Mexico hotel giant puts its IT in Texas

Cross-border cloud computing is no barrier for one large Mexican company, but trade barriers make it a source of worry in Washington.

WASHINGTON -- The U.S. has been shipping application development work offshore for years, but cloud computing may help make America a data center services exporter.

Take Grupo Posadas, a large hotel group in Mexico. It has five data centers supporting more than 17,000 guest rooms in over 100 hotels and other lines of business. It runs three of those data centers itself and two others through outsourcing partners.

But the company is moving almost all of its IT capability to a data center in Texas run by managed hosting company Savvis.

Posadas CIO Leopoldo Toro Bala said his company plans to sharply reduce its data centers, and will rely on Savvis for cloud-based infrastructure services. Savvis will also provide managed database services.

The move will enable Posadas' IT group to free itself from running infrastructure and focus on developing mobile, social networking and other tools to help the business grow, said Toro Bala.

"Our IT strategy is aligned to our growth, and our growth means that we need to be flexible and agile," he said.

The U.S. is the leader in cloud computing technology, and U.S cloud-based service providers draw customers globally. Some countries have responded with laws to protect domestic providers using FUD (fear, uncertainty and doubt) campaigns over privacy issues to counter U.S. IT companies, said Daniel Castro, an analyst at the Information Technology and Innovation Foundation.

The international pushback is a major threat to U.S. cloud providers, Castro said. "The potential market for cloud computing is very large, and the U.S. right now is the country that stands to gain the most from it," said Castro. A U.S. House subcommittee on Intellectual Property, Competition and the Internet held a hearing last week to look at the competitive threats to the cloud computing industry.

Castro was among those who testified, and in a later interview, he said that some countries are warning that the Patriot Act is a threat to privacy and a reason not to use a U.S.-based data center.

Castro said most countries have an equivalent Patriot Act law, and some, including Canada and Australia, allow businesses to turn over data voluntarily to a government agency. A U.S. company would violate its terms of service if it acted similarly, he said.

Also among those testifying was Justin Freeman, the corporate counsel of Rackspace, a hosted service provider. He told committee members that "many U.S. cloud technology companies are attempting to compete overseas," and much of the time these services are provided out of a U.S.-based data center to remote users -- a position which is increasingly met with opposition from foreign countries concerned about friction between their domestic privacy principles and U.S. law."

That has not been a concern for Toro Bala, who has extensive experience working with U.S. IT companies, and said that he meets the needs of Mexican and U.S. law in providing his services globally.

The data center migration will be completed in November. Most of Posadas' data center equipment is leased and is due to expire this year, so it created an opportunity to make a move.

The shift to the cloud is neither lowering nor increasing IT costs, Toro Bala said, but it is giving his business new capabilities. Among them will be a faster time to market on development projects. Previously, a new service required new equipment, a process that, in total, could take months to deploy. The cost would be fixed as well; with cloud, the costs are variable.

With the cloud, new services can now be deployed in a matter of weeks, Toro Bala said. "That is the type of capability that we were lacking, that agility."

Toro Bala said his company has many U.S. partners and works internationally. "Working cross borders comes naturally," he said.

Patrick Thibodeau covers cloud computing and enterprise applications, outsourcing, government IT policies, data centers and IT workforce issues for Computerworld. Follow Patrick on Twitter at @DCgov or subscribe to Patrick's RSS feed. His e-mail address is pthibodeau@computerworld.com.

See more by Patrick Thibodeau on Computerworld.com.

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