Fear and Loathing on the Legacy System Trail

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June 01, 2002
Migrating Legacy Systems
Elizabeth Lauer Ivey - eivey@hvsit.com

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© 2002 Hospitality Upgrade. No reproduction without written permission.

Thousands of U.S. hotel properties and a good portion of major hospitality enterprises rely on decades-old applications written in obsolete programming languages.

Along with the inflexible databases and the cumbersome hardware systems on which they reside, these applications may no longer be supported by their creators.

As distribution partners and the travel industry collectively embrace the Internet, the hospitality sector is currently grappling with a mix of legacy and Web-aware systems. Since legacy applications are tightly tied to the way hotels operate, the health and flexibility of those applications directly affect a company’s ability to expand geographically, to offer differentiated services and to benefit from more efficient Internet-based distribution systems. This cocktail of complexity and costly middleware patches can create serious inefficiencies and frustrations for operators, employee users and even consumers. Without a doubt the potential for efficiency and cost savings increases when all applications can use the same operating system or benefit from increased levels of interoperability offered by next-generation programs and platforms.

What Is a Legacy System?
A legacy system consists of some combination of the following: early software programming languages, older proprietary hardware, unsophisticated databases and/or non-existent network protocols. If this sounds like your hotel operation, don’t panic. These systems underlie almost every corporate enterprise, but are especially prevalent in the hospitality industry. By definition many legacy systems are cryptic in appearance, antiquated in platform, and with some notable exceptions, weak in functionality.

Good Help is Hard to Find
Despite their stability, legacy systems are likely to be inflexible, expensive and difficult to maintain. According to a recent Gartner Group study, it is estimated that 60 percent to 80 percent of an average company’s IT budget is spent on maintaining existing mainframe (or mini-computer) systems. Those systems considered rich in functionality are increasingly dependent upon super users—tenured individuals working miracles to optimize legacy functionality through a myriad of interfaces and Byzantine data extraction. This observation is not meant to minimize the role of these persons, for they are vital to every organization. Yet no matter how dedicated they are paid to be, the day will come when they will retire, expatriate or simply grow tired of working with last century’s tools.

Consider the fact that the number of programmers who can handle former language standards such as COBOL is declining annually. Recruiting personnel to support legacy systems is becoming more difficult, while 4GL programmers and network engineers continue to enter today’s workforce in droves. Likewise, the next generation of hotel employees (those graduating from high school and college over the next five years) is already proficient in Windows and browser-based applications. Those irreverent digital punks will be more reluctant to work with older, less intuitive systems. If a hotel company wants to attract and retain a savvy workforce, it should give employees modern tools and the opportunity to cultivate their own technology skills.
When debating the organizational challenges of replacing current systems, executive management should never underestimate the sophistication of the current or potential labor pool.

Paul Major, director of hotel IT for Aspen Skiing Company, said, “Legacy systems can create a subtly negative atmosphere among staff, not unlike a sort of low-grade fever. Staff can feel the lack of investment is actually in them, that management doesn’t care about the tools they are forced to use. It’s difficult to attract talented prospective hires when they see a system that they stopped using 10 years ago.”

Can’t seem to keep your knowledge workers? The high level of turnover only compounds the need for more user-friendly systems.

Can’t This Wait?
There are many forces influencing properties and enterprises faced with the dilemma of upgrading legacy systems. Some internal factors include the need to standardize systems across multi-property operations, the desire to move to a modern platform, ease of training in a high turnover environment, tighter integration between sales and property management systems and the need for increased database marketing and e-commerce capabilities. One major external force is the technology shift within the distribution community. Facing extreme market pressures, travel agents and consolidators are now joining the movement toward adaptive Web-based systems. Finally, the consolidation taking place in the vendor community has resulted in reduced support levels for legacy product customers. No matter how compassionate your PMS vendor is, it’s only so long before the gentle prodding to upgrade turns into a harsh ultimatum. Will your property or portfolio be prepared? In this scenario, the most important thing for hotel management to realize they have is 1) a choice of vendors and 2) a voice to get what they need, assuming they can articulate the requirements of the operation. Use these intelligently and above all, strategically.

Migration Strategy and Planning
Before beginning any kind of modernization or migration project, hotel operators and executive management must understand exactly what their legacy systems do and whether the systems adequately support the business strategy. It is critical to develop a vision of what the architecture and infrastructure should be in two years, four years and a decade from now. Understanding the benefits of migrating and discussing those benefits from a business perspective is an early step to migration planning.

In many hospitality enterprises, various technology initiatives dealing with central reservations, billing operations and loyalty program administration operate without coherence. Few organizations have constructed the technology infrastructure to support this, but for just about any business the competitive future depends on an immediate commitment to innovation and next generation systems—and of course, a well formulated technology strategy.

