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Technology in Hospitality - Fits, Frustrations and Failures

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June 01, 2007
Hospitality | Technology
Michael L. Kasavana, Ph.D., NCE, CHTP - kasavana@msu.edu

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© 2008 Hospitality Upgrade. No reproduction without written permission.

There are few industries that implement technologies as complex or diverse as those installed in the hospitality industry. From large coastal resorts, to downtown hotels, to quick-service restaurants, to private country clubs, to lavish gaming casinos, managing hospitality technology is quite challenging. Given the inherent difficulties associated with interfacing standalone technologies into a network configuration, it is not surprising that fits, frustrations and failures often arise.

Often the excitement associated with installing a new application or system upgrade can cause management to become anxious and thereby overlook certain preliminary factors designed to ensure success. For example, while common sense might suggest that prior to interconnecting a point-of-sale (POS) system with a hotel property management system (PMS), staff should first test the POS system on a standalone basis to confirm functionality. Well, this may not always be the case. Given the urgency to directly interface the POS system to the guest accounting module, a gap in training and/or testing may arise resulting in failure to achieve a reliable interface. In order to better understand the fits, frustrations and failures of hospitality technology, it is important to understand system objectives, considerations, myths and strategies for success. 

System Objectives
In general, the three electronic data processing (EDP) objectives of hospitality technology applications are:
Minimize the time of the data processing cycle.  Shorten the elapsed time needed to transform data to information through proper processing. The resultant Input>>Process >>Output sequencing should be accomplished as efficiently as possible; the more rapid the completion, the more valuable the application.

Minimize the number of times data is handled. Each time the same piece of data is handled there is a possibility of omission, transposition or duplication error. The most effective EDP process involves handling data elements only once. For example, consider a dining room server correctly capturing a guest’s dinner order on a handheld POS terminal. The data can then be routed to the appropriate kitchen workstation, relayed to a sales journal file, and subsequently posted to the guest’s electronic hotel folio. The goal being to maintain control over data resources by minimizing duplicate procedures.

Streamline system output. One of the criticisms of automated hospitality information systems is an abundant output of irrelevant information. What report components are most critical to effective operations? How difficult is it to locate and retrieve important metrics from among a lengthy daily report of operations? What statistics should be contained on a dashboard display? There is a need to fine-tune system output so that it is highly responsive and customized to management needs.

Over the past several years, managers and system vendors from the lodging, foodservice and private club industries have been surveyed to determine what factors contribute most often to technology frustrations and/or failures. The 12 most frequently cited considerations (not in rank order) include:

1: Insufficient Initial Training  The most frequently cited reason for technology frustration or failure is a lack of time and money committed to staff training. Vendor- prescribed training for new system installation is a standard contract component of a license agreement. The prescribed training schedule is usually segmented by staff position across each planned application software module. Vendors tend to offer a variety of training formats including: on-site, classroom and online training. On-site training is the term used to describe the basic training mode in which a vendor representative leads a group session on the hospitality premises, directed at teaching specific modular functionality consistent with the system contract (e.g., sessions on installed system applications). Classroom training is the term usually used to describe regularly scheduled classes conducted by a vendor representative, usually at vendor headquarters, as a generic educational offering for a group of unrelated users. Sessions tend to focus on the general functionality of a widely adopted application (e.g. POS report generation). Online training (also called e-training) is a flex-time option that enables the learner to select content and duration of delivery over an Internet (broadband) connection. To date, on-site vendor training remains the standard mandated by system contract. From a management perspective, there needs to be recognition and appreciation for the total cost of training.

Typically, a comprehensive hospitality information system may require scheduling in the range of 125-150 hours of onsite training, over a one-to-two week period, for new users. Hourly training sessions (priced at $100-150 per hour) are intended to familiarize property staff with soon-to-be installed system functionality. In the case of onsite training, in addition to training session fees the property is also responsible for the costs incurred by vendor training representatives (i.e. transportation, accommodations and out-of-pocket expenses) plus related course materials, securing sufficient space for attending staff, as well as the expenses related to installation of necessary training equipment.

