Traditionally, the only choice for hoteliers was to purchase, deploy and operate their PMS software applications on-premise – and for many companies their preference still is to use the tried and tested in-house option offered by traditional on-premise enterprise software. However, Gartner, the leading global IT research firm, estimates that the annual cost of owning and managing on-premise software applications can be as much as four times the cost of the initial purchase! With on-premise software hoteliers are required to lock into multi-year contracts, fork out large upfront investment costs for physical hardware equipment and software licences, not to mention fees for upgrades, patches and fixes as well as an annual maintenance fee on top of all of that – it is thought that companies can spend up to 75% of their total IT budget just to maintain and run existing systems and infrastructure – meaning the IT budget for the rest of the year (every year) looks pretty grim and the likelihood of investing in new technologies even remoter.
However, with the introduction of the cloud and Software-as-a-Service (SaaS) hoteliers now have the option to move from a licence based to the subscription-based model, allowing them the opportunity to avail of a more agile, flexible, quality enterprise PMS at an affordable cost…Here’s how:
Set-up: SaaS eliminates the need for a large, up-front capital expense, because equipment is “rented” not bought. While traditional software pricing is limited to the cost of the software application, in most cases an upfront fee in exchange for a perpetual user license, SaaS applications are charged on a subscription basis that you pay monthly or annually for as long as you use the service and includes the cost of the software application, the hardware and the people services i.e. maintenance, support, training and upgrades and is inclusive of all hardware, networking, storage, database, administration and other costs associated with SaaS delivery.
Integration: Unlike traditional PMS software where hoteliers’ freedom to work with several different vendors is limited (as applications don’t easily integrated with software from different providers) SaaS easily links multiple centres together as one. They can also be used in conjunction with/ integrated with existing premises-based infrastructure, allowing companies to add enhanced features while maximizing the return on their initial investment.
Scalability: As user needs grow, a traditional system may not be able to keep up and if it can, it means more upfront costs for the owner – which over time, may not be needed, and therefore a wasted investment. However SaaS makes it easier for hoteliers to scale their services, up or down, based on requirements. Since computing resources are managed through cloud software applications, they can be deployed virtually as fast as new requirements arise and the subscription pricing can be adjusted accordingly.
Maintenance: As we mentioned at the beginning, companies can spend up to 75% of their total IT budget just to maintain and run existing systems and infrastructure! However, the beauty of SaaS is maintenance no longer needs to be the bane of the IT manager’s life. The SaaS vendor takes care of all technical resources and system maintenance, from software updates to top-level data protection and backup – there are also no recurring upgrade costs to worry about either because they are completely automatic – you are always logged into the latest version. As a result, you also have the peace of mind knowing that cloud implementations have a longer lifespan than on-premise because hardware does not become obsolete or incapable of operating the latest software/application.
Personal: There are two savings that can be made here 1) In-house IT resources that were once caught up in maintaining an old and tired system can now apply their time to innovation and to improve how the business operates – not on maintenance! And 2) Unlike traditional PMS solutions that required hoteliers to set aside (and pay for) “days” of one-on-one training, SaaS PMS solutions are easy to use and intuitive at the end user level – meaning that even the least tech-savvy members of a hotel’s team can easily gain access to the information they need at the click of a button.
All in all, when compared to on-premise solution, SaaS is the ultimate budget friendly solution; not only are the initial upfront costs much lower but SaaS makes calculating on-going costs easier and predictable allowing hoteliers to move costs from CapEx to OpEx, but with a much more agile up-to-date system, hoteliers can use and allocate their internal resources more effectively to increase productivity and profitability.