Four hidden costs of on-premises hotel software

By Tanya Pratt

Cloud computing is reshaping industries worldwide, and the hospitality industry is no exception.

In many ways, the very core of hospitality and its service delivery is undergoing reconstruction. Perhaps the best example of this is that consumers are clamoring for a contactless, low-touch hotel experience in an industry that is historically high touch.

This, among many other seismic shifts in the industry, reaffirms that the ability to implement technology simply and swiftly is key to staying ahead of changing consumer preferences and maintain relevance. Hotel operators need to add new capabilities fast in order to be competitive, and this requires a refreshed approach to innovation.

Generally speaking, legacy on-premises enterprise systems lack the flexibility to adapt to the rapid industry evolution. Here are four hidden costs to on-premises systems that make it clear why cloud is a better choice for hospitality enterprises looking to the future.

  1. Hardware and infrastructure. In a data center, hardware, air conditioning, electricity, and real estate aren’t exactly hidden costs. But you may underestimate the amount they add to the total-cost-of-ownership (TCO) equation. In addition, the storage demands of many on-premises software packages can result in unexpected disk space shortages that have to be resolved—fast. The resources, time and trouble required to keep a data center afloat can be an unwelcomed distraction during a time of dramatic business change.
  2. Software. Once hotel software licenses have been purchased, there are often costs related to IT support, mobile device support and add-on software that need to be factored in. In addition, emergency fixes from the software vendor can result in increased IT labor costs. Even operating system and antivirus software costs need to be added to the equation. Add to that customer demand for new features and functionality, and you have a recipe for hidden cost.
  3. Backups. If you’re managing your own system backups, the cost of off-site storage and costs associated with the staff needed to manage and troubleshoot backups are all part of the on-premises package. That backup becomes ever more critical as you roll out new features that may require you to expose valuable legacy data to new systems.
  4. Integrations, upgrades and patches. If your software is on-premises, then it’s the responsibility of your IT team—or your pricy third-party vendor—to keep it up to date. Third-party integrations can cause changes to the server parameter that result in major downtime and work disruptions. Those can be expensive—and, in many cases, these mundane tasks can distract your IT team from focusing on projects that create more value for your organization.

Future-proofing your digital infrastructure
These hidden costs can be avoided. Access to the virtual capabilities of the cloud has leveled the playing field for major international chains and small boutique hotels alike. Hospitality CIOs are looking to cloud computing to support new hybrid workforce models and take advantage of the flexibility and affordability that the cloud provides.

There are other costs that go away with the cloud. For example, the cost of purchasing software that never ends up being used—”shelfware”—is a non-issue with the cloud. Increased operational costs, including additional guest-facing staff when system downtime occurs, should be calculated into the TCO. In the end, understanding the true cost of on-premises software—and the ways cloud computing can eliminate these costs—can help ensure that you’re setting up your digital infrastructure for future success.

Tanya Pratt is VP, OPERA cloud strategy, Oracle. She leads the Oracle Hospitality OPERA cloud strategy and product management teams.

This is a contributed piece to Hotel Business, authored by an industry professional. The thoughts expressed are the perspective of the bylined individual.