In addition to direct training fees, property employees need to be paid for time spent in training sessions. In total, system training carries a high, often unanticipated, price tag (often in excess of $25,000). In an effort to reduce overall system expenditure, property managers report negotiating reductions in training fees and session commitments. According to practitioner feedback, this can be a critical mistake often contributing to system frustration and failure. In a related matter, continuous improvement and ongoing education were also mentioned as important components of an ongoing training regime.

2: Managerial Apathy   The absence of management participation in project planning, installation and/or implementation for a new system or system upgrade can quickly lead to incongruity and failure. Industry experts emphasized the need for top management to demonstrate interest and support in technology applications for there to be an effective implementation. Lack of administrative commitment can become contagious and will ultimately trickle down and produce wide-spread indifference and improper system utilization. Early involvement in determination of the property’s needs, system selection, contract negotiation, system installation, as well as persistent operational monitoring, are suggested touch-points that management can use to help ensure success. Unlike the costs of training, managerial apathy does not have an easy-to-assess price tag.

3: Resistance to Change Although it is becoming less of an issue as technology permeates society, there remains a percentage of hospitality industry employees who will oppose technology applications that change long-standing procedures or processes. Although this issue is somewhat self-explanatory, failure to anticipate the dysfunctional effects related to resistive participants is a major mistake. The resistance of a few can lead to breakdown and misuse of system resources that can cripple the system’s effectiveness. An old industry adage states, if a business installs an automated system but continues to operate as it always has, then all it has done is spent its money without any significant gain.

4: Data Conversion  An often forgotten aspect of system implementation is the fact that the system is purchased without the property’s data installed (e.g. no reservation files, no food and beverage menus, no financial reports, no guest history files, nor any payroll records). Populating a new system (or application) with historical, proprietary data often necessitates a special conversion program and/or an extensive amount of data capture and re-entry to create a workable database. Data migration may be incorporated in a system contract as a service item or delineated in a work order or order agreement. Regardless of format, the work should be specified in detail with an emphasis on the data elements necessary to build an effective, operational database. Similar to training, the handling, processing and transcription of data carries a cost. It is important to note that despite the fact a system vendor may provide an automated conversion program capable of reconfiguring the property’s legacy database or data warehouse into a format compatible with the new system, there may be a fee applied for such application. Alternatively, the vendor may offer printed forms or electronic spreadsheets to be used by property staff for data importing during project initiation. In any case, properly populating data fields is a critical variable impacting system success or failure. The projected time for data cleansing and data re-entry into a new database may range from 25 hours to 40 hours (or more) at a cost of $100-$150 per hour. Management must reconcile the fact that  the new system will not be effective until it is loaded with property-specific content at a cost in the range of $2,500-$6,500.

5: Application Complexity  The old adage the more intuitive a hospitality information system, the greater its chance of success remains true today. Lack of intuitive application design, faulty hyperlinked programming and difficult to navigate database files can restrict management to utilizing only a small fraction of an installed system’s capabilities. The fact that applications appear too complex to initialize (e.g. data mining, asset management or labor scheduling) may force management to operate without optimal or complete information. When information is based on incomplete or improperly collected data, the outcome will render a false conclusion that the system doesn’t work properly or provides useless information. Simply stated, applications that are too cumbersome to use, will not be used. Applications that flow logically tend to enjoy a higher rate of usage and satisfaction.

6: Improper Scalability  The one size fits all theory does not hold true for hospitality information system technology. A property-specific application that is successful in a 500-room limited-service hotel will not necessarily be transferable to a 2,000-room resort property. Too often an assumption of linearity has led to applications failing, not merely attributable to insufficient functionality, but due to lack of capacity or sufficient parameters. Surveyed managers admit the fact that their main focus is on guest-centric services, not technology. Therefore resolving scalability issues should be the responsibility of the system vendor.

7: Interface Complexities  Tying hardware components together is relatively simple as physical connectivity can be achieved through cabling or wireless access points without much problem. Difficulty can arise when the interconnected component parts attempt to share data. Similar to placing a long-distance telephone call to a foreign country, dialing an international code followed by a phone number will lead to circuit connectivity. Should the person answering the call speak only Russian and the caller only English, the communications that ensue will be extremely cumbersome and perhaps impossible.

