Growth & Innovation in the Cloud: La Quinta's Centralization Roadmap
Computing power today is at an inflexion point not seen since the invention of personal computers in the 1970s. One of the most powerful innovation trends is the advent of the "Cloud." Cloud Computing, defined as Internet-based computing, whereby shared resources, software and information are provided to computers and other devices on-demand like a public utility, has the potential to deliver computing resources ubiquitously to both businesses and consumers while radically driving down the cost of technology, and accelerating the pace of innovation.
Starting with the acquisition of La Quinta Inns & Suites by Blackstone in 2006, La Quinta has gone
through a significant transition, modernizing its technology footprint using cloud computing and strategic partnerships with several best of breed IT services providers. La Quinta was an early adopter of cloud computing, in fact, starting down the path before the term became popular. La Quinta's strategy was implemented in a phased approach over an eighteen month period in order to minimize the duration of the impact to the business.
A key element of a cloud computing strategy is a reliable network with cost effective bandwidth to deliver the needed services. In 2006, La Quinta partnered with Verizon and Thing5 to deploy a managed MPLS network across the chain. A Software as a Service (SaaS) model from Thing5 delivered inbound and outbound calls to all 400 La Quinta-owned properties resulting in savings of 20%-50% in property telecom operating expenses. The Thing5 platform has also eliminated the need for PBX and voicemail systems at more than 60 La Quinta properties and replaced them with a hosted service at a fraction of the cost of a traditional on-property system.
The next phase of the La Quinta strategy involved moving the central reservation system from an in-sourced custom developed product to a SaaS model. The primary drivers for this decision were architectural limitations in the legacy system constraining its ability to effectively scale in response to the planned growth of the chain, and cost of operation and maintenance. La Quinta selected the Rezview CRS platform from Pegasus Solutions to provide a scalable SaaS platform, and implemented it chain-wide in 2007. A strong partnership has enabled La Quinta and Pegasus to work jointly on innovations to the platform including the recent launch of sophisticated dynamic rate management capabilities.
In conjunction with the CRS migration, La Quinta also migrated away from their custom developed property management system and selected Nitevision PMS from Remco Software to be deployed chain-wide through the cloud from a centrally hosted datacenter. The centralized model has reduced the speed of transmission of rates and reservations from the CRS to the PMS from thirty minutes in the legacy environment to less than one minute. Hosting property systems in a managed data center has delivered 100% uptime for the PMS at 99% of properties. Deployment of patches to the software that used to take several weeks is now completed in six hours for the entire 780 plus property chain. Remco and La Quinta have also collaborated effectively to enhance the product over the last few years in a mutually beneficial strategy that is ensuring long term sustainability of the solution.
La Quinta also migrated several back office systems including guest assistance and invoice processing to SaaS based platforms like RightNow. Its reporting platform leverages hotel industry specific solutions from Aptech. The company is in the process of migrating its financials and HR systems to a Platform as a Service model provided by HP in partnership with Oracle.
Any migration of systems to external providers requires consideration of security and PCI compliance requirements. A prospective partner must provide evidence of security policies, preferably be independently PCI certified, and also be subject to a review of financial health. A closely aligned partnership with key business leaders including commitment from top management is essential. The bulk of the IT department's effort is focused on integration work and enabling interfaces between the various vendor platforms. Finally, the correct definition of key SLAs (Service Level Agreements) and ongoing monitoring is essential for a successful implementation.
The transition of key systems to the cloud has enabled the La Quinta IT department to support the business and deliver improved services at half the operating cost and reduced capital cost compared to 2005 while the La Quinta property footprint almost doubled in size over the same period. It has also allowed the IT department to provide dynamic staffing and computing capabilities in an increasingly demanding business environment. Use of specialized industry experts has increased the technical innovation capability of the organization. Speed and scalability through centralization has enabled faster delivery of transactions and system administration across the distributed network of properties.
Gartner predicts that by 2012, 80% of Fortune 1,000 enterprises will be using some form of cloud computing. Hotel companies have traditionally lagged behind the IT industry as a whole in technological advances. This is their opportunity to break free from legacy computing delivery models and deliver more with less in these challenging times exploiting the capabilities of one of the best IT industry trends in decades.
Vivek Shaiva joined La Quinta as their chief information officer in 2007 and provides leadership over all their information systems including systems architecture, technology enabled process optimizations, quality assurance, telecom and IT infrastructure. Prior to joining the company, he was senior vice president, enterprise architecture for the management company that handles mergers and acquisition for the Blackstone Group's real estate hospitality portfolio.
Cloudy, with a Chance of Widespread Adoption