Guest post from Mark Lindwall, Vice President of Customer Success at DecisionLink.
So, You’ve Decided That You Need A New Hotel Management System
Some time ago, you decided that your existing Hotel Management System probably needs an upgrade. Maybe reliability or security have been an issue. Perhaps you don’t have some functionality that you need for guest satisfaction or labor efficiency, or your system cost is too high. There are some steps to take to ensure that you get buy-in along your decision process and, crucially, can up your odds of winning approval and funding.
Where you’re at
You’ve talked with your current provider, searched Google and read relevant articles about choosing systems, talked to some colleagues, looked at new functionality available and determined what you believe you need and are considering Software as a Service (SaaS) rather than on-premise software.
If it were entirely up to you, perhaps you would make the decision yourself and sign an agreement for your new system. More than likely, however, you’ve got to get the buy-in of other people in your company’s management team, including budget approval. And while the decision process may be slower, it’s important to get insights and perspectives of others in your decision process because they will each view this decision through very different lenses, depending on their roles.
Plus, when it comes time to convince your bosses that this is a necessary change and investment, won’t it be good to have allies helping you make the case, and on your side during implementation? So, let’s explore how to influence the decision, approval, and funding of your new system.
You Are Competing for Limited Budget
Before you even get started, recognize that you are in competition for budget. There’s only so much money to go around. The VP of Operations may want money for needed parking ramp maintenance or new elevators that move more quickly. The VP of Guest Experience may want funding for mobile room key capabilities. The VP of Marketing may be asking for investment to make website improvements for better imagery or personalized marketing campaigns. Every funding request may be passionately requested, but only so many will win the competition for funding.
Ultimately, your GM (or owner or CEO) and CFO (or head of Finance) will decide whether to fund your proposed new Hotel Management System or some entirely unrelated request, based on what they believe will give the business the best financial return on that investment. They’ll care far less (if at all) about software features and functions than they will about things like the Return on Investment (ROI), Total Cost of Ownership (TCO), Internal Rate of Return (IRR), the Payback period, or the Net Present Value (NPV) of the investment.
Therefore, to win the competition for budget, you should be thinking about, and quantifying, the business impact that the new system will deliver to the business from the outset. Ideally, you’ll prepare all throughout the decision process to present your best business case for funding to your financial decision makers in the terms that matter to them. And look for the solution providers who are similarly focused on producing measurable business results (rather than just touting features and functions), because they’ll be committed to delivering on those results and will support you in value quantification throughout your decision process. That said, here’s some advice and steps for making a well-informed decision, and winning approval and budget for your new Hotel Management System initiative.
Step One: Have Clear Business Objectives for Your Initiative
You are going to need to do much selling to convince others that change is needed, and that time, energy and, ultimately, budget, should be invested in a new Hotel Management System. So, have three or less concise objectives that you can consistently state to other leaders as to why this change is imperative for the organization (not just your department) and why you need their help. Start with a problem statement such as “We’re not hitting revenue targets because our system is breaking and is creating inefficiencies.” Then make your case. As an example, make the case that “A new Hotel Management System is critical to hitting our revenue and expense goals because it will:
- Optimize revenue by increasing bookings through mobile functionality and improved analytics
- Increase cross-selling to sister locations, and
- Improve employee efficiency and productivity
Your points may differ, but you get the point. Be clear, concise, and consistent in your messaging.
Step Two: Determine Your Decision Process
How decisions are made varies greatly from one organization to the next. In fact, it’s not uncommon for an executive to start an evaluation process without considering what the steps will be and who will participate. But this decision will require resources, information, and buy-in from others. Therefore, it is only reasonable to think through your process for how this decision will be made, even if you must adapt your plan somewhat as you go along. At least understand the major milestones or gates you will pass as you go, and the reasonable timeline in which each milestone will occur and by when you wish to make the decision and implement.
Recommended milestones for a software decision process are:
Note that building an Initial Business Value Assessment is near the beginning of the process. The idea is to create a financial hypothesis that will determine whether the value of a new Hotel Management System is worth going through the decision process. In other words, what financial results do we believe a new system will deliver? This won’t be highly accurate until you get further into the decision process. But you should have an idea of whether this even makes sense to pursue, and you should have defensible justification for dedicating resources to pursuing this decision. The best providers can help you with this. Amadeus, for example, can help quickly produce an initial Business Value Assessment for hotels who are considering new software. This helps in identifying key business benefits that should be considered in the evaluation and quantifies them.
Step Three: Identify Where the Budget Will Come From
You may already own the budget that you need for your new Hotel Management System. If so, that’s great. Frequently, though, budget for your current system may be spread across different departments, especially if you have an on-premise system currently. For example, budget may be allocated to Sales, Operations, Housekeeping, etc. It can also be entangled in software, infrastructure, and people. For example, servers, system software, security software, IT personnel support costs, network infrastructure, etc. Therefore, reclaiming or reallocating that budget for a SaaS solution may take some work. At this step, it’s not about asking for budget, but just understanding where the money may come from.
Step Four: Identify a Decision Team
Not everyone needs to be involved in this decision. But the right people do. The larger the expenditure and the higher the perceived risk, the more executives are typically involved in decisions. So, managing the right number and the right roles (think organizational function and altitude) of decision participants is important to get the input and support you need, while managing a reasonable decision pace. In addition, getting buy-in along the way is crucial when it comes to implementation and adoption of the new system by those who will use it. Typical participants in this decision include:
The “Executive Committee” who will make the final “Yes” or “No” decision, review contracts, and approve budget.
