Ms. Murphy

Technology

Optimizing the Use of New Technology

By Hilary Murphy, Professor & Researcher, Ecole hoteliere de Lausanne

The challenge of optimizing IT investment is relentless for the hospitality sector. This article reviews some of the salient issues that impact on optimizing new technologies by revisiting the determinants of technology adoption and then by sharing some of my research into Strategic Technology Relationships in the Hotel Sector, conducted earlier this year with the hospitality technology managers (CIOs and IT Directors) in the major European hotels. Finally, some suggestions are proposed for the future optimization of technology in the hospitality sector.

What are the key determinants for successful IT implementation?

Markets and people drive change. Though market power is generally thought to be a positive influence on technology purchase, there are further external drivers which should be considered.

The first of which is location and competition, i.e. at one end of the spectrum some hotels in highly competitive environments adopt IT technologies in order to enhance competitiveness or simply to keep up and, at the other end, a hotel company in a less competitive environment would not be faced with as great a push to adopt. Indeed, the best gross indicator of competitiveness may be simply the amount of resources committed to information infrastructure!

Next, the hotel sector is more information intensive and therefore is subject to greater pressures when purchasing technology. Additionally, the technology infrastructure in the location/ destination may also prove to be critical. Though penetration of broadband may be consistent in the USA, there remains a worldwide digital divide. This divide is exemplified in Europe between the north and south and will widen further with the new additions to the European Economic Community being poorly connected, with subsequent impact on technology adoption.

Size matters. Large hotels are more likely to adopt IT as they have more transactions and more data to manage and are more likely to have the financial foresight to plan and invest in technology and, consequently, shorter buying cycles which enhance their attractiveness to technology developers and vendors. Their scope of activities are also more likely to determine technology adoption so that hotels that offer a large number of activities, e.g. spa, health & beauty, nightclub, events, F&B etc may be more predisposed to adopt. The larger the business the more it is able to hire or contract people with specialized skills and this, in turn, affects technology decision making.

The classification of the hotel also plays a major influence with the more demanding customer tending to frequent a "higher" classification of hotels and, along with an expectation that the service and product is superior, is the expectation that the technology provision will also be "superior". The age of the premises is critical with "new builds" more likely to adopt some kind of integrated technology pipeline solution as they can be rolled out as the build progresses whereas older properties face bigger interruption to their activities and consequently may take longer to implement any kind of physically disruptive technology solution.

Internally, optimizing new technology is essential to success, applying it an inappropriate culture and to a "chimney, vertical or silo" structure is usually a disaster. Culture creates barriers to technology adoption and three levels of culture must be recognized -national, work group, and particularly, corporate culture. Corporate culture, whether it is in an individual property or chain hotel will again prove to be a driving force for technology. If a company view themselves as technology leaders (or technology laggards!) then this will also have a dramatic effect on adoption. Many companies follow a 'technology leader' approach because this strategy promotes what the company knows best , however this may further lead to solutions that require the retention of the company's large and expensive population of highly skilled technology professionals.

Chief Executive Officer (CEO) characteristics may be more directly influential in smaller businesses but also play an important role in culture and technology decisions. The CEO is viewed as an entrepreneurial figure who is crucial in determining the innovative attitude in an organization. The individual motivation of the CIO or IT director and his strategic position within the organizational structure can be a further determinant. Powerful champions of products tend to be more influential in getting new products and services adopted and successfully implemented within organizations. However some may attempt to shield themselves from the risk of technology failure through the formation of "new organizational designs" and adopt evasion strategies which enable them to cope with uncertainty in the technology environment! Furthermore, the strength of personal networks extends not only across the individual organization but also externally with key stakeholders. Alliances with other companies are of increasing importance because of the need to acquire additional competencies over a range of technologies.

Thus, it is important to not only appreciate the environmental determinants that influence technology decision making and implementation but also to view this in the light of how technology is seen as a value driver by hospitality technology managers and the next section examines the value divers that emerge from recent research.

