.microsoft.com/windowsazure
"We have daily peaks for dinner rush, with Friday night being the biggest,"says Jim Vitek, director of eCommerce, Dominos. "Super Bowl, however, has a peak 50 percent larger than our busiest Friday night. Windows Azure allows me to focus on customer-facing functionality and not have to worry about whether or not I have enough hosting capacity to support it.
Vitek says Dominos hasn't implemented Azure yet, but looks at the possibility of implementing it in the near future "We think eventually [cloud computing] is going to get there. The fundamentals are in place where it makes sense.
Vitek says the interim steps Dominoes may take before committing its online ordering business to a full cloud-based model is to scale its IT infrastructure out to the cloud if it runs out of internal capacity, or even as a business continuity plan. "In case we encountered a failure in the network layer or database, we could, in theory, set up a whole new architecture to host our application in the cloud.