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Technology – get ahead in the cloud

26 February 2010 by
Technology – get ahead in the cloud

The era of businesses maintaining their own IT departments will soon be over as companies come to appreciate the advantages of cloud computing and the pay-as-you-go systems model. Daniel Thomas reports

It's a horribly familiar situation for many hoteliers. The booking system has gone down and the general manager is desperately trying to contact the IT team, while those on the reception desk scrabble to manage guests using pen and paper.

Avoiding these situations can be difficult when managing your own IT systems but, although there is the option to outsource to a third-party specialist, this hasn't always been cost-effective for all operators.

However, the emergence of cloud computing - where applications are hosted by suppliers and delivered to users over the internet, a variant on "software as a service (SaaS)" - means hotel operators should no longer run any of their IT systems in-house.

That's the view of Ian Millar, professor of information technology at Ecole Hôtelière de Lausanne, who was speaking at the Master Innholders' Annual Conference in London.

"Outsource 100% of your IT," he told the conference. "Don't try and do it yourselves. You're hoteliers, not IT people. If someone told me they were buying some software, I'd say, ‘Don't do it.' Put in multiple internet lines and rent it all. Rent server space, pay a monthly fee, and you have professional IT companies managing your systems for you."

Millar suggested that "the whole world" is moving towards the cloud computing model to manage its IT applications, and he is backed up by industry watchers: IT analyst firm Gartner has predicted that by 2012, 20% of all global businesses will own no IT assets.

In response to a question over whether there is a danger of putting all your eggs in one basket when outsourcing IT in this manner, Miller was unequivocal.

"The internet has never gone down," he said. "The problem has been the ‘last mile' [the connection managed by broadband suppliers], but that is improving every day. SaaS providers have 99.9% uptime - how many hotels can say that about their internal networks?"

Ben Hood, managing director at Fourth Hospitality, says Millar is absolutely correct in highlighting the importance of cloud computing to the hospitality industry.

"Quite simply, organisations shouldn't be footing the bill for the infrastructure and knowledge required in traditional computing," he says.

"Technology and the way it is delivered has moved on, and cloud computing means no capital investment and no requirement for the hospitality businesses themselves to keep abreast of fast-moving technology, as that can all be done for you."

Arthur Bolton, director at IT consultancy TPI, says this is now changing. While businesses have been rightly afraid that their data might fall into the wrong hands if they lose control of their security, cloud computing suppliers are now happy to allow independent standards organisations to audit their security, he says.

Another barrier has been concern over gaps in functionality when moving from an in-house service to one in the cloud, but this is being addressed, according to Bolton.

"Suppliers are working pretty hard to come up with new releases of products that increase functionality," he says. "Customers are having to fill fewer gaps."

To make cloud computing work, businesses will need be able to pay for services as they use them, suggests Bolton. When business is good and they use a lot, they pay more. When sales volumes are low, they will use less resource and will therefore pay less.

Of course, outsourcing isn't all about cloud computing - efficiencies can still be achieved by handing over the support of IT systems in more traditional ways.

Peter Walker is chief executive of Cyntergy, an IT services firm for the food service, leisure, hospitality and retail sectors, whose clients include Travelodge, Sodexo and InterContinental Hotels Group.

He says there are a number of advantages of outsourcing IT support: it costs less than paying internal dedicated staff; the economies of scale allow an outsourced service desk to provide a more comprehensive service in terms of hours of support, skills, consistent manning and languages; you have a resource and a cost model that can be scaled up or scaled down according to the needs of the business; and you can have an objective reporting process that has no other remit, or bias, other than to help solve your IT problems, however they may have been caused and whoever is at fault.

However, Walker admits that outsourcing support is not risk-free. "There is, as with most business change, no gain without pain," he says. "There is a cultural shock to a business where existing support people know site managers well and have developed a mental library of instant fixes. All these have to be re-learnt by an outsource provider during the transition of skills from in-house to external."

But Walker stresses that the pain is short-term and the positives outweigh the negatives. "You can immediately benefit from the outsourcer's investment in sophisticated call logging and reporting software as well as state-of-the-art telephone systems," he says.

"Apart from cost savings, you can learn more about the recurring faults in your systems."

The appetite for outsourcing appears to be growing, no doubt driven in large part by the global recession. TPI research shows that businesses in Europe, the Middle East and Asia spent a massive €12.4b (£10.9b) on outsourcing in the final three months of 2009, with the region recording a 135% quarter-on-quarter increase. The total value was also 61% higher than the same period in 2008.

Whether hospitality operators are prepared to outsource their entire IT operations just yet remains open to question, but the days of running all IT systems internally appear to be numbered.

Hoteliers have been advised to outsource 100% of their IT by renting server space and paying a professional IT company to manage all their systems, including software programs

Economies of scale allow an outsourced IT function to provide a more comprehensive service in terms of support and skills

OUTSOURCING CASE STUDY: PROUD CABARET

Proud Cabaret, the restaurant and show venue, recently signed a three-year deal to outsource all of its IT infrastructure to IT services provider Fifosys.

The City of London venue, which opened in November, has a 120-seat restaurant with nightly shows from 9pm until midnight, drawing audiences of more than 900 people a week.

In preparation for Proud Cabaret's launch, Fifosys installed IT infrastructure as well as CCTV, door-entry and time-attendance systems.

The CCTV system allows Proud Cabaret's management to access cameras from remote locations, forming an integral element of the club's security strategy, while the time-attendance system uses a fingerprint scanner to record when staff clock in and out of their shifts, providing real-time data to the office network.

Alex Proud, owner of Proud Cabaret, says: "For me, the best thing about the service we get is its efficiency. Time is money, and downtime can be costly. With a service that means you are always operational, downtime is not a problem I envisage us running into."

Mitesh Patel, managing director of Fifosys, says: "Midmarket and small businesses face a real challenge in managing their IT support requirements. For an organisation the size of Proud it is extremely difficult to justify a full-time IT department, particularly as they need support outside normal office hours. Therefore, outsourcing the whole IT support function to a specialist organisation is not only a cost-effective solution but also provides higher levels of service."

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