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Data Management Versus Business Intelligence

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March 13, 2007
Hotel | Technology
Sandra Andrews - sandraa@microsoft.com

© 2007 Hospitality Upgrade. No reproduction without written permission.


We’ve all seen the industry excitement around business intelligence and the power of one view of the customer. But I wonder how much we’ve put the cart before the horse. Business intelligence is all about getting insight out of data, but what happens when that data is inconsistent across the enterprise?

A myriad of business intelligence tools exist on the market today, and the truth is most hospitality organizations have a mixture of these within their enterprise. For example, marketing is probably running ePhiphany; finance has Hyperion; and other departments are utilizing Cognos or Business Objects. As a matter of fact, most companies I talk to are running between six and 10 different business intelligence applications.  No wonder it’s a common occurrence to be in a meeting and have two very different takes on the very same information.

Are all these front-end analysis tools just hiding the real problem? In hospitality, we’re certainly not lacking data. Quite the contrary: we’re struggling with too much of it. Whether it’s coming from the PMS, onsite POS, Web applications or one of many proprietary line-of-business applications, we’re flooded with information. The problem is consistency across databases and establishing one point of truth for any particular data set. No matter the size, hospitality organizations are drowning in the complexity of BI and this ultimately increases the cost of business.

The root of this problem is simple. Application developers continue to develop applications based on their own databases because of a perceived need to trust the data at the point of development. In fact, it’s quite common to develop an application first and then think about the data model. Yet, as systems grow and new applications launch, the amount of duplicated data grows exponentially. And for those advanced organizations that have a data architect and instill an enterprise data model, there is still a major problem of rewriting applications to connect to the system of record for verifying information such as site ID or location or many other duplicated records.

But what about the data warehouse? Wasn’t that the solution for data management? One would expect so, but as hospitality organizations grew and, in many cases, acquired other companies, the data warehouse itself exacerbated the problem, rather than solving it. I see this myself – and you probably do too –  in the many identities I bear when traveling . Even among sister or partner hotels, I’m listed as Sandra Andrews, Sandy Andrews, S.M. Andrews and many other permutations. It’s easy to experience the complexity of the hundreds of systems each hospitality organization runs, whether franchised or managed, across chains and partner networks. It’s no wonder BI vendors are so hot on the hospitality market.

Of course, BI has been around for more than 10 years, and IDC reports it to be a more than $13 billion market, forecasted to grow more than 8 percent annually for the next three to five years. Hospitality executive surveys have shown the tremendous return of BI and that it remains a top spending priority for many companies. At Microsoft, we worked with IHL Consulting to analyze the top IT spending trends in the industry. Across North America, Europe and Asia, hospitality firms spend $420 million on line-of-business business intelligence, breaking down into several specific areas:

$159.12 million–data warehouse implementation suites

$63.57 million–customer relationship management

$57.01 million–data warehouse design and administration tools

$43.44 million–analytical applications

$25.64 million–data mining tools

$20.57 million–inventory optimization

$18.88 million–executive scorecard

$14.31 million–database administration and management

$18.44 million–other

Given the high IT spend in business intelligence, the next thing to determine is the total cost of data. Whether this is defined as the costs of acquiring and operating data storage or the amount spent for tracking, managing and storing one parameter in one database. The explosive growth of data in the industry escalates this cost dramatically.

As for business intelligence, I think we need to divide it into traditional BI and next-generation BI.  Traditional BI offers simple analysis and reports on what hopefully is a single version of the truth. And, unfortunately, most BI vendors get to that single version by implementing their own applications, with their own databases, pulling from what they believe to be the systems of record. Next generation business intelligence, however, involves gaining business insight from data and turning that insight into action. It means optimizing and predicting the business, giving users desktop and mobile dashboards with real-time information alerts to help enhance the guest experience, make better decisions and ultimately impact business performance. It’s powerful stuff.

So, in order to get the true benefits of business intelligence, the hospitality industry needs to focus on data management first. For example, Harrah’s has been upheld as a leader in business intelligence, but ultimately I believe the company is superior at identity and data management. Understanding that the horse comes before the cart, in this case, has led to Harrah’s success.

How does the industry accomplish this data management task, especially with the increasing complexity and sheer volume of data? The good news is there are experts out there. The role of the data architect is less than five years old, and it’s becoming a crucial role in the success of hospitality enterprises. The other good news is that the market is evolving and the next generation of BI targets every user in your organization, empowering line-of-business executives to make real-time decisions based on accurate data and enabling staff to have the right insight to personalize and enhance a guest’s experience.  With this in mind–and as long as the right steps are taken to manage data before BI is employed–I believe hospitality organizations are poised to succeed.

Sandra Andrews is the hospitality industry solutions director for Microsoft. To learn more about Microsoft’s hospitality initiatives and business intelligence platform visit http://www.microsoft.com/hospitality or contact Sandra directly at sandraa@microsoft.com.

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