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Examine the Hidden Costs of On-Premise Software

Di Davillas
Global Senior Director Sales Strategies, Solutions Engineering, Oracle Hospitality

How many times have you heard someone say, “I feel safer with my server right next to me” or “Cloud is so much more expensive than if I buy the software outright.” 

On the surface, such statements seem to make a case for stiff-arming a move to the cloud. But dig just a little deeper, and there’s plenty of logic, statistics and common sense that debunk those views.

When making a game-changing decision for your hotel to embrace cloud, it’s important to factor everything into your Total Costs of Ownership (TCO). Don’t “phone in” this work; your due diligence is imperative. 

But it can be overwhelming, so let’s start with the most notable factors that should be considered:


For your TCO, take into consideration the hardware costs, electrical costs, cooling costs and periodic “health check-ups” that need to be conducted by a professional for the server. Additionally, don’t forget that on-premise software takes up a lot of storage; you don’t want a notification delivered to your phone, indicating that you’ve run out of disk space.


This is often a greater expense category than one imagines. Even though licenses have been purchased to own, there are typically support costs for those licenses that need to be factored. Likewise, so should add-on software for interfaces.

If you are managing your own back ups, associated costs need to be in the TCO. Take into consideration not only the cost of the off-site storage facility you are using, but also the time and effort needed for the IT team to manage the back ups, especially as it relates to checking for errors.

Your on-premise software does not live on an island, which means it will need an operating system and an anti-virus software. These pieces are vital; include all costs for OS and anti-virus. Don’t forget that any mobile devices that are supported need to be in the TCO.

Upgrades, Patches and Downtime:

It’s a cloud vendor’s responsibility to provide compliant and innovative software. But if your software is on-premise then it’s your responsibility to keep it up to date.

On-premise software often is complex and doing it yourself may not be an option. Please include any additional software costs, vendor services required, and the time and effort expended by your team to  plan and execute upgrades and patches (including overtime).


Breach. It’s probably one of the scariest words today for hoteliers and probably the most misunderstood among those who own on-premise software. Most of the security breaches and data losses happen to on-premise software (or internally hosted software). The rules for security are getting more complex, and it’s becoming increasingly harder to stay secure. Your TCO must include all that it takes to keep your hotel safe, including additional software and safeguards that require implementation. Consequences for not being secure also need to be factored such as IT team’s time and effort, costs of audits and cost of any fines.

In addition, there are “hidden costs” of having on-premise software that also must be considered:

  • Have you heard of the term “shelfware?” It’s basically unused, purchased software that’s likely incurring support costs.
  • For larger upgrades that might result in significant downtime, other factors may need to be reviewed such as: increased operational costs, including additional front desk staff required and managing guest issues.
  • Third-party integrations and upgrades can be tricky. It’s important to remember that even the slightest change to a parameter on a server can make the whole thing crash. Therefore, all testing of software needs to be included in the TCO as does any “fall out” resulting from a bad upgrade.
  • Costs associated with unanticipated events – such as server parts breaking down or last-minute fixes that need to be applied by a software vendor, as well as your own IT labor costs for such occurrences – also need to be added.

Make sure to write it all down. It’s an important exercise that will help confirm that a move to the cloud makes all the sense in the world.


Oracle Hospitality brings over 40 years of experience in providing technology solutions to independent hoteliers, global and regional chains, gaming, and cruise lines. Our cloud-based, mobile-enabled solutions for property management, point-of-sale, distribution, and reporting and analytics lower IT costs and maximize business agility. Oracle Hospitality’s OPERA is recognized globally as the leading property management platform and offers open APIs to serve as a platform for industry innovation. Learn more at www.oracle.com/Hospitality. Get specific product information as quick as clicking right here.

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