8: Insufficient Budgeting  Too often information technology is considered a short-term expense rather than a long-term investment. Managers report that hospitality firms have a tendency to focus on technology only when it doesn’t work or when circumstances demand immediate attention. Rather than considering the specific task or tasks at hand, management would be wise to deal with overall objectives, life cycle costs and technology benchmarks. This can be accomplished through budgetary inclusion of information technology.

The myth that technology alone will solve problems fails to recognize how it affects and integrates with management, staff and guests. Too often the importance of initial training, continuous training and programmatic retraining is not adequately budgeted, and therefore objectives become more difficult to achieve. Most technology specialists agree that there are at least two ways that technology can adversely affect property finances. First, technical problems waste time and resources and can cause stress and frustration. Second, missed opportunities that could be derived from more effective applications usually result in lost revenue opportunities. In other words, it is essential to have some funds in the annual budget for maintenance or expansion applications. While many hospitality companies report spending 1 percent to 3 percent of revenues on technology, a shift of 3 percent to 5 percent helps ensure continuous operations and reinvestment funds as needs arise. This is similar to financial planning for unexpected—but predictable—expenses related to the property’s roof, carpeting, furnishings, swimming pool or golf course.

9: Product Underbidding  Since most salespeople are paid on a commission basis, it is logical to think that system vendors will be proposing systems that include more equipment or programming than a property actually needs. But surprisingly, managers believe that systems are not being oversold; instead they cite the more common practice of underselling. Underselling involves proposing a system configuration that approximates property needs, but with a somewhat deficient configuration. By including less than the optimal amount of equipment or programming in a proposal, the vendor’s bid price will likely be artificially lower than its competitors. The success of this approach to the bidder is based on the assumption that once the system is selected and implemented, it will be easier to sell add-on components to bring the system to appropriate design than to consider unplugging the system and starting over. For example, assume a property currently has eight POS terminals installed in a large dining area. Vendors are then invited to bid on a replacement configuration to replace the installed system. Assume one vendor decides to underbid by convincing management that given the technological advancements in POS design, the dining area now can be serviced by six, not eight, POS terminals. The vendor then bids the system at a price consistent with a six terminal system and is the successful bidder.

For the next several weeks following POS installation, dining room servers complain about the inadequacies and bottlenecks in the POS system causing slow order entry and production to service coordination. Management contacts the vendor to discuss the issue. As a result, the vendor suggests installing two additional POS devices; thereby returning the property to a level of eight POS terminals. After the additional POS devices are installed, the total installation cost (moving to eight terminals) is now higher than either of the other original bidders. In other words, if the successful vendor would have bid a eight terminal configuration initially it likely would not have been selected as the preferred vendor. Hence, underbidding got the vendor’s system installed and allowed the network to be considered in comparison to alternate bidders with larger systems and higher prices.  

10: Ongoing Training  Despite vendor training materials being available in a variety of media formats (including DVD, audio tape, Web-based, and/or podcasts), most properties opt for live classroom instruction at the time of installation with little or no follow-up sessions. When an employee resigns from the property, training may amount to the outgoing worker serving as the trainer for his/her successor or another line employee providing on-the-job training. Given the constant evolution of property software applications, changes in system modules, and level of employee turnover, it seems logical that management should invest in ongoing training and retraining programs. Similar to other considerations, ongoing training is a hidden cost of system utilization that typically is omitted from the budget process. To ensure continuous system success, surveyed managers advocate the routine use of recorded video presentations for ongoing training. They also suggest a once per year "live" vendor representative refresher course to ensure proper system utilization. The realization that the employee about to vacate a position is not likely to conduct a thorough or conscientious training program has helped influence the use of ongoing training media and educational sessions.

