sweating the small stuff – part one (automated inventory depletion)

For whatever reason when revenue is up venues have the tendency to not sweat the small stuff.  I guess it’s because the small stuff doesn’t amount to much when focusing on the big investments.  But when revenue is down it’s time to look closely at where your staff is spending their valuable time.

The next few posts will be dedicated to the “small stuff”.  Each has a minimal time and dollar investment with a quick ROI.

automated product/item depletion

Manually entering inventory depletion should only be necessary if you don’t have a PC based POS solution (and even then it may not be required).  If you do have a PC based POS solution (and who doesn’t at this point) then now is the time to link the two system.

A basic overview of this interface is the POS system exports a text file (formats can vary) of product/item depletion.  This file is then used by the inventory management system to decrement inventory amounts.  A key prerequisite is a “Common Numeric Identifier” for each product/item that is shared; this is generally the SKU number.  Chances are good the vendors you use already have a functional interface, and it’s highly possible getting it turned on won’t cost you anything (except maybe vendor support fees).  If your vendors do not have an established interface you have a few options

option one
The first option is to work with one of your vendors to write a utility that meets the specifications of the other vendor.  For example, your POS vendor writes an export utility that produces a file matching the import specifications of your inventory control vendor.  Or, the inventory control vendor writes an import utility that uses the file format provided by the POS system.  Most vendors have vast experience with this option, as it is the most common and generally preferred solution  But, the price of this method can vary drastically among vendors.

Pros:  vendor supported interface, highly scalable for large volumes of data
Cons:  vendor may charge high price for development, any future changes to the interface require vendor time line

option two
The second option is to use a middle-ware utility to convert the standard POS export format to the standard import format for the Inventory Control system.  There is a multitude of middle-ware applications available allowing someone with development experience to accomplish this.  They range from free-ware applications to highly scalable solutions like Microsoft Biztalk.  Be careful however as the price of this option can unexpectedly creep as interface iterations spiral out of control.  The advantage is the opportunity to use the middle-ware application for other integration projects.  The important point here is data mapping.  Incorrect data mapping will lead to incorrect inventory depletion.

Pros:  scalable for large volumes of data, use middle-ware software for additional interface engines
Cons:  requires development experience, possible high cost of software and development

option three
The third option is to build a conversion utility with scripts, macros, and/or batch files. This process generally involves utilizing MS Excel and Visual Basic for Applications (VBA).  I would only recommend this option when working with small volumes of data (no more than few hundred lines of data per executed export file) and when manual validation of the process regularly can be performed.  Most IT resources (especially if they are a recent graduate with an computer related degree) have the experience necessary to build these utilities.  The important piece here again is data mapping.  Incorrect data mapping will lead to problematic inventory depletion errors and generally non-descriptive and unhelpful error messages produced by Microsoft.

Pros: internally owned, can quickly be implemented, low cost investment
Cons:  internally owned (yes it can be both), not scalable for large volume of data, high chance of failure

reviewing your ROI
To calculate your ROI estimate how much time is spent reviewing sales and product mix reports and how much time is spent entering depletion into the inventory system.  For convenience use monthly estimates.   Next, calculate the Estimated Monthly Task Cost of this process using the hourly rate of employee(s) performing the task.

Estimated Monthly Task Cost = (time reviewing reports  X  hourly rate) + (data entry time  X  hourly rate)

Based on which of the three options you choose to implement calculate the Total Project Cost.  If your vendor charges a recurring support fee for the interface in Option One, don’t forget to include that in the Total Project Cost.  Also, if you choose Option Two and pay for a recurring support fee for a middle-ware application don’t forget to include that in the Total Project Cost. (If you plan on using it for additional projects you may want to only include a fraction of the support fees.)

ROI = Estimated Monthly Task Cost / Total Project Cost

This is how long in months it will take you to recoup the Total Project Cost, allowing your employee(s) to focus on other revenue generating activities. You may even find your ROI is less than one month!

