Data Security: A New Focus for Cloud Hospitality Software, by Emma Rodgers
Cloud software is transforming the hospitality sector. Hotels have the ability to manage all elements of their operations from front desks, restaurants and customer accounts from one single scalable platform. Restaurants are equipped with analytics that can measure sales, inventory levels and the effectiveness of marketing activities to help them compete in an increasingly tough market. Key benefits include cost cutting, due to the reduced need for expensive hardware and enhanced customer service, as a result of greater efficiency and personalised offerings.
However, cloud hospitality software has hit the headlines recently with announcements that Fancy Bear, an infamous group of cyber criminals targeted hotel Wi-Fi systems across Europe and the Middle East, through malicious emails. It was not a first for the industry. A recent data breach by the company Sabre affected high profile names such as Four Seasons Hotels and Trump Hotels. With cyber security breaches now becoming a regular occurrence, the industry is seeking a solution to keep its customers data secure.
Recent attacks may make some entrants wary of moving to the cloud. Yet cloud providers are ultimately likely to be the answer. They’re investing millions into internet security with continual updates to their offering. Measures such as secure coding and architectural risk analysis are likely to be far more effective than an individual hospitality provider protecting its own server. Oracle also stresses the importance of a focus on software integration with physical premise security and access protocols to ensure firms stay protected. Finally, firms need to give staff greater training to ensure that they inadvertently avoid opening the door to cyber attackers.
There has been numerous UK software success stories in the hospitality sector, as the industry has truly embraced the positive benefits of cloud technologies. Although data breaches have been a concern, the industry is deploying a multi-million investment in preventative measures as it looks to help protect customer data, business operations and corporate reputations from criminals.
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Cloud market trends, by Kirsten Handley
We run the rule over the key trends in the cloud industry in 2017 and beyond.
Accelerated migration to the public cloud
Businesses will increasingly move to the public cloud for the advantages of better information management and security, and the largest beneficiaries are likely to be large public cloud suppliers. For instance, market leader Amazon Web Services is expected to announce it hit revenues of €11bn in 2016, while Microsoft Azure is expecting to again grow turnover 100% year on year. Google, IBM and Oracle are also predicting strong cloud financial growth.
Blockchains in global procurement
One of the most innovative cloud breakthroughs of recent times has been blockchain. This is a peer-to-peer platform secured by advanced cryptography for business and personal transactions. It restricts participation to a small number of users and only shows the information each party is authorised to see. It is estimated that it could save almost €100bn in annual supply chain efficiencies.
Cloud becomes an enabler of security
Against a background of increasing European Union regulation and high profile data breaches, concerns about information protection still dominate. Major cloud providers are developing new cognitive abilities to fight security vulnerabilities, and turn what was originally perceived as a weakness of the cloud into a strength. UBS predicts flat corporate spending on IT as cloud computing service providers look set to take over cyber security customers.
Industry transformation driven by cognitive computing
The Internet of Things (IoT) and other key cloud computing trends are generating a vast amount of data, which is growing disproportionately to our ability to make sense of it. 80% of the world’s data is classed as dark, collected by computers but unusable by humans. Cloud servers, storage and software are being built using cognitive solutions to allow for the interpretation and understanding of this data. These solutions could stimulate transformation across numerous industries ranging from financial services and retail, to the healthcare and airline sectors.
Rise of multi-cloud strategies
The use of multiple cloud services will become the norm for many businesses as they seek to combine optimal features from a number of providers. It is highly unlikely that even the largest public cloud players will be able to address all IT needs and therefore it is expected businesses will shop around.
Cloud wars, by Emma Rodgers
The deadline for our Cloudex awards, Clearwater’s search for the top 20 cloud companies in the UK is here and it couldn’t be a more interesting time to be assessing the top crop of the UK market. It’s also going to be fascinating to sit on the panel alongside Melissa Di Donato from Salesforce and get her take on the market.
This week it was announced that Microsoft has overtaken Salesforce as the market leader in the software as a service (SaaS) space demonstrating the huge effort that the old guard have been making in order to address the cloud-model challengers stealing share. Whilst Salesforce still has the lead in the CRM space, Microsoft’s offering in collaboration and other enterprise applications has seen it narrowly take the lead, whilst Oracle has been the fastest growing vendor this year.
But it’s not all bad news for the pure cloud vendors. Operating in a market which grew around 33% in the second quarter of 2016 compared with the previous year, there’s plenty of opportunity to go around. Vendors such as Workday and ServiceNow are taking advantage, often focusing on specific application areas or vertical markets to establish their positions. Naturally this is also leading to significant levels of M&A amongst the market leaders with NetSuite, a leader in cloud ERP, one of the latest major targets having been snapped up by Oracle in a €8.4bn transaction.
According to the report from Synergy Research Group, the SaaS market is likely to triple in size over the next 5 years presenting a huge opportunity for traditional vendors and pure cloud vendors alike.
Spotlight on cloud ERP – Oracle’s acquisition of Netsuite, by Kirsten Handley
One of the biggest acquisitions in the cloud space happened this month when Oracle paid €8.4bn for its cloud rival NetSuite. NetSuite is considered by many to be the first cloud-based company offering ERP software through a software as a service (SaaS) model. The deal reunited NetSuite’s CEO Zach Nelson with Larry Ellison, his old boss and early investor.
So what made Oracle shell out the cash? Firstly, it is worth noting that whilst Oracle has emphasised the importance of cloud, it only made up 6.5% of its total revenue for Q4 2015, a tiny percentage. Oracle believes it can compete with some of the larger players in the cloud space, leveraging its brand by building a portfolio.
