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Buyers, Beware

06/07/2016

by Terry Price, CPA, CHAE, CHTP

Summer is here – one of my favorite times of the year. The weather gets warmer and we have the opportunity to get outdoors. Among the fun things we do in the heat is the gathering of all our friends and colleagues at HITEC. This year’s show promises to be another extravagant display of new technologies and solutions for our industry. With the economy looking up, many will be shopping for some much needed solutions. The advances in technology and the adoption of cloud-based solutions give us some exciting new options to choose from. But beware, we need to proceed with caution.

Consider the property management system (PMS). For the better part of a decade our industry only had a small group of vendors that provided PMS solutions. These vendors were in business for quite some time and their solutions had matured to include a wealth of features. The differentiators were look, feel, platform and segment focus, not so much the features. This has lulled us into a sense of comfort that could be very dangerous today. The comfort of assuming a base level of features in a solution has changed. For example, a good friend of mine was assisting a company to review a new PMS solution. The process had progressed to the point of giving a face-to-face demonstration. During the demonstration, the vendor was asked to show the accounts receivable portion of the solution. The vendor said, “That is coming in the next version.” WHAT!?!? The response quite frankly baffles the mind. How can you claim to have a PMS solution and not have the accounts receivable module? I have to admit, in my former life as CIO of a resort, I am not sure I would ask a PMS vendor the question, “Do you have an accounts receivable module?” Apparently, we should. And it should not be the only question we ask.

The industry is currently in a state of immaturity in software solutions. It is part of a natural cycle in technology and not necessarily a bad thing. In the end, it will be great thing. We just need to be aware of the solutions’ current level of maturity. Travel back with the ghost of technology past and consider a few technology cycles we have lived through. A few decades ago, IBM introduced the personal computer (PC). It made the ability to own and operate a computer affordable for most everyone. Software pioneers, such as those listed in the HFTP Technology Hall of Fame, began to build hotel solutions using the new PCs. At first, the solutions did not have many features. Over time, they matured and became quite feature rich. Then, thanks to Al Gore, the internet was born. This changed the way we communicated with our customer. The internet era brought us online booking and global distribution systems. In the beginning, we only booked basic rooms. Now, you have the ability to manage your entire stay. Steve Jobs then introduced us to the smartphone. This put the power of computing into the palm of your hand. Suddenly talking on your phone became the secondary or third purpose. The smartphone era brought us hotel apps. As with previous technologies, the first versions were not loaded with features. I believe you see the pattern. And now we are entering the era of the cloud.

Cloud-based computing (CBC) is not new. It is, however, fairly new to the hospitality industry. As with the technological cycles mentioned above, our industry is slower to adopt compared to the consumer market. The CBC era is more disruptive compared to previous cycles because it requires the core of the solution to be revamped. The previous cycles of the internet and smartphones were additions to our portfolio of tools, not significantly changing the core solution. CBC requires vendors to redevelop their solutions on a new platform. It is not an upgrade patch; it is basically starting over. A result of starting over is immaturity in the feature set – an issue with the new vendors as well as the well-known vendors creating their “next-gen” solutions.

A consumer may ask, “Why do they release the product before it is completely ready?” I used to ask the same question until I spent the past four years working for a software company. It takes a lot of money to develop a new solution and at some point the vendor needs two things: revenue and feedback. Where do revenues and feedback come from? Correct; us, the customers. Revenues are important, but the feedback is more important. A vendor needs to know if it is going down the right path with the solution. A vendor never wants to program a completed solution, put a bow on it, and no one likes it. The vendor/customer partnership is vital to the maturation of a product. The customer needs to be aware if they are an early adopter of the solution and are well compensated for their efforts. Being a partner with a vendor on a new solution can be rewarding, but it is not for the faint of heart. The entire management and operation teams need to be on board and understand both the benefits and the costs.

How can I protect myself and understand what I am buying? The answer is two words: Extra-due diligence (maybe it is three words). Your vendor feature questionnaire needs to be quite extensive. Do not get too detailed, such as, “Does the guest name turn green when checked in?” Remember, searching for a new solution is not trying to find the same solution you already have. Make sure the questions concerning the basic functionality needs of your operation are asked and answered. Do you post revenues each night? Do you manage group blocks? Do you have an accounts receivable module? When working for a vendor, I responded to several questionnaires. I admit, I hated it. Now I am out helping other companies review the solutions out there and I see how important it is. The questionnaire is like a resume. It is not designed to list every detail about your work history, but to highlight the most important items you need to know. This process can be a lot of work and difficult to add to your already overloaded task list. Several very competent professionals are available and have been down this road before. Reach out and let them give you a hand retrieving and understanding the information you need. Next, make sure you get the vendor to show you some of the functionality they have indicated to include. Sometimes, the answers to the questions may come from a loose interpretation of the question itself. Enough said.

We have talked primarily about PMS solutions, but it is the same for all software solutions. My purpose is not to scare but to inform. This new era is going to be exciting and I encourage you to become part of it. Ask the questions, get the information, and make a decision that meets your company’s needs and operations. Happy hunting.

About The Author

Terry Price, CPA, CHAE, CHTP
Principle Owner
HFT Consulting Group

Terry Price, CPA, CHAE, CHTP is a principle at HFT Consulting Group and is part of the DANNI Enterprise team. He can be reached at Terry@hftcgroup.com.