If you don’t have the experience or time to implement this interface give me a ring, I’d be happy to help!   But don’t forget to include the cost of the consultant in your Total Project Cost.

If you are wondering about an integration capability post a comment and I’ll cover the details in a future post.  Even if you think it is probably not possible, it may be.  I’ve seen a parking garage gate interfaced to the POS cash drawer…so almost anything is possible.

For more information about kevin sturm Consulting please visit my website or email me .

information entertainment gets healthy with an Apple a day

I did an interview with Josiah Mackenzie on his Hotel Marketing Strategies Blog. In the interview Josiah asked me a question about how information entertainment is changing the guest experience, with specific reference to Microsoft Surfaces. I think Surfaces is cool, but I’m not convinced it’s functional at the current price point (check out the full interview here). His question prompted me to do a little more research on some rumors about Apple’s move into hospitality.

I liked these rumors for two reasons. First, Apple already has guest experience nailed. If you doubt me spend some time in an Apple Store. From architecture, to music, to hands-on-play, to service Apple knows how to manage the guest experience. Second, I’m a tech junkie and an Apple lover (both the mac and honey crisp kind).

What I found really excited me…. I may book a trip just to experience what I saw. Apple has partnered with Nanonation to provide some seriously awesome digital media content to guests. Most of their website revolves around digital signage, but via Apple’s website you can register to watch a demo on how they are changing the face of in-room entertainment. And this isn’t future in-room entertainment, it shows what is available now!

To get all the nitty-gritty details you really need to watch the presentation. You can do so by going here and then click “Watch the presentation”. That will take you through a series of steps to register your info with Apple (you will need to setup an account). There is a also a single page pdf you can download here.

if you don’t have time to watch the video here is my synopsis of the benefits.

1. A really awesome graphical user interface that is very easy to use, allowing your guests to buy services, research local attractions, and all the while allow you to store their search information making their future searches more guest-centric.

2. Through use of the Mac mini (a 6 x 6 x 2 computer) you can use the LCD HD TV that most likely is already in the room. And you get the awesome Apple Care warranty option. This also means the hardware and software platform for your In-Room Entertainment is the same as for your Digital Signage in the main areas.

3. The potential benefits of how this technology will migrate to the iPhone and iTouch is SWEET! See your entire schedule and be able to book reservations for any hotel amenities on your iPhone through an app that integrates with your room details.

4. Very intuitive and highly functional interactive channel guide for TV viewing.

5. A movie guide that is more advanced than the current solutions you generally see in hotel rooms, offering more flexibility and a richer user experience typical to that of a Mac.
   

If you’re interested in implementing a new and different in-room entertainment or digital signage solution give me a call. Together we can find out of this solution is right for you.

For more information about kevin sturm Consulting please visit my website or email me.

mail call…what’s the scoop on SaaS solutions?

I received an interesting email a while back from Carson Mehl at Lumiere Hotels.

“I am curious to know if you have heard of any robust hotel software being developed that is web-based. Our company has started using a number of web-based software solutions such as Google Docs and Basecamp by 37signals and they have been a huge asset as far as ease-of-use, collaborative ability, and no-need for extensive/expensive hardware. The great thing about web-based software is that it all operates inside the browser so it can be easily accessible from a number of devices.”

Regrettably I was not able to point to any truly web-based solutions that I felt would meet the needs of a boutique hotel group. There are a few out there but none that I have extensive experience with or have been impressed with.

What Carson was really asking is why hasn’t a hospitality technology vendor come up with some true SaaS applications that fulfills the requirements for a boutique hotel or resort location? For those that are not familiar with SaaS it means Software as a Service. Wikipedia defines it as “…a software application delivery model where a software vendor develops a web-native software application and hosts and operates (either independently or through a third-party) the application for use by its customers over the Internet. Customers do not pay for owning the software itself but rather for using it. They use it through an API accessible over the Web and often written using Web Services or REST.”

