Benefits of an Integrated Business Software Systems in a hotel environment
December 7, 2015
Every high-growth hotel grapples with decisions around the best business system to manage
its expanding operations. Proper planning of an integrated business management software
system often takes a back seat to short-term revenue acceleration goals.
As a consequence, various disparate applications are installed at different points in time in
various functional areas, resulting in business process inefficiencies and software integration
challenges. But how did these problems arise in the first place, and how can they be avoided
in a hotel environment?
Architecture of a Typical Siloed Business System
A rapidly growing hotel operations can quickly become entangled with a complex application landscape. When starting out, hotels first install PMS (Property Management System) and accounting software so that they can manage their reservations/guests handling process and bookkeeping.
In the quest to organize more guests handling, hotels then put in standalone sales management systems, along with separate agreements with IDSs (Internet Distribution Systems) and CRSs (Central Reservation Systems) such as Booking.com and Expedia. Inventory management, HR, Call accounting and other fulfillment systems get addressed with disparate software and spreadsheets.
To further increase top-line revenue, many hotels will embrace additional sales channels resulting in more sophisticated processes for ecommerce integration, recurring billing, and financial consolidation, amongst others. Additional business software to support these processes can take the form of standalone applications from different vendors, homegrown applications, or a variety of spreadsheet workarounds.
Hotels that evolve their systems over time in this manner can find themselves with a poorly planned architecture that handles short-term tactical needs sub-optimally while holding the hotel back from scaling efficiently over the long term. This tangled web of siloed business software systems, often referred to as a “software hairball”, inhibits flexibility, productivity, dissatisfied guests, and ultimately slows down the hotel's ability to grow.
Hotel Challenges Caused by Having a Siloed Software System
When high-growth city or resort hotels have several siloed applications, there are many business challenges that arise. These challenges can become so severe, that they can cripple growth. Here is a summary of the main issues that can hinder your growth if you run a hotel with disparate business software systems:
Wasted Employee Productivity: When your hotel is in growth mode, every employee must be operating at optimal productivity. If your employees are bogged down with inefficient and disjointed processes, it increases errors and takes time away from their more important core duties. Important processes such as front office guests handling, outlets services, other facilities in the hotel, order processing, invoicing, expense approvals, and fulfillment, to name a few, can take a lot longer to get completed, and are often erroneous. For instance, your employees may be spending hours manually re-entering order information into the accounting and invoicing system, while other employees pull that same information from your Inventory & Materials Management system for their order fulfillment processes. If any orders are canceled in the meantime, your employees have to sift through mounds of data to reconcile this information again. Such labor-intensive and manual tasks reduce the agility that your hotel needs to grow, and this is from one angle only, while the same goes to the other systems in the property!
Lack of Real-time Visibility: When software systems are un-integrated, you have multiple overlapping databases, and cannot easily get a view of business performance in a timely fashion. Reports showing performance across your finance, sales, marketing, service, and fulfillment departments are crucial to giving you an integrated view of your hotel's operations. Most companies simply give up on acquiring this information on a regular basis because of the amount of time it takes to source, extract and analyze this data. For those that do, countless hours are wasted trying to tie unrelated, error-prone, and out of date information together. Consequently, hotels either end up making critical decisions slowly, based on inaccurate information, or they make hasty and risky decisions off of gut instinct.
Integration Complexity and Cost: With so many disparate applications, IT wastes an enormous amount of time and money on integrating, maintaining, and acquiring new versions of these applications. Often times, once new versions are purchased, even more integration and maintenance needs to be performed for all the different versions of software to work together. Consequently, valuable IT time that could be used to make the hotel’s business more productive is wasted, while maintenance costs skyrocket.
Increased Customer Churn: Customer acquisition and revenue growth are key pillars to your hotel's continued success. With fierce competition, it is essential that your hotel provide an exceptional customer experience or risk having customers take their business elsewhere. When customers are unable to quickly get served or receive any of their reservation information properly, can't get issues resolved in a timely manner, or have to frequently deal with delay in services, they will be less satisfied and less likely to continue staying at your hotel. An integrated software system ensures that customers have the right information and customer experience and that your employees have the instantaneous access to all the customer information as well as hotel’s resources they need to service and sell to your guests.
Advantages of Integrated Software Applications
To keep your hotel business growing at the dramatic rates you plan for, it is essential to have your hotel software applications integrated around a single codebase, database and business process. The advantages of designing your systems in this manner yield tremendous cost savings and improved business productivity, including:
Process Efficiency Across Your Organization: There are several key processes that you may encounter in your daily operations, such as reservation management, fulfillment (Complete guests services), invoicing, cash collection, expense approvals, and financial consolidation, to name a few. Automating such processes enables you to avoid new hires that would otherwise be required to manage these processes, and redeploy staff to higher-value activities to help your business innovate and grow. In an ROI study by independent analyst firm Nucleus Research, Nucleus found that, by using an integrated applications from a single vendor, hotels accelerated their financial close times by up to 50%, increase sales productivity by 12.5%, and increase inventory turns by 50%, amongst other efficiencies. In the same study, with a certain customer, Advantage Sign Supply, cut its order processing time by 66%.
Dramatically Improved Visibility: Real-time visibility is important in making timely informed decisions. When information can be accessed instantly from almost anywhere, without wasting resources on data extraction and tying data from different sources together, employees are better informed and can make more accurate, faster decisions. For example, by having all their business data available in real-time, hotels were able to monitor their suppliers' workloads in real-time and doubled their business in four years while saving $120,000 annually.
Significant IT Time and Cost Savings: With IT no longer having to procure, install, and maintain multiple systems from different vendors as well as the various integrations between them, a significant reduction in operational costs can be realized while IT time can be spent improving the business operations.
Accelerated growth: With an integrated software systems and built-in modules/tools Protel PMS has, expansion with additional sales channels can be accomplished a lot faster because of unified reservations process through interfaces with these main channels and accounting management processes and data with Sunsystems and other applications integrated with Protel and offered by INTERACT. Hotels can also upsell and cross-sell more efficiently to their existing customer base because of the improved visibility they obtain.
User-Driven Innovation: Because process changes can be implemented quickly, everyday business users are able to apply their functional expertise to tailor processes and applications in a way that improves performance. Meanwhile, IT is liberated to focus on strategic initiatives that can add value to the bottom line by building innovative value-added solutions.
Today, hotels are using sophisticated business software to fuel their growth but many are still struggling to keep up with their growth and manage costs effectively because of a hodge-podge of disconnected functional systems causing process bottlenecks and employee productivity issues.
Integrated hotel software products and from a single vendor are transforming how hotels run, and enabling them to transcend growing pains that previously were holding them back from taking their business to the next level of profitable growth. That’s why the Team INTERACT has looked carefully while building up a complete package of integrated hotel systems for every corner of hotels operations, just to ensure that we help hoteliers focus on their business and let us take care of the IT part helping them grow their profit and giving them right tools to run hotel operations efficiently with minimum resources.