Industry Update
Opinion Article27 April 2016

Hey, You, Get Off of My Cloud!

Surviving the Transition to "Community Model" Software

By Bernard Ellis, President and Founder at Lodgital Insights LLC

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After cautiously testing the cloud computing waters for almost twenty years, the hospitality industry has been diving in head first lately, and for the most part, made nice, controlled entries with minimal splash. And for the majority, the dive was followed by a graceful, controlled float to the top. Others, however, found themselves disoriented, bumping into other swimmers, and gasping for breath. The cloud is indeed like a community pool in many ways, but after reading this article, there's no reason why you shouldn't be able to quickly find your lane and swim faster laps than ever.

Quick Insight From the Path Not Taken

So why do I claim to have so many answers? Please allow me to share a little history that might explain why this issue is particularly near and dear to my heart. Not ready to commit to a career in the hotel industry at age 18, I opted for a liberal arts college and majored in sociology. I figured it wasn't completely off track: after all, large hotels are one of the few places where under one roof you are likely to cross paths with people from all rungs of society, potentially from all corners of the globe, and even more interestingly today, to witness the unprecedented five generations currently sharing the hotel workplace. And my sociology degree did indeed train my mind to have an even more nuanced and inquisitive appreciation of the diversity around me. However, what it didn't prepare me for was the beautifully dressed bride, red-faced with fury and screaming at full volume across the front desk, nor for her even more unpleasant mother, nor the panicked, disorganized meeting planner who generously distributed blame to everyone but herself, nor the beloved celebrities who weren't nearly as friendly in person. In fact they were kind of a pain. Yes, what I came to realize was that I liked the systems a lot more than I liked the guests.

But not to worry, dear readers: the hospitality technology field has provided just as much if not more opportunity to exercise my sociology training. I've always been suspicious that the herky-jerky, often rhyme-less, reasonless way our industry adopts new technology might not be quite normal, and in fact, could even be considered deviant. Having now had three years at Infor to compare notes with my counterparts who serve other industries, such as healthcare, public sector, retail, and industrial manufacturing, I can now definitively confirm that, no, our industry is not normal-far from it in fact!

Was it All a Dream?

Conveniently, cloud computing offers a perfect example to illustrate my point. I have actually been evangelizing cloud since 1999, the year when I began a 12-year stretch of working for growing companies who each only offered one product, a web-native Software as a Service (SaaS) solution, the first being a CRS and the second being a revenue management system. So, why, even in print, is my tone coming across a little surly, if our industry began humming along on cloud computing more than 15 years ago? After all, some of my Infor colleagues are only just now managing to convince some of their manufacturing customers to dip their toe in the water. Well, what I didn't fully appreciate at that time was just how much of a "cloud bubble" I was in. Viewed from more of a distance, it was easier to see that, as with so many other emerging technologies, hospitality hadn't actually been all that heroic about early adoption. Instead, the industry was actually following its usual "slow-slow, quick-quick, slow-slow, quick-quick" dance rhythm of technology adoption, whose tempo is set by low tones of wary apprehension that are occasionally lured to the dance floor high noted promises of lower costs. There had not been nearly as much early adoption as I had thought.

At one point, we had signed almost the entire Las Vegas strip onto our cloud-based CRS for electronic distribution, but at that time less than 5% of their bookings were electronic. We grew to 6500 hotels in just a few years, but besides mega casinos, they were all small chains, independents, or representation companies who, while perfectly flattered to be labeled as early adopters and innovators, were really there for the low flat-fee transaction price. The big brands certainly wanted no part of it, after all, their home-grown CRS' were one of the few true differentiators they had left, and many proclaimed with grave certainty that their companies would never, ever, no, not ever, adopt an off-the-shelf CRS, especially one hosted by someone else!

My ensuing years in the revenue management system business had also given me an overly rosy picture of our industry's cloud adoption. In that case, I now realize that ironically it was the most risk averse who were more attracted to the model. Even if they had their doubts that the system would work for them, they could sign up knowing that in a year they'd have an easy off-ramp available, unlike the six-figure up-front capital expenditure which was required by the prior generation of RMS technology. A sale of those big systems generally only occurred when accompanied by either a contractually binding performance guarantee, or a buyer who was willing to take a huge leap of faith-which too often later proved to be career-limiting.

Some hotels were dragged onto the cloud by the need manage OTA extranets, while others would only risk adopting cloud solutions for non-mission critical applications such as centralized purchasing, or annual RFP preparation, A noteworthy number of web-based PMS, POS , and wholesaler booking startups came and went as well, unable to achieve a critical mass of users.

So, while the industry put on a very convincing act of widespread cloud adoption that even had yours truly fooled for many years, it's really only happening just now. The clearest indicator is how many big brands have either rolled out off-the-shelf cloud-based PMS and/or CRS solutions, or soon plan to. I also can't help but do a double-take, when witnessing the extreme urgency and deep frustration that a brief RMS outage can now inspire. What a difference a decade makes. And as cloud adoption in hospitality has gradually worked its way inward from peripheral point solutions to mission critical applications such as the property management system, POS, and Back Office Accounting, service level agreements and up-time guarantees have taken on a new level of importance as well. This was to be expected, since besides being responsible for more high-visibility, guest-facing service delivery functions than the first wave of the most commonly adopted cloud solutions were, these mission critical systems tend to have more interface connections to the outside world, handling crucial functions such as inbound reservation delivery from the CRS or other channels, as well as POS charge postings.