In our email conversation Carson was good enough to expand to what hoteliers are looking for…

“…The newest evolution of internet browsers and runtimes like Adobe AIR are really opening up the possibilities for rich internet applications. Applications like Google docs, basecamp, ZOHO, buzzword (my fav), even Facebook that are stored in the cloud and accessible from anywhere, offer such an advantage. The ease of collaboration they provide is alone and tremendous improvement on traditional software not to mention the accessibility factor, ease-of-use, elegant design, and simple hardware requirements. I do not have super-deep ranging experience with hotel software, but what I have used is far short of what is possible today.

From an hotelier’s point of view, I see a demand for a well designed software platform that is easy to use and is far reaching ie: pos, pms, booking, web-booking, reporting, etc. What is currently available in this regard is very expensive and complicated from both a hardware and software standpoint. The existing platforms work well for companies with deep pockets, IT experts and central reservation departments…

I guess the dream software would provide seamless connection between web reservations, pms, and the gds. It would allow an administrator to provide different levels of access to employees. It would automatically create and update guest profiles. It would show activity feeds for a property (similar to a facebook newsfeed, but showing reservations made on the web, pms, or gds, and more). It would be dead simple to use. It would look elegant. Training would be obvious and intuitive. It would be a subscription based service or maybe annually licensed. The system would be complete so there wouldn’t be any interfacing problems between disparate types of software. All the data is indexed and searchable. Reports are automatically generated and distributed. Data is backed up securely. The software works in multiple languages. Software updates are seamless, because it is web based. Housekeeping could carry around a tablet pc or iPod touch and update their room list. Guests could check out from their tv or laptop. The list goes on and on. It may seem like a pipe dream, but I think it is a possibility especially as we are reaching the age of ubiquitous internet connectivity.

From a software company stand point I think there is demand for such a service. It might be a long long time before a large hotel company would make the switch but there are so many independent and small hotels for which this service would be a blessing. In addition, if the service was successful the access to data would be invaluable.”

I thought the question was a good one and the desires well stated. So the question stands to why are there not more SaaS applications for hotel/resorts?

In my experience the main reason has been a data access issue. For pure web based applications the data is held (and often owned) by the vendor. Data security standards and PCI regulations make it difficult for vendors to effectively and affordably deliver on the needs of a hotel/resort. PMS, POS, and GDS solutions are generally considered mission critical to the business. If you don’t have immediate access to the data then you cannot run your business successfully which often means inconveniencing the guest. And unless a company like Google with an almost infinite budget for infrastructure redundancy and fail-over brings a solution to the table the costs of effectively delivering a solution like this appears to be too high for a start-up looking at what is really a limited market (unless some of the larger brands like Hyatt, Hilton, and Marriott joined in).

Ultimately I hope I’m wrong because I believe we need this. A corollary could be made to what people thought about CRM solutions until Salesforce.com rocketed to uber-status of success and took over that space as the darling of the market.

If you know of a SaaS POS, PMS, GDS or other hospitality technology solution leave a comment as I’d be interested to find out more about them. Or if you have other thoughts on this topic post a comment and share your wisdom.

best-of-breed or one-stop-shop…what’s best for me

For many this debate is a philosophical versus empirical one, but it is worth a discussion I think. It is almost impossible to set aside the philosophical side of the debate (i.e. those that hate strongly dislike big business), but I’m going to do my best based on my experiential side of the debate. In starting this post off lets take a moment and clarify what we are talking about.

best-of-breed
“Best-of-breed” vendors generally provide one or two technology solutions. They are 100% focused on these products and are thus considered to have more expertise in the needs of their customer (a debatable concept). Generally they are also considered to be more agile because of this focus (or so they say), allowing them to respond to development requests in a shorter time frame or at least with a more predictable software release schedule.

