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Food for Thought

New ideas and advice to help you improve the operation, turnover, and connectivity of your dining sites.

I see you baby, investing in SaaS

October 26 2017, by Olivia FitzGerald

The big question arousing the interest of pub and restaurant business managers today is (wait for it) IT vendor behaviour.

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Product, turnover, marketing and all the other big issues have not gone away, of course. But profit trumps everything in this low-margin industry and this is where the question lies. In other words, do IT service providers offer genuine business partnerships or are they mainly focused on their own growth?

This isn’t to say IT is a dirty word, far from it. For many restaurateurs, the latest cloud-based table booking Software as a Service (SaaS) solutions can transform their business by delivering Big Data analysis, identifying operating efficiencies, reducing costs and driving innovation.

But not all clouds are created equal. Choosing the right one isn’t just about comparing specs or service level guarantees. It’s about judging whether the provider really has the heart to be in the business it claims to be in.

Every platform provider will tell you their mission is to help your organisation, and that’s undoubtedly true: they’re trying to solve your problems, not sell you the Golden Gate Bridge. But is that their only mission?

While some platforms are purely business to business, others also run business to consumer services. We’ve all encountered similar models any time we’ve bought a concert ticket - where the ticketing firm sells a ticketing solution to venues and then passes them on at a profit to the “end-user” i.e. us.

Are your IT systems holding your hospitality business back? >>

One big characteristic of these businesses is they have a tendency towards market domination, because as they grow they encounter economies of scale that make it exceptionally difficult for others to compete. Would you fancy setting up a ticket business to rival Ticketmaster, or a credit card organisation to take on Visa, or an online shop to take on Amazon?

No, neither would we.

There’s nothing wrong with economies of scale, of course. But such organisations often create winner-takes-all markets where rivals perish, leaving them as the only game in town. And when that happens, the platform provider has all the power. As US businessman and stock market legend Peter Lynch put it: “In business, competition is never as healthy as domination.”

We won’t name names, but we’re sure you can think of plenty of cases where dominant platform providers started throwing their weight around at the expense of their business customers.

And that’s a concern around table booking systems in the pub and restaurant trade too. If a platform provider is both B2B and B2C, how closely does its interests align with yours? Whose branding appears through the booking funnel? Whose business matters more to them - yours, or the consumer business?

These are crucial issues, because they can help you identify not just whether a solution is appropriate for your organisation today, but if it will still be appropriate in the future.

Even if you’re satisfied that your interests do align, it’s important to plan for a worst case scenario as well: if you decide that your relationship isn’t working out, how easy will it be to disengage from the platform and return to your own branding? Just as important, how do you ensure you can get all your data out?

The right solution should plug in effortlessly to your existing systems - and you should be able to unplug it just as easily.

If your interests no longer align, stand up and sing it like Mick Jagger: “Don’t hang around, ‘cause two’s a crowd on my cloud, baby.”

Key points to remember

  • Big data can provide actionable insights for your business
  • Software as a Service (SaaS) provides infrastructure without the expense
  • Providers with B2C as well as B2B platforms may have competing aims
  • The right platform offers control of your costs, your brand and your data

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Topics: Technology