Weekly Blog

Cloud vs Licensed Software


Posted on October 24, 2014

Innsoft, Inc. has been around for 23 years. In that time we have seen many technologies come and go and the needs of properties evolve. For instance, many hoteliers remember a time when Call Accounting systems were in high demand and absolutely necessary to run a hotel. Now, with the ubiquity of cell phones, properties have turned to other revenue generators.

Some new technologies are extraordinarily beneficial. A few short years ago it would have been inconceivable to think that Booking.com and Expedia would take over such a large swath of the online travel agency (OTA) market. Now, it is a rare property that does not have a contract with one or both of these providers. A large portion of hotels now manage reservations from online providers through interfaced services that didn’t exist a few years ago, such as our GDS, Booking.com, and Expedia interfaces.

Other technologies are swiftly adopted by some vendors and hotels, but the benefits sometimes do not outweigh the risks. “Cloud” has become a major buzzword in many industries, but the ramifications of swiftly adopting cloud technologies without fully understanding and preparing for it can be serious.

So what is “The Cloud”? This can be a confusing concept, but put simply, it is software that runs over the internet instead of from your computer. Software you run from your computer is usually purchased and licensed so we will refer to it as license-based software. You may have also heard of SaaS (software as a service). This is another term for cloud-based software. Some cloud software options have obvious advantages. If you have ever streamed a video over the internet, you have seen the benefits of it! Other cloud options do not carry such obvious benefits.

The question is, does it make sense to sign up for a cloud-based PMS (property management system), or purchase and own a license-based PMS installed on your own computer?

To answer this, let’s first consider why there are several PMS providers offering cloud-based systems:

  1. Franchises prefer their properties to use cloud-based software. In some cases, the software is part of your franchise fees and the franchise has direct access to your guest information, total revenue, and other details of your business. Most PMS providers sell the majority of their product to franchises and therefore their customer is really the franchise, not the hotelier.
  2. As the latest fad, many providers have decided to jump on the bandwagon without considering the needs of their current customer base. Have you noticed that most of the cloud providers that have been around awhile still offer “legacy” license-based systems? If cloud software was the right option for their customers, why are they still selling the old systems? It is very difficult for a company to maintain two completely different products sold to the same customer base. So ask yourself, if the vendor offers both options, are both systems being maintained and supported to a high standard?
  3. They can charge more and make more money off cloud software. Cloud systems are typically charged on a monthly basis. Although you may hear that costs start at $5/room/month or $1 per reservation, which sounds very low, the total cost when you add up your rooms (or reservations) and optional services is often triple or more what you would pay for a license-based system. This means more expense for the hotelier and more profit for the providers, especially considering that these costs go on as long as you want to access the software.

If you are an independent property, or part of a more flexible franchise, then ask yourself if the cloud provider you are considering has your best interests in mind, and what kind of real costs are you looking at?

Now let’s look at the supposed benefits of cloud-based PMS software and whether or not they hold up. Here are the benefits that you will commonly see cloud providers list:

  1. Cheaper. (False) We already know this isn’t true. Cloud providers try to make it sound lower by phrasing their pricing in terms of rooms per month, per reservation, etc. With cloud-based software, you pay more money and have no ownership of your own data. If you decide to stop paying the fees, you lose access to your system. As a business person, wouldn’t you rather own your data and software?
  2. No need to download software or maintain computer systems. (False) I’m not sure how they get away with this claim. Cloud software still runs on a computer and you still need a functional and secure web browser. Whether or not the software is in the cloud or on your PC, you need to run a clean computer (have updated anti-virus/anti-malware software, maintain your network, operating system, etc.). Also, you are completely dependent upon an internet connection. What happens when it goes down and what is your backup plan? How is that PMS provider going to get you up and running? Since the software runs on the cloud, will they provide any support to help diagnose PC issues?
  3. Integrated internet reservations. (True, but no different from licensed software) Check-Inn has been offering interfaced reservation options for much longer than cloud providers. This is certainly not a benefit limited to cloud software.
  4. Automatic data backup. (True, but licensed software also offers this) Again, this is not a feature limited to cloud software.
  5. Easy to use. (Usually False) I have never understood this claim. Cloud software can be notoriously complex, and many systems were originally developed as licensed software that was converted to the cloud, making it less than ideal for front desk usage. Check-Inn is one of the most intuitive software systems on the market. You are able to download and begin using Check-Inn within minutes, and can start checking in guests as soon as you enter your room numbers and tax information. We offer a fully functional demo so that you will be fully informed of the functionality before needing to pay anything. We want to make sure Check-Inn is the right system for you!
  6. Data accessibility. (True) This is the most legitimate benefit of cloud software. It is the most frequent reason customers think about using cloud software over license-based systems. However, there is no need to pay high costs and lose rights to your own data just to be able to access your system online. Remote access software has become incredibly sophisticated, is offered by hundreds of different vendors, includes options for mobile devices, and has both free and extremely low cost versions. Using remote desktop software also allows you to manage the rest of your computer systems from offsite and check on other aspects of your business as needed, so even if you use cloud-based software, you probably will need remote desktop software anyway. Contact Innsoft Support for suggestions on remote desktop software.

Check-Inn is a license-based software system. This means that when you purchase Check-Inn, it is owned by and licensed to your property. When you purchase Check-Inn you can use it forever at the licensed property without being required to pay another penny. We have many properties that purchased Check-Inn over 15 years ago and still use it to this day.

Check-Inn is widely recognized as one of the easiest, most intuitive programs on the market. This is because our customer is always the hotelier. Because we keep the hotelier in mind with every programming and business decision made, we offer options that cloud-based software continues to struggle with. This includes: ID scanners, signature pads, credit card processing interface, and low cost, commission free reservation interfaces.

Even better, you only pay for exactly what you need. Most cloud-based software systems are based on package pricing that include options you may not want or need.

Many of our cloud-based competitors are afraid to list their full, accurate price list on their website because they know once you start adding up all the (often hidden) costs that it would drive you away.We post all of our prices on our website and will happily discuss our pricing for our software, services, and hardware at any time. We offer the same fair, low pricing to all of our customers so there is no need to worry that you are paying more than another property.

The last thing to consider is data security. The news has been littered with stories about data breaches. Clearly, running your business completely through the cloud is a risk, in addition to the risk of being utterly dependent on a functioning internet connection. Do you trust your ISP (internet service provider) with all of your sensitive business data?

While Check-Inn is not a cloud-based property management system, we do offer cloud features for integrated online reservation services. These options include interfaces to several GDS providers, Expedia and Booking.com, and the Direct Inn booking engine for your non-franchise website. Once we release the new version of Check-Inn, we will be working on other cloud-features such as access to reports online, built in remote access, and more. You don’t need to spend loads of money and lose ownership of your data to take advantage of the best features of the cloud!