one-stop-shop (aka integrated systems)
(Pretty self explanatory I think) The Wal-Mart of technology vendors. They can fulfill most of your major technology needs and some of your minor ones as well (or so they claim). Generally they are very large organizations that offer products to a wide range of vertical markets. For this reason they are considered to have less knowledge of your specific operation (a debatable concept). Their release schedules tend to be further apart, but they also tend to perform custom work more willingly (possibly because of a larger resource pool) (also a debatable concept).Now that we are all on the same page lets talk about how to sort through the question, “What’s best for me?” First, for the purposes of your time and my own sanity I’m not going to attempt to categorize all the vendors for every technology solution. It’s almost impossible given the new companies that pop up semi-regularly and more importantly with the disappearing act by many of the formerly named best-of-breeds recently gobbled up by the one-stop-shops. And that quickly then brings me to the point…best-of-breed or one-stop-shop labels are a useless and very stupid business requirement when selecting your technology solution. It might have been a semi-meaningful requirement five years ago (of even two years ago), but not anymore.

Now, I’d like to just end here and have you believe me because I say so…but the probability is some of you reading this are staunch believers that best-of-breed or one-stop-shop is an important requirement when selecting a technology vendor. The rest of this post is dedicated to you. If you agree with me I’d love you to post a comment on what experience led you to the same conclusion. Below are some of points based on my experience, and why they are pointless when made as general statements.

ease of integration
This is one of the biggest points in the debate, and is often touted by the one-stop-shop as a major reason to chose them. But before you buy look closer, talk to existing customers, and make sure that this is really true. As with anything in technology your plug-and-play solution may leave you hanging. At face value it seems logical.

A single company can get their products to interface and integrate easier/better than different companies.

But changes in technology, the ever shifting product road map, and the acquisition engine proves in reality they most likely are not so integrated.

Most one-stop-shops did not start development of their products at the same time, which can mean the technology platform between the solutions is different (sometimes drastically). This can lead to some interface challenges that are often only overcome with limitations (and you end up with multiple technology platforms). The number of products gained through acquisition and the time frame of those acquisitions is also a good identifier for how seamlessly integrated a one-stop-shop is. My experience has led to the conclusion that the integration capabilities post acquisition is about the same as when they were different companies. Existing customers have lived with the limitations before the acquisition for years, so it is easy for a vendor to rationalize not making it a priority to enhance integration.

The willingness of one-stop-shops to work with other vendors is also a point to consider here. Where generally best-of-breed vendors thrive off partnerships with other vendors, the one-stop-shop may create integration road blocks. After all, it is in their best interest for you to purchase all of their products.

Now in fairness to the one-stop-shop I suppose I also need to point out that best-of-breed vendors also make this claim by touting their agility to enhance the product quickly. In some cases this is probably true. But do not be easily mislead. As a customer you want to be wary of this promise, because if it is being made to you it is also being made to someone else. You want a vendor that has a well established software development life cycle (SDLC) so they already (or at least should) have the next two to three versions of the product planned out. First, this means that new development probably cannot make it into the next scheduled version. Second, it means that your requested enhancement can easily be trumped by promises to the next customer. The temptation for best-of-breeds to “follow the money” is often too tempting and promises become easy to break.

Rather than basing your decision on claims to ease of integration do your research to document your requirements with order of priority. Select a technology solution based on your clearly defined and documented integration requirements versus claims to ease of integration.

small size = better relationship
I’m going to pick on best-of-breed vendors here. One of the claims made by best-of-breed vendors is their smaller size lends to a better vendor-client relationship. They claim to support their product(s) better and establish better relationships with their customers because of their size. Who made the rule that to be nice to work with you have to be small? In my experience a good vendor relationship is grounded in the type of people versus the size of the company.

As a side note it is too easy when choosing a technology solution to let your sales person do all the selling. And that seems logical…but your sales person is not who you will be talking to on a daily basis. You should be meeting with the group of people you will be working with regularly. If you will be assigned an account manager then meet that person. You should also speak with installation, support, and the person that handles billing disputes. Interview them because how they respond will give you a very good idea of what it will be like to be a customer. This group will often not have the skill or desire to “sell you”, so they will act just how they act every day.

