The Risks and Benefits of Cloud Computing

Marlon Ortiz, VP-IT, American Casino & Entertainment Properties

Cloud computing brings many benefits and some inherent risks to gaming organizations. First, let’s have some basic understanding of these technologies. Cloud service providers sell computer hardware and software “as a service” over the Internet. The most common ways are:

Infrastructure as a Service(IaaS): The cloud provider offers virtualized data centers allowing companies to deploy their applications and not worry about the infrastructure needs (load balancing, scaling, security, backups, etc.). Examples are Amazon Web Services (AWS), Microsoft Datacenter, Rackspace, and Supernap data centers.

Software as a Service (SaaS): The cloud provider delivers application solutions on a pay-for-user basis or as a monthly or yearly subscription. Examples are Google Apps, Microsoft Office 365, and Salesforce.

Platform as a Service (PaaS): The cloud provider provides a combination of infrastructure and the software development environment allowing customers to develop, and run the application on the cloud. Some examples are Microsoft Azure, Red Hat Openshift, and Amazon Web Services (AWS) Elastic Beanstalk.

A priority for any gaming organization should be to have a program in place to grow the skill set either by growing talent in-house or by hiring the right talent

As we can see from these offerings, the first benefit is cost savings. They reduce the required Information Systems infrastructure (application servers, database servers, development environments, server rooms, UPS, air conditioning system, etc.). This entire infrastructure moves from on premise to the cloud.

We can also see that cloud infrastructure is more flexible. It can be scaled up or down, adjusting to business needs. This offers great savings in time and resources when deploying new time-sensitive business applications. A business can also adapt to workload changes better by provisioning and de-provisioning infrastructure resources.

One more important benefit is the establishment of a more resilient infrastructure. Cloud providers have built strong redundancy into their services. This, combined with the ability to gain access anywhere there is an internet connection, makes cloud services an attractive option for any organization.

But all these benefits have to be balanced against some risks that each organization needs to understand and mitigate. The most important risks are:

Security: The most important concern here is to secure the data. Standard internal IT security control can’t be extended to the cloud. 

Here, the cloud provider is responsible for implementing effective security controls, but it’s the client’s responsibility to understand which controls are those, how they work, and what type of compensating controls are needed.

Limited control: Service providers manage and limit the access to the cloud infrastructure. In some instances, it is counter-productive to hand over control of the hardware layer to a service provider.

Regulatory compliance: It is very important to understand the implications of moving data from your internal infrastructure to a third party cloud provider so you remain compliant with federal and state laws and industry regulations.

Service Level Agreement (SLA);This is very important topic of conversation with your provider, if everything goes wrong who is accountable.

These are some of the concerns associated with these services. Like any new technology, cloud services are evolving. As these technologies mature, they are going to become an essential part of the way business organizations deliver their services.

Like many other industries, the gaming industry is highly regulated and technology tends to move faster than regulations. In such an environment, the approach tends to be very cautious we have been implementing cloud solutions in non-regulated systems and applications. We have several solutions that are cloud based specifically we have implemented; asset management and tracking, inventory system, restaurant reservation system, and right now we are assessing Microsoft Office 365.

We are very good at collecting data. The gaming industry has been a pioneer in the data collection business. One of the earliest computerized Casino Management systems was implemented by Resorts Casino in Atlantic City back in 1980. The gaming industry has built huge data warehouse systems filled with all kinds of information about its customers.

Every time a customer visits a gaming facility, information is collected and analyzed. This information rolls into their customer relationship programs (loyalty programs). An incentive program will be unique to a customer depending on the player’s performance. The gaming industry is very competitive. To compete, casinos need to use the latest technologies to communicate in a personalized way to their customers.

The explosion of social media has created new opportunities to communicate with a younger generation, but social media generates huge volumes of data coming from multiple sources at ever faster rates. Gaming organizations are adding the new data sources to their data warehouse systems. The problem is not in the collection of data; the problem is how to analyze data in a way to provide useful insights to make better business decisions.

The challenge for any gaming organization successfully implementing a big data analytics program is twofold: first, a robust analytical infrastructure, and second, a strong skill set. The analytical infrastructure is very important since this type of analysis is a very computational, intensive process that requires an infrastructure that is able to process multiple complex queries simultaneously. Some infrastructure solutions for this type of analysis are cluster computing, grid computing, and lately, cloud computing. Each of these solutions offers advantages and disadvantages that need to be balanced against the business needs.

But the real problem to a successful implementation is to have the right expertise to properly make sense of the huge amounts of data. These data analysts need to be experts in several programming languages, data collection techniques, statistical analysis software, database management modeling, visualization and presentation techniques, and probably more important, industry knowledge.

The acquisition of this talent is a challenge faced by not only the gaming industry, but pretty much every industry. There was a report published by McKinsey predicting that by 2018 the US would face a shortage of close to 190,000 workers with deep analytical skills. A priority for any gaming organization should be to have a program in place to grow this skill set either by growing talent in-house or by hiring the right talent.

An option that should be explored would be for gaming companies and universities to join forces to prepare the next generation of big data analysts. Universities will provide the required knowledge of computer science, mathematics and statistics, and gaming companies will provide the industry knowledge.

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