What to Look For
What is the greatest reason for replacing legacy systems? According to Jeff Parker, director of information systems for Denver-based Magnolia Hotels, an expanding collection of upscale urban properties in Colorado and Texas, the greatest reason for replacing legacy systems is the quest for efficiency. Parker said, “Not just efficiency in operational procedures, but efficiency in user administration, back up and recovery procedures, data extraction and ease of training across all hotel departments.”

Chief Marketing Officer for Hotel Information Systems Seth Christian said, “Information must be readily available throughout the enterprise. Successful hoteliers are demanding an accessible suite of integrated applications that emphasize their operational standards.”

To understand and anticipate the behavior of customers, analytic functionality has become essential. To drive revenue and occupancy while managing multiple distribution channels requires flexible yield and channel management tools. To capture information across multiple customer touchpoints requires new levels of integration between systems that have not been previously linked. Integration is dependent upon the use of open standards, as well as development tools and methodologies that companies like Microsoft, IBM and Sun have agreed upon to power client-server and Web-based systems over the next decade.

Some hotel operators are so fearful about the loss of historical data they cite this as the No. 1 reason for staying on their current system. If this sounds familiar, the question to ask is: How useful is that legacy data to your CRM initiatives? (By the way, it is YOUR data and any software vendor that tells you that you can’t take it with you when you go is just trying to keep you with them.) But before you insist on packing that baggage, determine the value of your legacy data. Should all customer data be retained or just data from customers that have stayed eight or more nights in the last calendar year, paid rack rate, dropped at least $100 per stay on ancillary services and/or live within a three-hour drive? Now, if you can get that level of customer detail from your current system in less than a day then you probably don’t need to pull the plug yet. But when an executive asks how many programmers are needed to run that kind of report, then it is definitely time to buckle up and M-O-V-E forward.

When the Going Gets Rough...
Selection of a new technology partner is never an easy task, but the stability of the company, as well as the commitment to ongoing development, is essential. Instead of obsessing over having 100 percent of the desired functionality today, look for partners with a track record in continued product enhancement.

Wendy Welch, CFO at the Barnsley Inn, said, “If the articulated development track supports the property’s IT vision, then the opportunity to influence that development can be very rewarding.” To manage the 70-unit independent property in Adairsville, Ga., Welch sought a higher level of integration and was willing to trust that the upcoming features for club and spa management would be delivered by Northwind’s Maestro property management system. The Canadian developers did not disappoint.

Manager of Business Development for Intellect Data Systems (IDS) George White said, “Many vendors have found that it is almost impossible to allocate programmers to the development of new applications on new platforms, while continuing to support existing clients. Yet the successful vendor must demonstrate its own ability to keep pace with technology on behalf of its market.” The Bangalore, India-based solution provider has a distinguished resume of developing hospitality enterprise systems for multiple platforms over the past 15 years. “We began with applications for Novell Netware, eventually moved to the AS400 environment and began work on our Windows product in 1997. Fortune NT was released within two years and continues to evolve as we pursue new markets and progressive customers with demands for new functionality,” White said. With a cavalry of software engineers proficient in hospitality business requirements, IDS has assigned development resources for Internet-native applications and is preparing for work on Microsoft’s .Net platform.

Think You Can’t Afford It?
Despite an economy on the mend, hotels and hospitality enterprises continue the struggle to find cash for the most basic capital projects. Spending money to keep legacy applications over the next few years may be a mistake. Making strategic business plans based on (or constrained by) legacy applications can be a very big and very expensive mistake. Right now may be the ideal time to retire legacy applications. Major corporations are certainly discovering the opportunity to leapfrog their competitors by modernizing or migrating legacy systems in the very near future.

The opportunity cost of remaining on legacy systems, especially unsupported ones, is very high. “Hotels and resorts that remain on legacy products are not able to benefit from the collective industry wisdom incorporated into modern systems,” said David Miller, an independent technology consultant and former managing director of hospitality IT at Vail Resorts. Miller continued, “If you cannot sustain parity with your industry peers, then you are less likely to achieve a competitive advantage.”

In conclusion, when aging, disparate systems impair a company’s potential for growth, service delivery, cost control or business process change then it’s time to upgrade, no matter what the current economic climate looks like. You can’t afford not to.

Elizabeth Lauer Ivey is a senior technology strategist with HVS International, a global hospitality consulting firm. The Technology Strategies division of HVS offers a wide range of strategic services to hotel and resort operators, real estate developers, investors and ownership groups. She can be reached at (303) 443-3933, ext. 220 or eivey@hvsit.com.

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