Nice dinners and golf outings are great, but I bet you would give that up for a support team that is knowledgeable on the product and a finance team that is pleasant to work with. Select a vendor based on their reputation in the industry and the people that you meet, not on the assumption because they are smaller they will be better to work with.

single support entity (aka one person to yell at)
The “one person to yell at” claim is generally made by one-stop-shops and it has some validity. It can be very useful to have a single point of contact for resolving problems with your technology solutions. But this is only a reasonable point if the vendor is responsive and helpful when you yell. If you already read the comments under ease of integration and small size – better relationship you should foresee the coming point.

Having multiple vendors that are very helpful and nice to do business with will always be better than a single vendor that is difficult to do business with. Base your technology decision on who you believe will offer the better support not based on the number of 800 numbers you have to tape by the phone.

in your back yard
This is one of those funny requirements that venues seem to think is a great benefit when choosing a technology vendor, and that technology vendors tout as a major benefit to the venue.

If the vendor’s corporate office is close they will be more helpful and technical support staff will be available to swing by your property on a regular basis!

Unfortunately this is usually not accurate whether your vendor is a best-of-breed or one-stop-shop. If you yell loud enough and long enough they will send someone, but that is true if you are around the corner or across the country.

The vendor is not staffed to be at your beacon call and you will often get the freest resource (read least experienced) when you do need someone. If there is a big enough problem they will send someone regardless of where you are. In my experience your vendor’s proximity to your physical location has very little to do with the quality of support you will receive.

Additionally, as a venue be wary of the in my backyard vendor. You have expectations but so will your vendor. You’re site will become a frequent stop for sales calls, sales meetings, prospective customers, prospective partners, and bleeding edge technology solutions.

In summary if you choose to do business with a technology vendor because they refer to themselves as best-of-breed or one-stop-shop you will stand to be disappointed at some point in the future. It is naive to assume that your best-of-breed company is not looking to expand their product suite through “build it’ or “buy it” plans. Even more likely your best-of-breed company is continuously being courted by one-stop-shops and will eventually marry for money (a poor relationship foundation by the way…in life and business). But for many that is goal. Build a company so that it is attractive enough to a potential suitor to sell and retire in the Caymans? Can you really blame the owner(s) for doing what almost every entrepreneur dreams of doing? I think not, so stop treating your vendors as if they were different than any other company with a different goal than your company. And for the one-stop-shop vendor the reality is they are generally not quite as seamlessly integrated as they proclaim.

The bottom line is hospitality venues did not coin the terms best-of-breed or one-stop-shop. They are terms creating by the vendor’s marketing departments and ultimately should have little bearing on your technology decision.

Comment if you agree or disagree, I would love to hear from you. And as always, if you’d like to find out more about kevin sturm Consulting please visit my website or email me.

Pictures courtesy of DWQ, Crawfishpie, Dzwjedziak, Extra Medium, katiebate

the attractive but un-sexy side of BI

I had a wonderful opportunity recently to join some very smart colleagues on a BI (Business Intelligence) panel presentation. I first need to thank Jon Inge for inviting me to be on the panel and for being an advocate for the un-sexy side of BI. Second I need to thank Rick Heuer, Geert Mol, and Clive Perry-Core who were on the panel with me. I learned a ton about CRM BI from Rick and Geert, and Clive has more hands-on experience to the nuts and bolts of BI than anyone I’ve ever met. It ended up as more of a round-table discussion than a panel really, but it was great for my own learning opportunities that way.

In his opening Jon referenced a great article from the Wall Street Journal on “Knowledge Management” which is largely what BI is all about. (Which I was bummed to not find on the web and provide as a link to all of you. If you find it give me the link in a comment.) The opportunity benefit of BI is to effectively act on meaningful information about your business…or more briefly put knowledge management.