Most hotel industry veterans will have at least a few war stories to share, describing the operational paralysis that engulfs a hotel operation when critical systems encounter performance issues, or go down altogether. They will also tell you that these situations typically arose after some sort of system upgrade. In the heat of such moments, frustrated operations managers usually accused the vendor of taking shortcuts on quality assurance, or putting too much focus on a different client, or simply not being talented enough masters of their craft. Over time, however, users came to understand that the reality of client-server applications, with their big releases of monolithic, feature-laden code, was that no matter how much effort goes into testing, whether automated or manual, there is simply no way to completely simulate an individual hotel's configuration, along with the data with which it is populated, and the live interfaces over which it communicates.

What are People Giving up?

To solve this, a user acceptance testing (UAT) exercise became an extremely popular practice. More specifically, with a typical UAT, the end user would get an advance copy of the new software release to install on his server, and then a copy of the production database would be taken through a trial run of the upgrade process, so end users could then be set loose on the system to learn its new features-and to try to break them. As defects were found, they were reported to the vendor for resolution, and fixes were either installed as patches or accumulated into another release, installed, and retested. While project milestone dates would have been established as guidelines, just as with the preparation instructions on a bag of microwave popcorn, the process was really considered complete when the discovery of new defects slowed to a pace that was negligible, or at least, you guessed it, acceptable to the user. Interfaces, traditionally the most frequent victim of system upgrades gone awry, could now be put through their paces well in advance of go-live night. And after testing was complete, and the hotel went live on the new version, the UAT often took on an important new role as a training environment that could be quickly synchronized with the production database, making for an extremely realistic training experience. And even if UAT concluded successfully, hotels could, and often did, delay the upgrade to a date that was convenient based on business levels, employee vacations, and so on. The UAT process greatly reduced project risk, and ironically, if defects were found after go-live, the user would even accept some accountability. So, after years of experience refining this popular process, what are we cloud software providers now asking you to do? "Get rid of it. Try to forget you ever had it, even."

Oh, and you can tell us when you think you'd like to do the upgrade, perhaps delay it until season is over, or until your star desk clerk returns from Acapulco, our until after the full moon. And we can listen, smile, and write it down, but the reality is you're going to get it when we give it to you, on the same day as everyone else.
When some hoteliers first hear this, you can almost see the firestorm of thoughts that are flashing around in his head like a pinball machine, before they shoot out of his mouth unfiltered: "Whose idea was this again?" "What are all the new features we're getting again? Are they worth the risk?'' 'Are you going to be here to hold our hands? Wait, how can you be, when all your customers will require hand-holding on the same night?" And my personal favorite: "Who acquired YOUR company and turned YOU so mean?"

What's in it for Me? What's in it for You?

At this point, after being exposed to so many conference sessions and articles on cloud computing, not to mention that first generation of subscription agreements that sneakily auto-renewed on you when you weren't looking, even the most seasoned and tech-averse hospitality executives now have some level of awareness of what cloud computing is. But when helping new and existing customers decide whether they should move to the cloud, the conversation tends to focus almost exclusively on the dramatic reductions in total cost of ownership that the SaaS delivery model brings. While it's nice that the ROI is so easily proven by that one dimension, as both vendors and purchasers, we could do a better job of communicating the other benefits of cloud computing to the other stakeholders around the enterprise. The contact may be signed, and obviously the right decision maker was convinced. But subscription terms run their course very quickly, and as the expiration date approaches, providers often find out that a completely different person will be the decision maker for the renewal, frequently a person who didn't see the original presentations, or have any training, and perhaps hasn't even seen or touched the system at all. And quite often this person has already been approached by the competition, and the hook has been set.

This isn't a bad outcome if the new solution is a better fit, or more effective, or more innovative. But it is definitely a bad outcome if the new solution is simply different, and displaces one that had had significant time and treasure invested in tuning it to the property's business practices, unique configuration, or market conditions. One of the benefits of the SaaS model is that its shorter subscription term drives more rigor on both sides of the partnership: for the user, the end of the term is a call to action to be sure that all options have been explored. But the result doesn't necessarily need to be the termination of an otherwise good partnership to move to a new solution, but rather to be sure you remain actively engaged with your partner, and are using whatever avenues they provide to communicate your evolving needs and new ideas. For the provider, the benefit is a constant awareness that all customers are at risk in the short term, and that products and services need to be delivered with unfaltering quality and consistency.

In an effort to fill more of this information gap, I'll now discuss some more SaaS benefits, doing my best to use laymen's terms. At first glance some may seem like they inure completely to the vendor, but please read on!

Getting out my sociology prism one last time, the SaaS multi-tenant, single version development model generally allows for many individual, divergent needs to still be accommodated by a shared work effort. The evolution of cloud adoption toward mission critical applications used by multiple departments, is likely to unearth new instances of divergent prioirities, but there shouldn't be any need for anyone to ask anyone else to get off their cloud. While the clearly measurable financial benefits like reduced TCOO streamline the purchase decision process, the non-financial indirect benefits deserve appropriate recognition as well. For example, the short or even non-existent downtime needed for upgrades removes a significant pressure point for hotel operations, reducing stress and enabling better guest service. The increased certainty and structure of the development environment should result in increased talent retention--no one wants to be late all the time.

Reprinted from the Hotel Business Review with permission from
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