Survey on Technology Performance & Value Drivers

This survey covered a number of topics regarding strategic partnering, current technology performance and opinions on value divers. Statements were presented on the following statements on Technology Performance/ Value driver- (responses were chosen from a ranking of 1-5, 1- completely disagree and 5 completely agree).

Though these figures are self explanatory it is clear that the main value drivers continue to in areas of the front and back office operations. Though much current discussion highlights technology convergence, single data view, new distribution channel, flexible networks, the guest room of the future, invisible technology, ambient intelligence etc, it is clear these hospitality technology managers are still clearly focusing on the front and back office when it comes to technology applications and the value derived from technology.

This is also further emphasized in the in the survey where hospitality technology managers were asked to predict which technologies would be crucial for the future and, overwhelmingly, it is still the PMS , CRS and POS systems that they predict will be key hotel technologies for the future and for technology investment.

Given these observations from this expert group, how can progress be made within the hospitality stakeholder community to optimize technology?

How to optimize?

Relationships with key stakeholders are critical as few hotels are able to roll out complete technology solutions from internal resources only. However, it is also clear that they still feel that IT vendors do not speak the same language or cooperate with one another to supply the solutions that hotels need or want. Until these key issues of communication are addressed, it is unlikely that the technology will be fully optimized in hotels. Solutions for hospitality problems must be developed in cooperation with the hotels, however, the onus is not entirely on hotel technology partners and vendors to shift their thinking. Recent research reveals that many IT managers are slow to adopt, unable to align hotel processes and business practices and find it difficult to update themselves on technology developments. Vendors could play a role in educating (rather than selling) and take a long term outlook with hotels, in particular, facilitating projections on total cost of ownership, or payback period that the hospitality technology manager may utilize to make a business case for purchase.

Hospitality organizations have unique cultures - even within corporate brands and chains. Culture can be positively influenced by exposing internal groups to external pressures, ensuring employee participation in reengineering, recognizing that training alone does not achieve cultural change, redefining group boundaries, managing anti- champions, building trust and leveraging the strengths of the culture within the organization.

Moreover, the most successful technology adoption in the wider sector, beyond that of hospitality, are initiated from the bottom up, not from the corporate office and both the enterprise and its leadership learn from these experiences the value of encouraging and rewarding wide-spread individual entrepreneurship.

Hotel organizations have diverse management structures and purchasing responsibilities and many influential stakeholders have come through several technology buying cycles over the last few decades (not all with resounding successes!). Customers are exerting more power in the marketplace than ever before and hotels are at the sharp end of the customer experience and need to engage with clients that have diverse, complex technology needs all the way through the customer "touchpoint" cycle, not just at point of sale or booking.

Though issues such as convergence, guest room technology etc are current hot topics, it is still not clear what the guest will bring with him in terms of personal entertainment and connectivity and what the hotel is expected to provide. This is further complicated by the increasing number of connectivity and information services within the destination itself e.g city-wide Wi-Fi and destination management systems offering a variety of travel related products and services. The typical hotel general managers has emerged from traditional training that is rooted in operational decision-making and may strain to visualize how technology might provide strategic differentiation in the market place beyond operational functions!

Finally, only by engaging in a common language, appropriate strategic partnership, shared cultural values, an appreciation of the business contribution by all stakeholders and a longer value cycle can we anticipate the optimization of technology in the hotel sector.

Hilary Catherine Murphy PhD, MPhil, MCIM, PGdip BIT, BA is a professor and researcher at Ecole hoteliere de Lausanne, Switzerland (University of Applied Sciences- University of Western Switzerland) and, additionally, an Honorary Research fellow in the Marketing Faculty at Strathclyde University, Glasgow. She has a PhD in the diffusion of information and communications technology in the hotel sector from the University of Wales, UK; an M. Phil, also from the University of Wales; a post-graduate diploma in business information technology, a Bachelor degree in business administration, marketing and law from the University of Strathclyde and a diploma in data processing from Louisiana State University in the USA. Ms. Murphy can be contacted at 41-21-785-1496 or hilary.murphy@ehl.ch Extended Bio...

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