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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.

July 30, 2012 06:00 AM ET

Computerworld - WASHINGTON -- The United States has been shipping application development work offshore for years, but cloud computing may help make this country a provider of data center services to enterprises in other countries.

Consider the situation at 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 are run by outsourcing partners.

But Grupo Posadas 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 the 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 United States is the leader in cloud computing technology, and U.S cloud-based service providers attract customers globally. Some countries apparently perceive this as a competitive threat and have responded by enacting laws to protect their domestic providers with FUD (fear, uncertainty and doubt) campaigns designed to raise questions about the security of U.S. data centers, 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 a laws that are similar to the Patriot Act, and some, including Canada and Australia, allow businesses to turn over data voluntarily to government agencies. A U.S. company would violate its terms of service if it did that, he said.

Also among those testifying was Justin Freeman, the corporate counsel of Rackspace, a provider of hosted services. 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. He has extensive experience working with U.S. IT companies, and he said that he complies with the mandates of Mexican and U.S. laws in providing his services globally.

The Grupo Posadas data center migration will be completed in November. The company leases most of its data center equipment, and the leases are due to expire this year, so it had an opportunity to make a move.

The shift to the cloud is neither lowering nor increasing IT costs, said Toro Bala. Instead, it is giving the business new capabilities. Among them will be a faster time to market on development projects. Previously, implementing a new service required deploying new equipment, a process that could take months. And under the old setup, costs were fixed; with cloud, the costs are variable.

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

Posadas has many U.S. partners and works internationally, said Toro Bala, adding that "working across borders comes naturally."

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

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