Get Your Head in the Clouds

What happens to a company that doesn’t possess a clear understanding of the potential significance of emerging technology and the benefits it can provide? At best, it fails to thrive, and at worst, it shuts its doors and sells off its assets to pay the creditors.

Having a successful product doesn’t ensure long-term success, however. Sun Microsystems gave us Java, Zenith gave us the remote control, and Fairchild Semiconductor gave us the first silicon integrated circuit. These formerly successful companies were left behind in the wake of new technological advancements, at least partly because of their inability to adapt.

Our industry certainly possesses more than its fair share of innovative owners and operators. Why then are casinos so hesitant to adopt enterprise-based cloud sourcing as a cost-effective and secure solution to the ever-increasing costs related to its technology infrastructure?

In a nutshell, “cloud computing” is the process of sharing IT assets to achieve extra power and productiveness with fewer costs. The emergence of cloud computing is revolutionizing the way companies operate, in much the same fashion as the world wide web revolutionized our ability to communicate and learn.

As an alternative to facility-based servers and infrastructure, applications and computing duties are being performed in huge offsite data centers. This allows any size business to operate with cutting-edge technology utilizing a “pay as you go” pricing model. This greatly reduces IT infrastructure maintenance and capital resource limitations regarding purchasing. The result is incredibly low-cost solutions with incredibly high-end equipment.

Cloud computing provides realistic and low-cost options for a property to create a social media structure without having to finance the several million dollars necessary to build the infrastructure and maintain the archiving assets that the site requires. There are “cloud in a rack” solutions that are designed specifically for social media and its hosting requirements. Why would a casino even try to create an expensive property-based solution when you could have a well-designed, reliable, low-cost solution in a fraction of the time?

As an operator, I cannot tell you the number of times a member of my staff came up with an extraordinary or innovative concept that we had no possible way to implement simply because we could not afford it. Before cloud computing, if an organization had an idea for a groundbreaking app or service, they would have to buy and configure expensive server equipment and hire additional staff to maintain it.

Now, smaller companies can deploy the application from the cloud and only pay for the resources they use. Gone are the days when only the largest casinos have the resources to pursue new ideas or concepts. As a small or medium-sized casino, you now have the ability to produce cutting-edge marketing and in-house concepts without the risk of huge capital outlays.

Cloud-based solutions offer you a level playing field with the largest gaming providers and a significant advantage to your local competition. It provides secure, reliable, scalable, cost-effective solutions designed to meet the needs of the casino, and all you, as a property, need to provide is a reliable connection to the Internet.

How much of your current budget goes to the upkeep and maintenance of your IT infrastructure? Gartner, the leading global information technology research and advisory company, estimates that the annual cost of owning and managing software applications can be as much as four times the cost of the initial purchase. Further, the average company can spend up to 75 percent of their total IT budget just to maintain and run existing systems and structure.

These costs will only increase as technology advances and your department heads require additional resources to maintain the services their customers demand. Casino employees, accustomed to using free and simple tools such as Skype, LinkedIn and iTunes for their personal relationships, now want to use those cloud-based software tools at work. Where your staff is now, your customer base is sure to follow shortly.

Before you make the conversion from your costly property-based infrastructure to a cloud-based solution, you must first perform a total cost of ownership (TCO) comparison, and consider the security and regulatory requirements of the jurisdiction you operate in. As you prepare the TCO, remember to factor in the cost of your existing support contracts. An example is the maintenance contract for your slot accounting system. The annual fee for this service is generally in the range of 15 percent of your total hardware cost and allows the property to receive support service for any hardware-related issues or very small software-associated enhancements.

There are a fair number of these agreements scattered throughout the property, often tucked into the budgets of the individual departments, and when analyzed together, they raise a very real concern regarding the true value of these contracts. Traditional hardware and software vendors are paid an upfront fee in exchange for equipment or a perpetual license. If there is a problem with the product, they have far fewer obligations after the sale is final. Cloud computing, on the other hand, has a much different model.

Cloud customers exercise far more control over their vendors than traditional software customers. They pay a recurring subscription fee, and cloud vendors are typically held to monthly service level agreements. This type of relationship provides a financial motivation for cloud vendors to earn their customers’ business every month by maintaining excellent support and by the deployment of additional enhancements to keep the competition at bay. The ongoing subscription model ensures that cloud vendors remain accountable on a continual basis to their customers.

Reliability, redundancy and robustness are the foundation of the cloud. Off-site data centers are protected against infiltration and are safe, reliable and protected against disaster. To be sure, your data is the cornerstone of your business and the protection of this data is the main concern of both your IT personnel and the regulatory agencies associated with our industry.

Regulatory mandates require every casino to both safeguard their data and have the means to restore their information in the event of data loss or corruption. This task is generally accomplished through the use of backups that are held in a secure offsite location. But what if you could store separate sets of your data in both Las Vegas and Florida and have them available immediately upon request? What if you didn’t have to back up on a weekly basis or monthly basis but were able to back up on a transaction-by-transaction basis in real time without slowing the system? Cloud-based computing allows this level of security and functionality at a much lower cost than your current solution.

There will be personnel in your facility that will aggressively fight to keep you from storing your information offsite. They will do this by accurately pointing out the data is proprietary and if you lose control of the data, you will lose control of your business. While the point of data loss is valid, the perception of off-site data storage leading to this eventuality is an illusion.

Let’s take your e-mail server as an example. How many companies manage their own onsite e-mail servers in 2012? When you hit the send button after completing that extremely sensitive e-mail, chances are very good that it is processed and delivered in the cloud. Most companies in the ‘90s said they couldn’t house their e-mail offsite for security reasons, but this has turned out not to be an issue. Secure scalable storage space and end-to-end message encryption security has proven to be a cost-effective protection against catastrophic loss as well as providing data integrity.

Service providers have been slower to address data security because it was not perceived as a large problem for most businesses. Public key cryptology, digital signatures and secure socket layers are now widely used, and even the Heath Privacy Act of 1999 (HIPA) allows the data of patients to be stored in the cloud. There are many medical facilities storing data in the cloud in a HIPA-compliant way, helping to prove the reliability of this method.

In time and with the introduction of online gaming, all aspects of your data management will be able to be stored in the cloud, even the games themselves. Wagers and payouts, as well as all other monetary transactions, will be processed through public key cryptology and SSL. We as a society routinely trust our financial institutions to process literally billions of transactions electronically each day. Do you trust the bank to do online transfers? If you trust that, why wouldn’t you trust the games to be transmitted in the same fashion?

What will the regulatory agencies say to this? If the actions of the government are any indication, they should embrace it. As a matter of public record, the federal government stores vast amounts of information in the cloud and even operates its own app store. The TSA, NASA and the NSA routinely store data in the cloud and the facilities that collect that data are given plenary powers to procure diesel to maintain uninterrupted operations. If this is the case, the NIGC can easily revise the 25 CFR 542 requirements to adopt the standards followed by our federal security agencies.

Cloud computing is a cost-effective and responsible solution to your ever-increasing technology costs. It allows you to spend your limited resources on creative solutions to grow your business as opposed to expending them on maintaining outdated and limited technology. It’s true that every cloud has a silver lining, and it’s high time our industry embraced it.

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