1. Strategic Hospitality Technology Investment
Chapter 11
Interview
Hospitality industry is like the transportation industry: perishable inventories, narrow margins, and high guest service standards
IT reporting to marketing or to the CEO (elevates it in terms of perception, prestige, and responsibility)
Trend: Technologists incorporating higher-level business skills
IT needs to be a horizontal resource that permeates throughout the entire company
Metrics on technology are the same as the hotel business in general
Walls between IT, operations, and marketing should be broken down (too often there is conflict)
Talk to customers – What does the customer want?
Technology Strategies for the Hospitality Industry © 2005 Pearson Education, Inc
Nyheim, McFadden, & Connolly Upper Saddle River, New Jersey 07458

2. Interview Mike DiLeva Head of Hospitality Division Unisys
Background in both operations and IT
Technology needs to be looked at more strategically
Hotel metrics can be applied to IT
Technology Strategies for the Hospitality Industry © 2005 Pearson Education, Inc
Nyheim, McFadden, & Connolly Upper Saddle River, New Jersey 07458

3. 1. Introduction
It is not nearly as important to get “lots of functionality” as it is to get “the right functionality for your business.”
Technology Strategies for the Hospitality Industry © 2005 Pearson Education, Inc
Nyheim, McFadden, & Connolly Upper Saddle River, New Jersey 07458

4. 2. Reducing Expenses and Increasing Profits
Reduce Cost
Increase Revenue
Technology Strategies for the Hospitality Industry © 2005 Pearson Education, Inc
Nyheim, McFadden, & Connolly Upper Saddle River, New Jersey 07458

5. Decreased Expenses Staff reductions Cost of maintaining systems
Eliminating waste
Periodic maintenance systems
Power control systems
Fixed costs don’t usually go down, they are a unique cost structure, and some guest service requirements are not negotiable.
Technology Strategies for the Hospitality Industry © 2005 Pearson Education, Inc
Nyheim, McFadden, & Connolly Upper Saddle River, New Jersey 07458

6. Increased Gross Profit
Not gross revenue
Directly attributed to the new system
Technology Strategies for the Hospitality Industry © 2005 Pearson Education, Inc
Nyheim, McFadden, & Connolly Upper Saddle River, New Jersey 07458

7. 3. System Examples Yield management Restaurant menu management
Technology Strategies for the Hospitality Industry © 2005 Pearson Education, Inc
Nyheim, McFadden, & Connolly Upper Saddle River, New Jersey 07458

8. 4. Cash Flow and Costs
ROI = (Increased Profits + Decreased Costs)/Investment
Adjust for time and the cost of capital
Additional costs of a new system
Costs associated with the project
Intangibles or “soft” benefits
Technology Strategies for the Hospitality Industry © 2005 Pearson Education, Inc
Nyheim, McFadden, & Connolly Upper Saddle River, New Jersey 07458

9. 5. System Selection Process
Conceptual design for the enterprise
Functional and system requirements
Request for proposal (RFP)
Vendor short list
Solicit proposals
Technology Strategies for the Hospitality Industry © 2005 Pearson Education, Inc
Nyheim, McFadden, & Connolly Upper Saddle River, New Jersey 07458

10. 5. System Selection Process (cont.)
Assess proposals against criteria
Visit reference sites
Vendor demonstrations
Final selection
Technology Strategies for the Hospitality Industry © 2005 Pearson Education, Inc
Nyheim, McFadden, & Connolly Upper Saddle River, New Jersey 07458

11. Conceptual Design for the Enterprise
Each application should fit into overall plan
Functional operations (i.e. matrix)
Eye towards the future
End product: A list of component applications that will be required to create the entire information infrastructure and a solid ideas of the system architecture.
Technology Strategies for the Hospitality Industry © 2005 Pearson Education, Inc
Nyheim, McFadden, & Connolly Upper Saddle River, New Jersey 07458

12. Functional and System Requirements
Don’t let management pick the new system
Don’t automate inefficient processes
Involvement from multiple departments or business units
Clearly define exactly what you need
Do some research
Keep expectations in check
Technology Strategies for the Hospitality Industry © 2005 Pearson Education, Inc
Nyheim, McFadden, & Connolly Upper Saddle River, New Jersey 07458

13. Building Consensus
Similar system installations in similar business units
Refer to enterprise design
Speak informally with vendors
Master requirement list
Think outside the box, but there are limits
Prioritize
Technology Strategies for the Hospitality Industry © 2005 Pearson Education, Inc
Nyheim, McFadden, & Connolly Upper Saddle River, New Jersey 07458

14. Request for Proposal (RFP)
Do not do “customization” on a fee basis
Numbered outline (matrix) or format
Clearly defined timetable
Support issues
Historic and forward-looking build schedule
Cost information in the same format
Technology Strategies for the Hospitality Industry © 2005 Pearson Education, Inc
Nyheim, McFadden, & Connolly Upper Saddle River, New Jersey 07458

15. Vendor Short List Credibility Be careful about databases
Request for information (RFI)
Technology Strategies for the Hospitality Industry © 2005 Pearson Education, Inc
Nyheim, McFadden, & Connolly Upper Saddle River, New Jersey 07458

16. Solicit Proposals Be realistic in regards to the time frame
8 weeks (4 weeks of just getting to know you)
Technology Strategies for the Hospitality Industry © 2005 Pearson Education, Inc
Nyheim, McFadden, & Connolly Upper Saddle River, New Jersey 07458

17. Assess Proposals Objective
Scale: Each functional and system requirement
Individual grade (independently)
Sensitivity Analysis (Larger/Complex Projects)
Technology Strategies for the Hospitality Industry © 2005 Pearson Education, Inc
Nyheim, McFadden, & Connolly Upper Saddle River, New Jersey 07458

18. Visit Reference Sites Bring your prioritized requirements
Install in accordance with schedule
Supplied system in accordance with specified requirements
Software and maintenance fees
Reliable support
Migrating and/or scaling
Technology Strategies for the Hospitality Industry © 2005 Pearson Education, Inc
Nyheim, McFadden, & Connolly Upper Saddle River, New Jersey 07458

19. Vendor Demonstrations
Scripted with freestyle
Don’t waste vendors’ time and money
Technology Strategies for the Hospitality Industry © 2005 Pearson Education, Inc
Nyheim, McFadden, & Connolly Upper Saddle River, New Jersey 07458

20. Final Selection You have to be willing to walk away.
Technology Strategies for the Hospitality Industry © 2005 Pearson Education, Inc
Nyheim, McFadden, & Connolly Upper Saddle River, New Jersey 07458

21. 6. Implementation Project manager Set a schedule
Establish a training system
Meet with vendor (Steps 1-3)
Stop and analyze (contingency plan and contact all stakeholders)
Technology Strategies for the Hospitality Industry © 2005 Pearson Education, Inc
Nyheim, McFadden, & Connolly Upper Saddle River, New Jersey 07458

22. 6. Implementation (cont.)
Start implementation in one department
Stop and analyze (monitoring all systems)
Move on to the next department
Stop and analyze again
Rollout the system property wide
Technology Strategies for the Hospitality Industry © 2005 Pearson Education, Inc
Nyheim, McFadden, & Connolly Upper Saddle River, New Jersey 07458

23. 7. Summary Business and Technology understanding needed
New systems must either increase revenue or reduce costs
ROI and RFP
Follow process
Technology Strategies for the Hospitality Industry © 2005 Pearson Education, Inc
Nyheim, McFadden, & Connolly Upper Saddle River, New Jersey 07458