/ Service Provider Reduces Operating Costs by Half with Move to Cloud Platform
Overview
Country or Region:United States
Industry:Distribution and services—Food services
Customer Profile
SpeedMenu, based in Austin, Texas, enhances the bar and restaurant experience with technology that allows guests to place orders and pay their tabs through their mobile phones.
Business Situation
SpeedMenu ran its solution in a self-hosted data center—but the costs to do so jeopardized the success of the business.
Solution
The company moved its solution—including a Windows Phone web-based mobile app—to the Windows Azure platform to take advantage of a cloud-based infrastructure.
Benefits
- Eliminates U.S.$350,000 capital expense
- Reduces operating costs by 50 percent
- Shrinks time-to-market by 40 percent
- Reduces time to add capacity
Richard Bagdonas, President, SpeedMenu
SpeedMenu created a way to make the restaurant and bar experience more satisfying for guests and more profitable for their owners. Now, it just needed a way to reduce the operating costs of the data center that hosted its solution, and to relieve its key personnel of the burden of managing that data center. It accomplished both by moving its solution to the Windows Azure platform for cloud computing and participating in the Microsoft BizSpark program for startup business success. Once on Windows Azure, SpeedMenu was able to repurpose and resell its U.S.$350,000 data center hardware investment, reduce operating expenses by half, shrink time-to-market by 40 percent, and nearly eliminate the weeks-long wait to bring added capacity online. With Windows Azure, SpeedMenu also has an easy and cost-effective way to offer aggregations of its data to advertisers.
Situation
In late 2010, entrepreneurs Richard Bagdonas and Dan Janjigian saw out-of-control costs begin to jeopardize their startup company, SpeedMenu, in its infancy. The problem was repeating charges for technology, month after month, as far as they could see. The path they were on led nowhere good. They had to find a way to put SpeedMenu on a firm financial footing. Fast.
No matter how brilliant the business idea, startups need to be focused on eliminating unnecessary expenses if they’re to give those brilliant ideas the time and money they need to grow into thriving businesses. Bagdonas and Janjigian were aware of this, of course, when they founded SpeedMenu at the start of 2010, with Bagdonas as its President and Janjigian as its CEO.
They founded SpeedMenu both to address a widespread problem and to take advantage of an opportunity created by new technologies. The problem: restaurant and bar guests wanted ever-faster service. Getting orders placed, executed, and paid for more quickly would both boost guest satisfaction and the venues’ revenues. Everyone would win. The question was how to do this without overburdening the waitresses and waiters.
The entrepreneurs considered a solution based on computers embedded in restaurant tabletops. However, they decided the cost would be beyond the reach of most of their target venues. Plus, computerized tables weren’t necessary because the vast majority of guests already walked into restaurants and bars carrying computers, monitors, and keyboards with them—in the form of their mobile phones. The challenge for SpeedMenu became how to tie mobile phones—anyone’s mobile phone, anywhere—to the ordering and payment system of any venue that wanted to pay to participate in a SpeedMenu solution.
Part of the answer lay in creating a web-based mobile app that guests could access and use to order, track, and pay for food and beverages without having to download and maintain software on their phones. A SpeedMenu guest-facing website for this purpose would be hosted in the company’s own data center. From that data center, SpeedMenu would send and receive information and transactions related to each guest’s “tab” with both the guest and the venue. A SpeedMenu administrative website would give each venue an easy way to update posted specials, configure service features, and view performance reports.
As part of their business model, Bagdonas and Janjigian also created anOpenAPI, an open application programming interface (API) through which other mobile applications and websites—for tourism, entertainment, city information, restaurant reviews, or the restaurants and bars themselves—could take advantage of the SpeedMenu service to build their own web traffic and business.
SpeedMenu went live in June 2010, and it was a success. That success certainly validated the entrepreneurs’ vision—but there was an unexpected consequence. With their service taking off so quickly, so did the requirements and costs of the data center. To scale sufficiently, they invested about U.S.$350,000 in hardware, and they projected continuing, annual costs of about $75,000 for support; $60,000 for Internet access, power, and a colocation site for disaster recovery; and $50,000 for still more hardware.
“We had spent $150,000 on infrastructure before we’d shown a single webpage to a single guest,” says Bagdonas. “And expense was only part of the problem. There was the responsibility for managing it all—for answering the middle-of-the-night calls saying that the servers were down. Our business model was great—our technology model to support the business, not so great.”
