⚠ We would appreciate if you would disable your ad blocker when visiting our site! ⚠

Moving to the Cloud, Part 3: IMPACT!

Order a reprint of this story
Close (X)

To reprint an article or any part of an article from Hospitality Upgrade please email geneva@hospitalityupgrade.com. Fee is $250 per reprint. One-time reprint. Fee may be waived under certain circumstances.


June 01, 2016
Nick Price

This article is the third in a series discussing key strategies that a company’s IT leadership should consider in making a move to the cloud. Part one (Hospitality Upgrade, Fall 2015) covered what the cloud is and why it should be attractive to most organizations. Part two (Hospitality Upgrade, Spring 2016) discussed some of the key decisions that need to be made in planning the move. Part three examines the impact of the transition on the IT organization.

As asserted in our previous two articles, moving to the cloud is a strategic shift in the application of technology resources that fundamentally changes the way the company does business. At the center of this shift is the way in which the enterprise’s technology is deployed. This particular shift is not uniquely an impact on the technology. One of the most directly affected IT resources is the IT organization itself. 

As cloud computing hype has given way to the realization that this delivery model has intrinsic, measurable benefit to the organization, many commentators were quick to predict significant downsizing events within IT organizations, some even predicting a full demise. Given that we are now well beyond the hype phase, and most enterprises have embarked on their journey to the cloud, it is apparent that we have not seen any such decimation of the IT department, nor a diminished need for its services. But we should not assume that all is well.

Many hotel business-units are preemptively taking IT solution selection and purchasing matters into their own hands, driven by a need to address fast-changing market conditions, competitor forces, time-sensitive revenue opportunities, client feedback, new business initiatives, and even the preference for an operational expenditure over capital expenditure payment model. Their ability to do this has almost singularly come about with the advent of cloud/SaaS products and services.
Often referred to as “shadow IT,” this business-unit rogue purchasing only serves to persist an “us” and “them” state if left unchecked, and also leads to an overall loss of: visibility into software costs, volume pricing, systems interoperability, SOPs, and service level agreements (SLAs), not to mention continuity of compliance, privacy and security becoming increasingly compromised.

There is an answer to this dilemma, but it involves IT transitioning away from highly technical system developers and administrators to more of a trusted IT solution broker role.

Cloud computing will allow IT to reinvent and recalibrate itself and to foster a more effective and collaborative partnership with their business counterparts. In order for this to work, and as mentioned in part one of this series, the IT leadership will first need to deftly define and articulate its cloud vision in terms of benefits to all the core business teams, especially operations, finance and, not least of all, the IT team itself. Buy-in is essential to success.

Despite most hotel companies having already deployed one or two cloud-provisioned solutions, there are still relatively large numbers of premise solutions in their portfolios. Savvy IT leaders appreciate that as their premise applications and supporting technologies shift to the cloud their IT teams must also shift and become less technology infrastructure-centric to, of all things, business-centric resources. So, while the overall headcount of an IT team may indeed remain the same, there will be a distinct need for a progressive shift in skills, roles and job responsibilities within IT.

Hospitality is a real-estate centric industry, and will inevitably be dealing with premise solutions for some time to come. TV, room controls, business management systems are intrinsically property centric. The question in front of us is not how to move these systems to the cloud, but how to move the cloud to these systems? As we have seen over the last decade, a budget-capped, on-premise IT operation can only get us so far, and has proven increasingly unable to come to grips with the technology sophistication implicit in the systems that routinely inhabit our guest rooms and meeting rooms today. Here cloud offers us a real advantage. The reach provided by cloud can greatly enhance service delivery of these distributed property systems by providing improved systems visibility and control enabling a centralized IT function to become even more effective than the previous on-premise counterpart ever was, and this effectiveness is even more likely if we consolidate function and cost into fewer, more capable headcount and operate these centrally on behalf of all hotels.

This skill set shift must be diligently calibrated to align closely with the pace and type of technology shift. Think of this as allocating and rebalancing your 401(k) retirement account. As you transition to a cloud computing end-game it will correspondingly pull your existing IT team out of balance.

By way of an example, we have provided a representative IT team transformation pre, during and post migration from a premise to a cloud deployment. In this example we have posited a 45 property, four-star hotel brand with properties distributed across several countries. We see that not only the skill-sets transform to align with the prevailing blend of premise and cloud solutions, but also roles and responsibilities.
What IT leaders should be driving toward is a team of IT professionals that have shifted to be predominantly business-facing as opposed to a technological orientation. Allocating the greater part of their time to an ongoing assimilation of business processes and inherent needs, and continuously marrying these to commercially available cloud-based services. Effectively, this new hybrid IT professional will have one foot planted firmly in the business, and the other in technology.

