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Flexible Applications - A Cornerstone of Brand Equity

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June 01, 2007
Hotel | Technology
Clay Dickinson - clay.dickinson@eds.com

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© 2008 Hospitality Upgrade. No reproduction without written permission.

The verdict is in and brands are king or so it would appear. Most major hospitality companies have replaced the capital-intensive and volatile earnings associated with property ownership with the comparatively stable and predictable management and franchise fee income.

Although asset divestiture has left many companies smaller than they once were, it has also left them with substantially less debt, happier shareholders and a good deal of cash with which to strategically grow their businesses.
An often underappreciated aspect of strategically growing the business is investing the capital required to build and sustain the information systems and business capabilities that support the companies’ brand equity. Why? Because a company’s brand equity is essentially a reflection of the value proposition it offers to the many stakeholders that comprise an increasingly dynamic travel ecosystem. 

The Link Between Brands and IT
A company’s ability to attract new affiliates directly correlates with the premium its brands command in the market. There are casual linkages between a company’s brands and its supporting business processes and information system. Ideally, these linkages constitute a virtuous circle that leads to the ever-increasing value of its brand equity. 

The circle on page 176 depicts global travel ecosystem surrounded by attributes and capabilities, many of which are predicated on modern, flexible information technology (IT) systems.

  • Brand equity–A summary expression of the value a customer is willing to pay for a particular branded product; a premium based on alignment with customer preferences.
  • Customer preference–The explicit and implicit wants and needs of customers, ideally at a price at which perceived value exceeds expectations; contingent on the delivery of a superior level of the next factor.
  • Customer experience–The ability to consistently deliver guest stays that meet or exceed a customer’s unique preferences; tied to customer knowledge.
  • Customer knowledge–Holistic view of the customer, regardless of location, channel or touch point, which results in knowledge of customers’ preferences and value, so positive experiences can be profitably delivered.
  • Enterprise architecture–Effectively enables the processes, people and technologies required to gain knowledge of, act upon and adapt to changes in customer preference thoughout end-to-end service encounter; based on and contributing to strategic focus.
  • Strategic focus–Increase in the ability to execute only the business activities and capabilties that truly add value to the business; reflected in strong brand equity.

Assuming these linkages, wouldn’t companies likely be laser-focused on creating an enterpise architecture that enables critical applications and systems to be modernized?  Although some hospitality companies are beginning to focus on this, many have yet to seriously tackle the issue–which begs the question, why not? 
Perhaps the answer lies in the fact that it’s easier said than done. Paradoxically, many of the same factors that offer opportunities for growth–including mergers and acquisitions, globalization, new brand launches and the like–often drive modernization while simultaneously exacerbating the obstacles listed above. The result is often paralysis that stymies innovation and reduces growth.

To Venture Forward–or Not
Isn’t there a way to effectively overcome these obstacles and generate the desired virtuous circle without taking down the ship in the process? Experience increasingly leads to a qualified, proceed-with-caution yes. As with most journeys through uncharted and potentially dangerous territory, the help of a road map and methodology in the hands of an experienced guide can be of real comfort. Moreover, it’s not a question of whether companies are capable of completing the journey alone, but rather whether they should.

Is negotiating the compexities of such modernization unaided the best use of a company’s time, money and resources? How about the strain of keeping existing systems up and running? What about speed to market? Lastly, there is the issue of risk: Evidence increasingly demonstrates that even the most IT-savvy companies are finding modernization to be tougher than anticipated.

A Way Forward
A framework such as the one shown in the figure on this page can be highly effective in helping companies safely make it through the modernization journey.

A strong framework may be bolstered by prebuilt, industry specific inputs and should produce tangible deliverables that are useful for both business and IT, including things like a roadmap, a business case, concrete plans for modernization, change and transition management programs, and a recommended IT governance structure.

Although the strategies are generally listed in order of execution, it is important to note that the unique nature of each application portfolio requires its own combination of strategies. The goal is to ensure the right strategy is applied to the right application at the right time based on each application’s strategic value and complexity.

Today’s hospitality companies are betting on the ability of their brands to command a premium in the marketplace. This premium is predicated on being able to better anticipate and respond to customer needs, despite an increasingly heterogeneous operating environment. Doing so will require adaptable business processes enabled by flexible, robust and secure information systems.

Today’s systems are not up to the task, and yet they have much imbedded value. The objective is to modernize these systems, ideally with a well-conceived enterprise architecture. Doing this with minimal risk, cost and disruption to the business can be greatly facilitated by working with experienced partners who use proven methodologies and are committed to your success.

Clay Dickinson is a client industry executive in EDS’ global travel and hospitality industry segment. He can be reached at clay.dickinson@eds.com.

The modernization process often relies on a series of interrelated strategies that, in turn, are supported by tools and techniques required to accomplish the work.

  • Relearn – A process that produces a detailed understanding of the stated application baseline
  • Refactor – Code analysis and restructuring with a view to improve maintainability and performance
  • Rehost – A strategy to migration applications to lower-cost platforms without changing features and functionality
  • Reinterface – A process to establish Web-based service-oriented features and functionality
  • Rearchiect – Some process by which applications are forward engineered to modern service-oriented architectures
  • Replace – A decision to replace certain applications with enterprise packages or custom developed applications
  • Retire – A decision to decommission certains applications and systems from service

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