Solution
Bagdonas had been writing software of various types for 30 years—since he was seven. He’d started writing business applications when he was 13 and, for the past 20 years, had focused primarily on Microsoft technology. “Microsoft supports the development community with great tools, training, and example code that make it easy to turn an idea into reality,” says Bagdonas. “So whenever I have a challenge, I always look to Microsoft first.”
In this case, looking first to Microsoft meant looking at Windows Azure, the Microsoft cloud service development, hosting, and management environment. Bagdonas also had another reason for turning to Microsoft. A year or so earlier, he looked at cloud-computing options from Amazon and Google, and he didn’t like what he saw. “We weren’t going to get our relational databases to work the way we wanted them to on Amazon or Google,” he says. “We’d have to take a step back in our technology to make use of those services. I was turned off by cloud computing.”
A Second Look at Cloud Computing
The Windows Azure platform turned Bagdonas back onto cloud computing. It included all of the infrastructure components that SpeedMenu needed, including the Windows Azure operating system on which to run the SpeedMenu websites, the Microsoft SQL Azure cloud-based relational and self-managed database service on which to host the SpeedMenu database, and Blob Storage for the non-structured data, such as photos of member restaurants and bars and lists of menu items and specials. The solution runs on eight to 15 instances of Windows Azure, depending on the volume of traffic that it must handle at any given time.
“Windows Azure is exactly what we were looking for: scalability without the ever-expanding investment; high availability without the management hassles,” says Bagdonas.
To take full advantage of Windows Azure and related Microsoft resources, SpeedMenu also joined the Microsoft BizSpark program for startup business success. BizSpark is a global program that helps software startups succeed by providing access to Microsoft software and tools, connecting them with key industry players and providing marketing visibility. Also, SpeedMenu had access to Microsoft expertise—including help-desk technicians, evangelists, and developers—whenever it mattered most. For example, when a connection to SQL Azure wasn’t working as SpeedMenu expected, Microsoft provided code to address the problem and worked with SpeedMenu until the issue was resolved.
A Staged Migration
The company made the decision to move to Windows Azure in November 2010 and had its database on the cloud-computing platform the following month. The administrative website for restaurants and bars was moved to the cloud in January 2011. The guest-facing website and Windows services—including services that integrate a guest’s activity on SpeedMenu with his or her Facebook and Twitter accounts—were moved in February. The staged migration was a deliberate choice.
“We moved the database first, and then the apps one at a time so that we could back out easily if we needed to—but we never needed to,” says Bagdonas. “What surprised us was that while we ran the database on SQL Azure and our websites and services in our own data center, the service actually ran faster than when it had all been in our data center.”
Technologies Beyond the Cloud
Bagdonas accomplished the port of the administrative website in a week, using tools that were already familiar to him in the Microsoft Visual Studio 2010 Ultimate development system to convert the website’s classic ASP code to the ASP.NET code of the Microsoft .NET Framework 4. He used the Language-Integrated Query (LINQ) extensions to the .NET Framework to support queries to the database. “LINQ is my favorite new toy for 2011,” says Bagdonas. “With LINQ, I had the middle layer between the application and the database taken care of for me, without having to spend tremendous amounts of time writing code.”
To extend the solution to guests, SpeedMenu developed a mobile web app for Windows Phone, as well as versions for iPhone and Android phones. The Windows Phone app is “skinnable,” which means that a bar or restaurant chain can easily rebrand it to look like a custom app on its own website. Bagdonas says that, while the SpeedMenu app is available for several types of phones, he sees advantages in the Windows Phone version. “Our app on Windows Phone is faster and more beautiful than our apps for other platforms,” he says. “And Windows Phone gives us access to interesting features that the others don’t. For example, if we adopt Live Tiles, guests won’t have to go into the SpeedMenu app to see the status of their restaurant or bar tabs—it can be right there on their start screens.”
Looking Ahead
With its websites and services moved to Windows Azure, and its app for Windows Phone deployed, SpeedMenu now is working to further promote the use of its OpenAPI and Windows Azure to make it possible for restaurants and bars, and major review websites, to add SpeedMenu functionality to their own sites.
SpeedMenu is also considering aggregating its data about guest purchases and making it available privately to advertisers and others. Such data could, for example, show how many people are buying a specific brand of beer through their phones, and where and how that number differs across regions—data of interest to the company that is buying online advertising for that brand. To implement this portion of the SpeedMenu business model, Bagdonas expects to use Windows Azure Marketplace DataMarket, in which business users can discover, purchase, and manage data subscriptions. Because of the ease of implementing this business model on Windows Azure—where the data and the market for it are on the same platform—Bagdonas expects the data aggregation business to grow rapidly to contribute about one-third of the company’s revenues.