The last decade has seen revenues from traditional legacy-based software and hardware declining. In Oracle’s case hardware fell by 7% to €1.8bn and its software licensing revenue dropped by 2% to €6.8bn. Its SaaS and platform as a service (PaaS) revenues on the other hand rose 68%.
The acquisition also allows Oracle to target a new type of customer from its enterprise heartland. NetSuite has made strong inroads in the SME market, a space Oracle has been working hard to move into. This market is relatively untapped and offers a huge opportunity.
Oracles does, however, have mixed success with its acquisitions; how successful this one will be, only time will tell.
Cloudex revisited, by Emma Rodgers
Ahead of this year’s Cloudex awards we caught up with Simon Hansford, Chief Executive of Skyscape Cloud Services (now known as UKCloud), last year’s overall winner.
Tell us about the past year since winning the award
Winning the award was absolutely fantastic for us and really drove stronger awareness of the business externally, as well as greater confidence within the company, and among buyers and investors. Since the awards our business has grown significantly and we have doubled revenue in the past year to €38m, while in the next financial year we think we will almost double revenue again. We have a very clear vision and understanding of our public sector customers and continue to win large contracts. The world is looking good.
You have been a supplier to the UK government’s G-cloud framework ever since its launch in 2012. Does the UK public sector continue to remain your key market?
Absolutely, we remain focused solely on the UK public sector which is an enormous market for us to go at. In the past, the government outsourced IT to a very small number of large system integrators, but today it is in the midst of a major initiative to bring control back into departments and disaggregate the supply chain. Departments are looking for ‘best of breed’ as they try to reduce costs and to transform their old legacy applications. Cloud penetration within central government – which accounts for around 80% of our business – is still only around 8%, and it is even less within local government at around 2%. That shows just how massive an opportunity this is.
How quickly do you think the market could grow?
Analysts estimate that within four years Cloud penetration within the UK central government could be as high as 30% and I think this is definitely possible. But I think the growth will not be even across departments with some embracing Cloud solutions quicker than others, as different departments have different needs and different cultures. However, across all government there is a big march towards the digitisation of services and we have already started seeing this in areas such as tax records. Don’t forget that a Cloud First policy also dictates that departments have to move to the Cloud unless there is a justifiable business case for not doing so.
You mention tax records. To what extent are citizens themselves helping push this drive do you think?
I think that’s a valid point. We as consumers now have far greater access to data and want to embrace the applications we already use in our personal lives in our working lives too. So it is up to state agencies to help deliver these applications.
What about the rising security concerns we are seeing around personal data. How does that affect your business?
A big selling point for us is that we are a UK company and data resides solely within the UK, so we can guarantee data sovereignty. We have a very high level of assurance wrapped around our offering and that’s really important to our customers. Inevitably when you are dealing with government data can be particularly sensitive and departments don’t want information being stored outside the country. The same thinking applies to personal records. For instance, would you want your tax record being stored somewhere on the other side of the world? In fact, we actually run a lot of applications that cannot be accessed from the internet at all because of security.
What is the competition like for you at the moment?
There is plenty out there but it remains fragmented. There is a clear split between pure Cloud providers such as ourselves, and suppliers which have simply dressed up old IT as Cloud. That is a real differentiator for us. One notable development over the past year has been more interest in this market from the big US tech giants which are beginning to make forays into this space. It will be interesting to watch how this develops over the coming year but I have already detected some resistance within government departments.
You still have a number of partnerships, is that correct?
Yes, up to 40% of our business continues to come through more than 200 partners. Our products are very commoditised and we will not change our formula at all. It is up to our partners to add things to that formula for their own specific needs. They take our raw product and then make an IT solution built around the Cloud.
Finally, what else is new over the past year?
We recently launched UKCloud Ideas, an online portal that enables customers to input their ideas directly into our system and influence our product development roadmap. Customers can also comment and vote on each other’s ideas, making them a higher priority for development. For instance, they might see the application that a customer is using and say ‘that’s exactly what I need for our system’. Early feedback has already been very positive.
Get ready for Cloudex 2016, by Emma Rodgers
As we gear up to launch our 2016 Cloudex Awards – Clearwater International’s annual hunt for the top 20 independently owned cloud technology businesses in the UK – it seems like a good time to take stock of where the cloud market is today.
When we started the index back in 2010 our thesis was always that it would significantly out-perform the main markets (correct), but also that this effect would diminish over time as cloud computing became the norm. It certainly seems that we’re several steps closer to that being the case. A recent survey by Better Buys found that the shift to cloud computing technologies is accelerating and the market will increase from around €7.3bn in 2015 to a whopping €49.9bn by 2026.
At Clearwater International, 8 out of the last 10 software deals we have completed have been Software as a Service (SaaS) model businesses and our current pipeline continues to reflect that trend, demonstrating the appetite for the SaaS-model in today’s market.
Whilst the US still accounts for around half of the total market, the UK and European picture is also one of notable acceleration. The report found that 1,400 new SaaS companies have sprung up around the world in the last 5 years, challengers to the industry giants who are still trying to find a way to capitalise on the trend.
What’s driving the change? Interestingly, a recent report for Six Degrees Group by IT industry analyst firm Freeform Dynamics, revealed that only 15% of respondents were purely motivated by cost savings when adopting cloud technology. In fact, whilst cost was of course a consideration, more important was the delivery of added value to the business. 95% of respondents indicated some level of cloud use.