- The Management Company executive who oversees a collection of properties
- A General Manager (GM)
- The Owner
- The Head of Finance or CFO
- Legal Counsel
Executive Sponsors who you’ll want support from often include:
- VP of Information Technology or CIO
- Sales & Catering: VP or Director of Sales
- Service Optimization: Chief Engineer or Head of Housekeeping
- PMS/CRS: Revenue Strategists
Operational personnel who are wise to involve are one or more representatives from departments who will be using the system.
- Sales & Catering team members
- Housekeeping team members
- Front desk team members
- Reservations team members
Step Five: Enroll Your Decision Team
You may not need to enroll all the participants above. The key is to involve as few of the right people as is possible to get the necessary input and buy-in at each level. Especially at the operational level, be sure to involve people who are respected by their peers, and who are open-minded, because all of those who didn’t have a say in the decision will need to trust that their peers who were involved were looking out for their best interests.
When you have clear objectives for the decision, have an initial Business Value Assessment document that justifies this effort, and have mapped out your decision process, it’s time to enroll the decision team you’ve identified and guide the decision process through to its conclusion.
Revisit Step Two before you begin and determine who needs to be involved in each decision phase and what role each participant will play. Adapt as necessary. When you recruit them to participate, people will want to know what how much time they’re signing up for, how they can add value, and what you’ll expect of them. Think through your list of desired participants and consider and have an answer for the “What’s in it for me?” question that each person naturally asks themselves. Be prepared to help them understand why their participation is important, needed, and beneficial to the company, and to them.
Step Six: Lead Your Decision Process
Guide your decision team to identify and document the requirements and any needed specifications. Be specific about the level of detail you need. Provide a clear deadline so the process doesn’t get mired. This is where having the perspectives of different functional groups will pay off. For example, here is a small sample of things that stakeholders in these different groups may want to take into consideration:
- Enable cross-sell opportunities they cannot currently accommodate to sister locations
- Improve communication for event execution to win more repeat business
- Reduce revenue risk associated with delay in response time or lost bookings due to downtime
- Increase number of bookings thru analytics, mobile functionality, and centralization
Information Technology (IT):
- Reduce or displace licensing, support, networking infrastructure, and hosting costs
Legal and General Management
- Reduce risk and cost of data breaches and loss, and subsequent reputation damage
Ensure that the right people are involved in the right phases of the process based upon the level of the tasks, the expertise required, and the level of leadership needed. Lead but don’t micromanage. Gain the buy-in of the key stakeholders you’ve enrolled through their participation.
Your role is to be sure that the requirements are well defined, that the decision process is followed, that the participants have active participation and input, and that the solution decision is objective and meets the needs of the business at both an operational (functionality) and financial perspective. Ask the providers you’re considering – and have ultimately selected – to help create a financial business case that’s transparent (your assumptions and formulas are clear and understandable) that you are confident that you can present and defend to your executive committee. Ultimately, they will expect that you’ve checked the boxes on the necessary system capabilities.
The key for you to gain approval for your new Hotel Management System over other competing funding requests is to present a compelling request for approval and funding in the language that matters to the “economic buyers” who make decisions based upon expected business outcomes and projected financial value. This should include the expected incremental return, the costs, the payback period and the estimated return on investment, shown in the table below.
Further, the business case should transparently state all the assumptions that the value proposition is based upon. For example:
Your business case should also present the calculation formulas in an easy to understand way. Here is an excerpt of a benefit calculation from an actual business case of an Amadeus customer:
Amadeus helps its customers to create comprehensive, detailed, situation-specific business cases with very little time and effort required. Customers can easily explain and defend the value of the benefits of a new system with Boardroom-ready documents which help them win with their executive decision makers.
After all your hard work in leading the decision process for selecting a new Hotel Management System, it’s important to ensure that you build a business case that makes the effort worthwhile and makes this decision easy for your senior management team.
Last, after you implement your new Hotel Management System, be sure to measure the results of your system against the baseline of the calculated benefits that you presented. Presenting this to your executive team on a Quarterly basis will do wonders for ensuring confidence in the decision that was made, and will make it easier for you to win approvals next time around.
If you’re ready to purchase hospitality software for your property, Amadeus can help build you a business value assessment, customized to your unique challenges. We’re here to help.
Guest post from DecisionLink
About the Author
Mark Lindwall is Vice President of Customer Success at DecisionLink. With more than 30 years of deep experience in B2B sales, sales management and leadership, leadership development, customer success, and researching B2B Sales Enablement at Forrester Research, Mark helps sales teams to engage executive decision makers in value-focused conversations that win more business. Mark can be reached at firstname.lastname@example.org.
DecisionLink is the provider of ValueCloud™, an enterprise-class business application that helps customers to grow revenue by massively improving their sales teams’ ability to put measurable customer value into every conversation with decision makers (from conversation #1 to post-implementation proof for renewal and growth). DecisionLink makes it easy for B2B salespeople to have valuable and credible business conversations with executive decision makers, and quickly develop compelling financial business cases that help customers buy their solutions. For more information visit www.decisionlink.com.