Benefits
By moving from a self-hosted data center to the Windows Azure platform, SpeedMenu significantly reduced capital and operating expenses, accelerated time-to-market, and virtually eliminated the burden of managing the IT infrastructure.
Eliminates $350,000 Capital Expense; Reduces Operating Costs by 50 Percent
The company’s primary aim in adopting the Windows Azure platform was to reduce the cost of hosting its websites and services. SpeedMenu has had major success accomplishing this.
Under the company’s original, self-hosted model, it had spent $350,000 in capital expenses for the data center and it estimated spending an additional $185,000 in operating expenses each year, starting with year one, to maintain it. In contrast, the terms of SpeedMenu’s participation in BizSpark give it no-cost hosting on Windows Azure for a year. After that, SpeedMenu will be eligible for a reduced hosting rate, which Bagdonas estimates to be about $90,000 given the company’s hosting needs. That will save SpeedMenu about 50 percent over the full hosting rate.
By moving to Windows Azure when it did, SpeedMenu was able to cancel a pending order for $200,000 worth of hardware to expand the data center. The company will repurpose and resell the hardware already deployed in its data center, recouping all or most of that initial investment.
“We’re getting a year of no-cost hosting, subsequent hosting at 50 percent off, and all without an up-front capital expense,” says Bagdonas. “Windows Azure is a huge financial relief to us.”
Shrinks Time-to-Market by 40 Percent
The bottom-line dollar savings from Windows Azure and BizSpark may be the measures that matter most to Bagdonas and Janjigian. But they readily admit that those aren’t the only savings that SpeedMenu gained from the move to Windows Azure.
Bagdonas says that the migration to Windows Azure was faster and more cost-effective than the company could have managed on its own, thanks to the assist that the company gained from BizSpark.
“The process of moving our sites to Windows Azure was 40 percent faster than if we’d have had to figure out everything by ourselves—which would likely have been the case on other cloud-computing platforms,” Bagdonas says.
The shorter time-to-market is even more striking when compared to the time required to put a data center into production. SpeedMenu took six months to deploy its data center, compared to three months to go live on Windows Azure. Bagdonas estimates that without pacing its deployment to reduce risk, SpeedMenu could have gone live on Windows Azure in less than three months—reducing total time-to-market even more.
Reduces Time to Add Capacity from Weeks to Minutes
Minimizing the cost of technology was the priority for the SpeedMenu founders, but easing the burden of managing that technology was a close second. SpeedMenu succeeded on both counts.
“We didn’t need to build a car; we just wanted to drive,” says Bagdonas. “That is, we not only bought an infrastructure, but we were stuck managing it, worrying about server crashes, power grids, Internet connections, and all the rest. All we wanted to do was focus on our business. And on Windows Azure, we can.”
Because the Windows Azure platform provides a complete platform as a service, rather than just an infrastructure as a service, SpeedMenu benefits from managed services for high availability, security, reliability, and more. It used to take SpeedMenu three weeks to go through the process of ordering additional servers, requisitioning additional power, receiving and installing the servers, and adding them to the network equipment and load balancers. With Windows Azure, SpeedMenu sees new instances of Windows Azure up and running in three minutes or less.
SpeedMenu takes advantage of the ability to bring up instances immediately to do what it could never do before: scale up to higher capacity only when it’s needed, rather than guess about future needs and go through the expensive and time-consuming task of onboarding new servers—only to discover that additional capacity isn’t yet necessary.
SpeedMenu brings instances down just as quickly. The company’s variability in traffic isn’t seasonal, like many retailers; it’s daily. Restaurant and bar business is moderate during the day, rises steadily through the evening, and drops precipitously around 2:00 in the morning. SpeedMenu uses Windows Azure to bring instances up and down in response to these ups and downs in web traffic volume. SpeedMenu has also automated this process, with programming that brings new instances up when current instances are at 70 percent of capacity, and brings instances down when they’re at less than 5 percent of capacity.
“Bringing instances up and down on Windows Azure is a hands-off process,” says Bagdonas. “We don’t even think about it—which gives us that much more time to think about SpeedMenu.”
Microsoft Cloud Power
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