11: Vendor Relations  The foundation for effective vendor relations begins at the time of system selection and evolves during system installation, testing and acceptance. Most property managers suggest there needs to be at least one in-person meeting with a vendor representative annually, supplemented by a steady communication flow throughout the year. When asked which aspect of hospitality technology most often leads to problems in vendor relations, the area of support services was a common target. It is for this reason managers point to the importance of understanding support and enhancement activities.

Property system vendors usually offer multiple levels of support services, including: basic support (level 1) – uncomplicated inquiries related to functional performance, instructional documentation and product initiation procedures; intermediate support (level 2) – investigative procedures to recreate an observed error or programming bug, resolution of interface problems, and experimentation with new products or third party add-ons; and advanced support (level 3) – longer, more involved problem solving including software, hardware and netware conflicts.

In order to successfully maintain vendor relations, managers should be familiar with typical support level activities for each installed system. Based on historical data, one popular system vendor forecasts the distribution of annual support services as: 30 percent level 1 activity, 55 percent level 2 activity, and 15 percent level 3 activity. In addition, the average property is expected to place about 40 service requests per annum. Telephone and remote support services, hardware specifications, network considerations, training materials and software module updates (minimum of one update each 12-18 months) should be clearly delineated in a system contract to avoid confrontational vendor relations.

12: Benchmarking  Property managers expressed confusion relative to technological success since there appears to be an absence of standards against which to gauge accomplishment. A safe assumption is that for every property system implementation there is a desire to evaluate its success. Unfortunately, what many managers have used to measure success is a set of financial metrics that are often improperly applied. For example, some managers try to evaluate success by computing the technology’s return on investment or by trying to perform a cost-benefit analysis or a post-implementation cost-benefit audit. As a result, property managers become confused and dismayed by the breadth and depth required to develop meaningful metrics that involve so many hard-to-quantify intangibles.

Three common sense benchmarks to measure the appropriateness of technology applications in the hospitality environment are competitive advantage, productivity improvement and profitability enhancement. In other words, management needs to focus on responding to three simple questions: Has implementation of the application provided the property a competitive advantage? Has it improved staff productivity? Has it enhanced profitability? While not all properties will respond similarly, a simplistic benchmarking analysis can generate a painless basis for evaluating application success. 

There are few industries that implement technologies as complex as those installed in the hospitality industry. It is not uncommon for an individual property to rely on more than a dozen different system applications, many of which are interconnected. Management needs to avoid factors contributing to technological fits, frustrations and failure. As Einstein so aptly noted, "You can’t solve current problems with current thinking. Current problems are the result of current thinking."

Michael Kasavana, Ph.D., NCE, CHTP, is a NAMA Professor in Hospitality Business for the School of Hospitality Business at Michigan State University. He can be reached at kasavana@msu.edu.


Technology fits, frustrations and failures are the result of:

  1. Insufficient training
  2. Managerial apathy
  3. Resistance to change
  4. Data conversion tasks
  5. Application difficulty
  6. Improper scalability
  7. Interface complexities
  8. Insufficient budgeting
  9. Product underbidding
  10. Lack of ongoing training
  11. Inadequate vendor relations
  12. Non-existent benchmarks
Hospitality managers must be mindful of the five Cs of component interfacing:
  • Confidence – Be sure to test each system separately before attempting to link them together. Troubleshooting is much more difficult if there is not confidence in each system’s functionality (e.g., POS to property accounts receivable).
  • Contract – There may be contractual clauses that prohibit, limit or restrict the interconnectedness of one product to another. Often, the host system vendor may require that no products be interfaced to the main application unless the host system vendor is involved. This is designed to protect host system integrity.
  • Communications – What, how and when data is to be relayed from one interfaced component to another is important. Timing issues, content issues and restricted data flows are important interface concerns.
  • Comparisons – One way to streamline interface procedures is to determine if the interface is unique. Instead of assuming this is the first interface of the component parts, management should inquire, through the involved vendors, to determine if other properties have installed similar applications; if so, how well did they work?
  • Contingencies – What can be done in the event the interface stops working? What solutions exist for resolving data bottlenecks or spare parts? The presence of a plan addressing emergency procedures is an important dimension of interfacing.

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