The State of IT

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March 01, 2017
Technology
Trevor Warner - Trevorwarner@warnerconsultinggroup.com

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The Unintended Consequences of Outsourcing

At an HTNG conference, someone commented that people used to travel to hotels to use technology they didn’t have at home. It was the age prior to home devices such as VCRs but in a hotel you could see movies (thanks to LodgeNet, now SONIFI), have a vibrating bed, and use your guestroom phone to order food service. Hotels were beginning the transformation from paper cards to the very early property management systems, but unfortunately, they still handed out a hard key to get into the guestroom. It really was setting the early stages of IT.


 
2017 hotel IT is vastly different. The large-scale trend to downsize IT and move to third-party IT support will have significant ripple effects for both innovation and security. The hotel industry has consistently lagged other industries for innovation and IT security. It is understandable why, multiple systems, multiple vendors with transit guests create a moving target for IT. The movie quote that comes to mind is from “Star Trek” when Scotty says, “…is like trying to hit a bullet with a smaller bullet whilst wearing a blindfold, riding a horse.” It’s a classic line and it perfectly addresses hotel IT. In addition, hospitality is seen as a small, less profitable industry from Fortune 1000 companies. This is a critical realization that has the unfortunate result in less financial stable companies with money for R&D in hospitality.
 
The hotel industry is really struggling to keep up with the guest. What travelers have at home is far superior to any system a hotel can implement, and at home we can do it for a fraction of the cost. Home technology is easy to implement, user friendly, and most importantly, once in place is the same for that user (until eventually prompted to change a password, which in turn causes some headaches).

Many of the technology initiatives we’ve seen over the last few years are now starting to bubble up to a higher scale deployment.  Several of these initiatives are attempts to try and keep up with the traveler and deliver what we as an industry think the guest wants, but ultimately we as an industry lack the money, manpower, and expertise to be successful primarily because by downsizing and outsourcing IT we are trending in the wrong direction.

The Transportation Security Administration (TSA) was formed post 9/11 to address the concerns of the previous airport security model, which was private and awarded to the lowest bidder. TSA was fully funded and over the course of 10 years adapted to the travel security requirements, flow, and changing technology to create a system. In 2015 Congress cut funding to TSA. Many travelers have noticed TSA PreCheck has shorter hours, random TSA PreCheck upgrades were eliminated, regular (non TSA PreCheck) lines are longer and security has started to bottleneck again. A lack of funding has created a situation in which TSA can’t deliver to security and traveler expectations. A recent audit by another government three-letter agency found that 95 percent of weapons made it through screening. No funding equals no manpower.

This is the same trend we see in hotel technology. IT is as important to the hotel industry as it has ever been, yet we see overall funding shrinking and IT staffs are getting smaller. More emphasis is put on third-party vendors with and without the intimate hotel expertise to manage the day-to-day responsibilities. Managing the third party is left to hotel operations or a very small internal IT staff with more requirements than hours in the day. This trend has been occurring for many years, but in the past 12 months we’ve seen very qualified vice presidents of IT or CIOs removed from their positions, and no longer in the hospitality space. 

Third-party IT, capable or not, does not have a seat at the table.
 
They are not involved in higher level planning to move, adapt and grow with the industry. There is a natural flow between the vendor, operations and the brand that results in the reality of the technology, the business plan and the impact said technology can create. The shift of IT staff to third-party IT can’t provide the vendor support, feedback and direction that allows the vendors to organically grow the product or service. Since outsourced IT does not have a seat at the table, they don’t have the influence or the authority. This very important piece of product evolution/innovation is lost. 

Hotel brands can’t do it alone; they look through the lens of creating standards, maintaining a brand. It’s a valuable perspective but it’s just one perspective. We need more IT expertise coming from owners (the money) and operations (feet on the street) to provide that balance and perspective. Vendors can innovate to solve problems and move technology forward, but without enough time in the day and enough IT professionals in the space, we can’t develop those innovations into usable products with the business terms necessary for success. 

The most concerning trend is what we’d refer to as IT in a box. In other industries, such as retail, technology can be implemented in a more plug-and-play, wide-scale environment. Equipment can be shipped, set up and implemented without much expertise. The technology is controlled centrally, providing for better security, management and scalability.  However, in the retail industry, you are supporting very few systems with very few actual users. Retail doesn’t parallel hospitality other than POS, and very few industries come close to the complexity hotels provide. The similarities are limited. 

We see this IT-in-a-box philosophy when retail employees come to hospitality, which leads some to the thought that third-parties can easily support IT needs. Hotels have too many variables: Owners, franchisee, management companies, PIP requirements, money available, location of property, number of staff users, and most importantly, transit guests. It’s like “trying to hit a bullet with a smaller bullet whilst wearing a blindfold, riding a horse.” 

IT in the hotel industry is overwhelmed and for all the issues we list above, smaller staff, fewer IT professionals and a lack of funding all result in a lack of leadership. Leadership is an essential and vital piece of the puzzle for innovation. As with TSA, what is our expectation? We have fewer C-level personnel with more responsibilities and a smaller staff. Who has the time to be an industry leader? This is not an indictment of any one person or organization but a statement of a decline in available people with the expertise and time to give the hotel industry the leadership it needs. 

Leadership, funding, lower population and outsourcing – it’s a slippery slope and one that is the root cause for many of the issues we are trying to overcome today. If the industry continues this trend, innovation will become nonexistent. We can’t continue to rely on the vendors who by nature want to sell us a product or service to lead innovation with the industry supporting them from all three levels (owner, management, brand). It is imperative that as an industry we develop multilevel leadership that sits on the hotel boards, various committees and industry organizations that can provide the direction that leads to innovation and evolution.
 
Hotel IT is complicated. Outsourcing IT solves a short-term financial problem to cover/break/fix but it creates a long-term ripple effect that will stagnate the industry. Just keep in mind that 50 percent of the public is worried about security, while 50 percent still use the word “password” as their password. We need strong IT planning. IT is still important.

Trevor Warner is the chef de la direction at Warner Consulting Group. He can be reached at Trevorwarner@warnerconsultinggroup.com.  



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