The Future of Hotel Procurement is in the Cloud - Here is Why - By Johannes Vocke, CFO, FutureLog

If your hotel uses in-house software to manage procurement, leadership may be reluctant to adopt a cloud-based solution - especially if an on-premise system has served you well for many years. This mindset is likely to put your hotel behind competitors in the near future if it hasn’t already.

Many leading hoteliers are levelling up their procurement departments with cloud-based infrastructure - investments that are now key to streamlining procurement operations, navigating an uncertain market, and satisfying new guest expectations. Even more than AI, the Internet of Things (IoT), blockchain, or robotics, hoteliers believe that cloud computing has the greatest potential to leverage its performance in the coming years.

To some, on-premise systems may seem sufficient for now. But hoteliers need to understand how this approach differs from the cloud and how a cloud-based service can make all the difference to your procurement function.

On-premise systems are showing their age

On-premise procurement systems are run on servers that are privately owned, installed, and maintained by the hotel. Having this kind of control over your software may be appealing - after all, you can customise procurement systems to operate exactly how you need them to without worrying about intervention from third-party providers. Managing your data in-house may also seem like the most secure method.

However, this approach comes at a cost. On-premise systems are expensive to set up and maintain, requiring your hotel to invest in significant IT resources. Additionally, you’re responsible for inevitable repairs and upgrades, which typically have long onboarding and implementation cycles. Users must also manually navigate between different tools for tasks that require data and resources across different departments. For example, staff may need to reference separate accounting and procurement software when managing vendor invoices, a process that is time-consuming and prone to errors and oversight.

On-premise solutions are often praised for having a high level of security. In reality, your data is only as secure as your due diligence. This means that software and hardware updates, patches, and other security protocols must be performed promptly to avoid breaches. Unless your hotel’s on-premise servers are accompanied by sophisticated cybersecurity personnel and infrastructure, you could be easily exposed. Many high-profile data breaches can often be traced back to something as simple as a late patch deployment, which adds a lot of pressure for hoteliers in an industry that is already highly targeted.

Cumbersome, expensive on-premise systems are also not flexible enough to handle today’s evolving challenges and demands in hotel procurement. Price volatility, supply chain disruptions, labour shortages, and inflation are instead driving hotels toward more efficient, streamlined, and cost-effective software systems. Enter: Cloud technology.

Streamline procurement, save costs, and level up your data security

Rather than being hosted on-site, cloud-based software is stored and managed on a provider’s servers. The hotel purchases a license to use the software, which can be accessed from any computer with an internet connection. With cloud-based software, any tools needed for procurement are centralised in one place for easy access.

Hoteliers that invest in cloud-based procurement software can enjoy greater purchasing efficiency, which, along with cutting costs, is a top priority for procurement departments. Cloud-based procurement solutions can easily integrate with other hotel systems, like inventory management and accounting. With permission, hotel staff can easily find and share information across the organisation without needing to juggle multiple tools or schedule time for in-person meetings and document handovers. This reduces redundancies, manual workflows, and errors, especially since data is updated in real time.

Procurement information is easy to access and more accurate, resulting in fewer mistakes that could later impact the customer experience through delays and inconsistent amenities. According to industry research, over 80% of businesses using an integrated cloud platform experienced higher customer satisfaction, employee productivity, and sales.

Because employees can do their jobs faster and more accurately, cloud procurement can deliver significant cost savings for hotels. There’s also a cost-saving element when it comes to software maintenance. With a license, the hotel only needs to pay for the cloud resources it actually needs and uses. Providers are responsible for maintaining the solution, saving hotels the headache and expense of scaling IT resources and infrastructure as business needs change. Some companies have reduced costs by up to 50% after switching from on-premise to cloud-based IT.

In recent years, hoteliers have come to realise the importance of strong vendor relationships in navigating disruption - something cloud procurement also supports. The cloud typically makes the entire procurement cycle more transparent, which can not only aid in better cost control and forecasting but also enable more strategic supplier relationship management. According to Deloitte, effective supplier collaboration is the best way to improve organisational value from within procurement.

With cloud technology, reluctant adopters can gain peace of mind that their data remains just as secure, if not more secure. Reputable cloud providers like Microsoft Azure use best-in-class security practices and infrastructure, with cybersecurity experts constantly backing up data, monitoring for emerging threats, adding patches, and ensuring that regulatory compliance standards are met. Hotels can also benefit from sophisticated security techniques, like encryption, key vaults, external attack detection, and multifactor authentication - features that would otherwise be extremely expensive and resource-intensive to develop effectively in-house.

The future of procurement is in the cloud

When efficient, collaborative, and armed with a clear view into purchasing cycles, procurement teams can play a massive role in a hotel’s overall performance. However, these functions are increasingly difficult with on-premise infrastructure, which can not only stall procurement with clunky, manual workflows but also increase hotel overhead and jeopardise data security.

Forward-thinking hoteliers are embracing change by investing in cloud-based procurement tools like e-procurement. While sticking with on-premise systems may seem like the more comfortable option for now, adopting the cloud is a no-brainer for hotels that want to stay competitive and resilient both today and in the years ahead. In hospitality, it’s clear that the future is the cloud - so why not make the switch now?

About the Author:

Johannes Vocke is the Chief Financial Officer at FutureLog, the leading global cloud-based procure-to-pay platform for the hospitality and gastronomy industries. Prior to joining FutureLog, Johannes spent over a decade at prestigious Big 4 firms spanning Germany, the U.S.A. and Switzerland, working primarily on professional audit services and honing his skills in finance. With an M.Sc. in Accounting and Taxation from Mannheim, Germany's #1 Business School, and a B.Sc. in Economics and Law from the University of Münster, Johannes is responsible for leading all strategic financial initiatives across the organisation and is driven by his passion for innovation, analytics, and process optimisation. In his free time, he enjoys travelling, exploring the great outdoors (sometimes on foot, sometimes on his motorbike!), and is an avid festival-goer. Connect with Johannes on LinkedIn.

About FutureLog

FutureLog provides a fully integrated, cloud-based procure-to-pay platform for the hospitality industry. We facilitate an end-to-end procurement process from purchasing, through inventory management and up to invoice processing; all available in one platform to save you time and money. The FutureLog procure-to-pay platform is the foundation for seamless connectivity between Hotel Operations, Corporate Centres and Suppliers.

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