Breaking Travel News here sits down with Jeremy Ward, senior vice president, IT, Kempinski Hotels, to discussion how Europe’s oldest luxury hotel management group has made financial and productivity savings by moving to cloud computing.
Breaking Travel News: Kempinski has established a relationship with cloud computing consultancy Cloudreach in order to assist with the move. How did this partnership come about?
Jeremy Ward: In early 2010, Kempinski Hotels created a five year plan in order to review and streamline the IT used across the business.
Our plan had a number of guiding principles, and among these was the desire to move systems and applications in to the cloud, or “above property” as we call it.
Another of these principles is that Kempinski Hotels is not a technology company.
We are a hospitality company providing management know-how to an extensive number of hotels globally.
We felt that wherever possible, IT solutions should go “above property”.
Capital investment is an issue for most businesses and we wanted to be able to give our owners more flexibility around the IT investment options and ideally move to an opex model.
Having already enjoyed success with cloud computing by moving over 5,000 users from Novell GroupWise to Google - we started looking at other areas of the business where cloud could work - software as a service (SaaS) and infrastructure as a service (IaaS) in particular.
Having assessed a number of cloud platforms solutions, we decided on AWS for its competitive pricing, mature offering and reputation.
However, we needed to work with an effective partner who had the expertise and experience for a large scale migration.
It was clear that there would be a significant return on investment from this project; however we needed to work with a partner who would help us understand when we would see quantifiable savings.
We also knew that we did not want to run our own cloud, so AWS recommended potential partners who could support us in outlining the business case of the project to the board, the migration itself, and an on-going managed service.
Cloudreach seemed the best placed to support us in all these areas.
BTN: How did this partnership assist Kempinski in assembling a business case demonstrating the benefits of the move to present to senior management?
JW: At the beginning of the project, the Cloudreach team visited our head office in Geneva for a two-day workshop to demonstrate the benefits of moving to the cloud and outline how implementing AWS would streamline Kempinski Hotels’ IT administration, alleviating the burden on the staff and the related costs associated with running physical servers.
Cloudreach’s business case helped us sell the move internally.
They created a deployment framework - a business plan which clearly outlined how the move to the cloud would be carried out over a five year period in line with Kempinski Hotels’ long-term objectives.
All requirements were looked into and discussed, and then included in the detailed cost model.
This is when we realised that we would start to see the return on investment at the two-and-a-half year point, which when presented to the board, was compelling.
BTN: What has been the cost impact of moving to cloud computing; both during installation and in the mid-term?
JW: By moving to a hosted infrastructure, Kempinski Hotels has achieved a lower total cost of ownership and administration.
Employees can focus much better on enabling core business activities by driving efficiencies from the applications rather than purely administering them.
Saying that you’ll only start to see an ROI with IaaS once you’ve calculated that you no longer need to refresh your hardware, if you’re looking for an ROI after 12 months and you’re at the beginning of a hardware refresh cycle it’s going to be a difficult sell.
This is where why we look at the bigger picture and the longer term ROI.
We weren’t sure with some of the management solutions – budgeting, forecasting, business intelligence – how much resource we’d need to throw at it.
The joy of the cloud is that you can adjust resource, taking off or adding until you find the optimal level.
We’ve been able to do all that with Cloudreach’s help - something you can’t do with traditional IT.
As for costs and returns, we certainly haven’t exceeded our budget in year one, in fact if anything we’ve underspent and Amazon keeps lowering their prices which is good news for us.
Over the whole five year plan, at today’s AWS pricing, we will see a 40 per cent saving over the costs of a comparable solution using a traditional IT model.
This has resulted from choosing the IaaS and managed services route over keeping it all in house.
BTN: How do Kempinski customers benefit from the new cloud-based systems?
JW: We look at this in two ways - our customers are both our employees and our guests, our employees certainly benefit from our move to the Google Apps platform, our helpdesk calls have reduced by 98 per cent for email related issues and they have a reliable collaboration platform to work with that’s constantly being updated.
As for IaaS, they get to use the same applications they’ve always used, but we have a much better SLA on the infrastructure and therefore the applications are more available to them over the year.
Our guests don’t necessarily have a direct benefit from our applications and infrastructure being on the cloud, they feel the non direct benefits in that our IT Managers are now able to help focus on driving efficiencies out of some of the applications that effect CRM, property management, food and beverage which in turns enables the hotel operations to run more smoothly, this of course impacts our guests.
BTN: In what other ways has Kempinski illustrated its commitment to be at the forefront of technological innovation in the hospitality sector?
Kempinski Hotels likes to innovate in all areas and this is true in terms of IT and our guest facing technology.
We are the first hospitality business to work with a major hardware manufacturer to provide occupancy-based pricing for physical networking equipment in the hotels.
This is bringing the consumption-based model seen in cloud environments into the Network environment; this is a first across many industries, not just hospitality.
In terms of guest-facing technologies, we are due to open a hotel in Vienna in 2013, where we aim to enable the guests’ smartphone and tablets and allow content from their device to be integrated into the room entertainment system over a wireless network.
We are also partnering with a company to provide tablets in the rooms to replace the traditional guest directories and allow an element of self service; this will also extend to their own device.
For the longer term we are working on a number of other innovations….watch this space!
Interview: Chris O’Toole