IT leaders will also have to accept that their roles and responsibilities will change in parallel with a cloud migration. Rather than passively waiting for a business unit to select a new business application and then mobilize to work out how their team will deploy, integrate, maintain and support it, they must be more strategic and pro-active. With a new appreciation and understanding of the hotel business brought about by operating a more business-facing IT team, IT leaders can institute an adaptive infrastructure into which new cloud-based solutions, which they, IT, have discovered and qualified, can be deployed. Effectively, diminishing any plausible rational for “shadow IT.”

Change will be required at the very top too. For example, from being the guarantor of technical SLAs into the business, to now being the validator, recipient and policer of these same SLAs. We have noted that third-party vendor SLAs are too often taken at face value in cloud/SaaS/PaaS/IaaS contracts. Very seldom does the IT team diligently investigate and qualify the provider’s ability to deliver upon these operational and support SLA claims. 

Additionally, the role and responsibility an IT team will play in the evaluation, validation and contracting for a cloud/SaaS solution differs notably from a premise license-based product. Essentially, details about what technology stack, database management system, coding language, interface protocols, etc. being employed by the vendor becomes much less relevant when compared to their competence and ability to deliver the purchased service consistently, at three nines, 24/7/365. As the business prepares to complete its transition to the cloud, where primary business workflows for the first time operate across multiple cloud-resident systems, the role of IT as an enabler and manager of core integration technologies will become a primary focus of IT service delivery, facilitating reliable operation at scale over multiple cloud systems and critical integrations between them.

While IT roles and responsibilities should change along the migration path to the cloud some will not. These are the roles of security, privacy, compliance and governance aspects of all IT solutions within the enterprise.  
On-premise systems demanded varying levels of 24/7 hands-on attention. This required dedicated, skilled IT specialists at the property. For a full-service four or five-star property this could mean two or more full-time IT resources. Using our example hotel company cited earlier, that translates to a fully burdened cost of approximately $8 million per annum.

As systems are progressively lifted out of the property, current local IT skills, roles and responsibilities will diminish, just as they will diminish for temperature controlled, raised floor space. But it is unreasonable to suggest that either will go away completely. 

Some of the big footprint applications that reside locally in an on-premise world are the property management (PMS), point-of-sale (POS), sales and catering, revenue management (RMS), telephony management, with perhaps the most sensitive, care-intensive, being the interface processing unit that physically and electronically straps all these systems together.  This collective constitutes a sizable inventory of hardware that needs to be constantly monitored, maintained, upgraded and physically manhandled by specialist IT resources.

However, consider a time when the majority of this hardware is gone. Would we need a full-time IT specialist physically on property anymore? Could the remaining maintenance of any residual hardware be adequately monitored and maintained physically by, say, the engineering department who may already be responsible for physical devices such as wireless access points, door locks, printers and PC terminals as well as electrical and communications cabling throughout the property? This is certainly already the case with most mid-tier, limited-service properties.
For local IT managers, it is reasonable to assume that given a choice between their current roles and responsibilities, vis-à-vis: sitting watching backups churn, downloads and upgrades process, manhandling servers into racks, maintaining training environments, etc. or a more engaging business-facing role, assisting both staff and guests in the use and optimization of their technology provisioned solutions, and being an ambassador of the hotel company’s overall IT team… Well, that might not be that difficult a choice for them to make. So we may still see IT badged resources remain on property, but they too have an opportunity to transition and become less specialized-technologists, and become a more valued and integral part of the business function.       

With new cloud-based services and applications, business units are increasingly taking IT matters into their own hands. This has led to change and entropy for IT leaders, leading to less visibility and control of systems and costs. The emergence of “shadow IT” also impacts the security, integration and economies of scale that has IT fostered over time.

But, cloud-based solutions also benefit IT leaders and their teams. With the right strategy, planning, communication and governance, this technology shift to the cloud offers IT a unique chance to transform themselves away from being tactical systems specialists to being more strategic service brokers. As a result, they can redefine their role, their composition and transform their relationship with business units, and most importantly help drive business priorities forward.

Nick Price is the CIO of citizenM Hotels, former CIO of Mandarin Oriental Hotel Group and a member of the HFTP International Hospitality Technology Hall of Fame.  Mark Haley and Mark Hoare are members of The Prism Partnership, a consultancy serving the global hospitality industry.


©2016 Hospitality Upgrade
This work may not be reprinted, redistributed or repurposed without written consent.
For permission requests, call 678.802.5302 or email info@hospitalityupgrade.com.

want to read more articles like this?

want to read more articles like this?

Sign up to receive our twice-a-month Watercooler and Siegel Sez Newsletters and never miss another article or news story.