Strategic Hospitality Technology Investment Chapter 11 Copyright © 2019, 2012, 2005 Pearson Education, Inc. All Rights Reserved Learning Objectives 1. 2. 3. 4. Chapter 11 Understand how purchasing differs when it is for a business Explain ROI and payback List some restaurant examples List some examples of what make up the total cost of a purchase 5. Describe the purchasing process flow 6. Explain how systems are successfully implemented Copyright © 2019, 2012, 2005 Pearson Education, Inc. All Rights Reserved Overview Chapter 11 • Quality and functionality as being somehow related • Equating the most functionality with the best • For business, it is important it is not nearly as important to get lots of functionality as it is to get the right functionality for your business. Copyright © 2019, 2012, 2005 Pearson Education, Inc. All Rights Reserved Reducing Expenses & Increasing Profits Chapter 11 • Most Important—IT investments must generate a positive Return on Investment (ROI). • To make a profit, IT must either reduce costs or increase revenue in some quantifiable way. Decreased Expenses • Payback—when the purchase actually pays for itself • Fixed costs—associated with property depreciation 1.Decrease cost of maintaining systems 2.Recipe Management Software 3.Periodic maintenance on systems can save money 4.Power control systems (lights, etc. on and off in rooms) Copyright © 2019, 2012, 2005 Pearson Education, Inc. All Rights Reserved Reducing Expenses & Increasing Profits Chapter 11 • Fixed costs don’t usually go down • Each hotel, restaurant, and club has a unique cost structure Increased Gross Profits • The assessment must include only increases in gross profits, not gross revenue. • The assessment must be limited to only those gross profits that are directly attributable to the new system. • Gross profits are equal to gross revenue less direct costs. Copyright © 2019, 2012, 2005 Pearson Education, Inc. All Rights Reserved System Examples Chapter 11 Restaurant Menu Management Systems • Develop more effective pricing strategies (e.g., menu mix) • Create a more effective menu mix • Schedule employees more efficiently within a shared app or online • Improve functionality for offering and controlling promotions (buy one, get one or happy hour pricing) • Process credit, debit and gift cards, and mobile payments more efficiently • Improve functionality for cross-marketing other services to existing customers • Increase covers or average checks through the implementation of the new system (and by how much). Copyright © 2019, 2012, 2005 Pearson Education, Inc. All Rights Reserved Cash Flow and Costs Chapter 11 Additional costs that may be associated with operating the new system • Hardware/software maintenance due to automating a manual system or an increase over the old system • Additional labor due to a short-term decrease in productivity after conversions • Costs of converting any exhibiting or historical data • Costs of interfacing the system with other existing applications or mobile devices • Communication costs • Consulting services Copyright © 2019, 2012, 2005 Pearson Education, Inc. All Rights Reserved System Selection Process Chapter 11 1.Verify/develop the conceptual design for the enterprise 2.Define functional and system requirements for the component applications and create organizational consensus 3.Compile a request for proposal (RFP) 4.Develop a vendor short list 5.Solicit proposals 6.Assess proposals against criteria 7.Visit reference sites 8.Have vendors provide demonstrations 9.Final selection Copyright © 2019, 2012, 2005 Pearson Education, Inc. All Rights Reserved System Selection Process Chapter 11 Verify/Develop the Conceptual Design for the Enterprise • The world of information capture, processing, storing, and reporting should be divided along the same lines as functional operations within the enterprise. • One example of how to do this is to divide all business functions into a matrix. • Should follow a forward-looking process. Copyright © 2019, 2012, 2005 Pearson Education, Inc. All Rights Reserved System Selection Process Chapter 11 Define Functional and System Requirements for the Component Applications and Create Organizational Consensus • Don’t let management pick the new system. • It rarely makes good business sense to automate inefficient processes or move it into an app. • Ensure involvement from multiple departments in the business unit. • Clearly define exactly what you need. • It is worthwhile to attend a trade show or seminar to research. • Remember to keep expectations in check. Copyright © 2019, 2012, 2005 Pearson Education, Inc. All Rights Reserved System Selection Process Steps to define and build consensus • Speak to colleagues and read articles • Refer to your own enterprise system design documents • Speak informally with one or more vendors • Combine all of this research into creating a master requirements list • Allow your team members to think outside the box • Prioritize each item of requirement Copyright © 2019, 2012, 2005 Pearson Education, Inc. All Rights Reserved Chapter 11 System Selection Process Chapter 11 Compile a Request for Proposal (RFP) • Never sign a contract that includes customization on a fee basis • Price all of your system and functional requirements in a numbered outline or matrix form. • Always make the vendor include a clearly defined timetable for customization and implementation. • Make each vendor provide a historic and forward-looking build schedule. • Make each vendor supply cost information using the same format. Copyright © 2019, 2012, 2005 Pearson Education, Inc. All Rights Reserved System Selection Process Chapter 11 Develop a Vendor Short List • Refer to one or more well-maintained databases of systems like the one you are selecting. • Use the databases to identify a list of vendor systems most likely to match your organization’s system. • Send a request for information (RFI) to those vendors that you think are the most suited to your needs. • Can the vendor provide a list of reference installations similar in size and operation to yours? • How long has the vendor been in business and can the vendor demonstrate his or her company’s financial stability? • Use RFI responses and interviews with reference installations to narrow your list of vendors to five or fewer. Copyright © 2019, 2012, 2005 Pearson Education, Inc. All Rights Reserved System Selection Process Solicit Proposals • Right detailed proposals. • Have a realistic time frame for responses. • Allocate valuable (good) people to the task. Assess Proposals against Criteria • Objectivity and Subjectivity analysis. • Begin by using the functionality matrix. • Eventually incorporate entire team. • Use simple spreadsheets. Copyright © 2019, 2012, 2005 Pearson Education, Inc. All Rights Reserved Chapter 11 System Selection Process Chapter 11 Visit Reference Sites • Did the vendor install the system in accordance with the schedule? • Has the vendor supplied the system in accordance with a reliable schedule? • Have software and hardware maintenance fee increases been reasonable and predictable? • Does the vendor provide reliable support in terms of help desk availability, on-site hardware service, and other factors. Copyright © 2019, 2012, 2005 Pearson Education, Inc. All Rights Reserved System Selection Process Chapter 11 Have Vendors Provide Demonstrations • Each vendor has a certain number of minutes to walk you through a series of functions that you have scripted out. • Following the compulsory presentation, each vendor gets an additional number of minutes to provide a freestyle explanation. • Do not require the vendor to present if you have already decided the vendor will not get the project. Final Selection • If you have more than three good candidates left—reconvene them and reassess. • You have to be willing to walk away. Copyright © 2019, 2012, 2005 Pearson Education, Inc. All Rights Reserved Implementation 1.Choose a project manager from your existing staff 2.Set a schedule 3.Establish a training system 4.Meet with the vendor and exchange notes on steps 1 through 3 5.Stop and analyze 6.Start implementation in one department 7.Stop and analyze 8.Move on to the next department 9.Stop and analyze again 10.Rollout the system property-wide Copyright © 2019, 2012, 2005 Pearson Education, Inc. All Rights Reserved Chapter 11 Copyright Copyright © 2019, 2012, 2005 Pearson Education, Inc. All Rights Reserved Chapter 11