During the introduction of the panel each panelists described how they worked in BI. During this brief introduction I came to the sad realization that I specialize in “un-sexy” BI. The “sexy” side of BI is in CRM and marketing. Their personal introductions were exciting and I’m sure led to everyone dreaming about a hotel knowing you when you walk in the door, welcome you by name, hand you your favorite margarita, quickly tele-port you to your room with pre-set temperature and lighting preferences, and have music playing based on your perceived mood and core body temperature. It is what you read about in press releases from the big brands in the industry where they know everything about what the customer prefers. The summation is Know your guest and achieve total patron value! Increase revenue through understanding your guest’s preferences and market directly to them! Sexy No? (to be said in a French accent)

For the record I totally agree it is way more fun to talk and dream about the benefits of BI with CRM. But the reality is the ROI and TCO for BI with CRM is harder to quantify (I tried hard to get a fifth acronym in that sentence but I couldn’t find one that made sense. Though I digress). It is not impossible to quantify, just harder. Before I jump into the “attractive but un-sexy” side of BI I think it is important to lay some foundation. First let’s take a shot at defining TCO. Total Cost of Ownership (TCO) is the total investment capitol put into the technology solution over a specified period of time. Return on Investment (ROI) is the duration it takes for decrease in costs and/or increase in revenues to surpass the overall investment (or TCO). To put simply, save or make more money than what you spent within a specific time period. The measure of any good technology solution should be create cheaper, faster, and better operations than what you do now. The general problem with proving the ROI of BI with CRM is the generalizations that take place into why certain customer preferences exist and under what specific set of circumstances. It is the accurate capture of circumstances that really creates the challenge. It is difficult (not impossible) to tie a decrease in cost or more likely and increase in revenue to a specific preference or area of guest behavior being influenced by an almost infinite number of inputs (aka circumstances) that lead to a specific action (for more thoughts on this see when CRM will achieve its potential).

So if BI with CRM and market data is “sexy” then the operational analysis side is really the “un-sexy”. Note that both are attractive, but the former is far more attractive than the latter.

The un-sexy side is the analysis of your operational systems data in order to decrease costs and increase revenues (yawn). I’ll define operational systems as Property Management System (PMS), Point of Sale (POS), inventory management, time and attendance, service optimization, and other solutions implemented to manage the operations of a venue. See, I’m only two sentences into the “un-sexy” and you’re mind is already wandering…hmmm..what should I have for lunch today…

But, when this data is captured in a meaningful way and linked to other external data elements (i.e. weather, currency exchange rate, website click through, etc.) the value proposition of BI becomes very attractive. I’m going to say “becomes” attractive because generally the first thing that a BI system shows you is how poorly your systems are currently setup to capture meaningful data. You will need to spend at least three to six months cleaning up configuration elements of your existing system(s) before BI will begin to have analytical payoff. The correlation can be made that it’s like exercise for your technology solutions. You may hate the process but you’ll like the results. I’ll cover some thoughts on the steps to a successful BI installation in a future post. But for those in need of immediate gratification Jon Inge wrote a great article in this months Hospitality Upgrade (it’s free by the way…so subscribe) entitled Demystifying Business Intelligence. You can download the article here from Jon’s website.

As an exercise in brain storming here are a few examples of how to both define and achieve ROI for your BI solution. I am making a HUGE assumption here that you already have some meaningful KPI’s identified for your business and that you can apply them accordingly. If you have not, first go read Jon’s article.

the pms story
A key metric for any hotel/resort is RevPAR (revenue per available room). The value of this KPI becomes more valuable over time as you compare it against historical data. It is one of the measures used for how to price a room and it’s amenities. Some PMS systems will give you this number over a specified date range and may let you compare it to one other range. Or you can run multiple ranges and do the comparison yourself by entering the information into a spreadsheet. But, what if rather than just looking at previous RevPAR numbers you were able to review historical RevPAR numbers with the corresponding temperature/weather and current exchange rates with selected currencies over multiple selected date ranges. Then what if that information could be plotted graphically for you giving you some solid predictive analytics on what room rate would give you the best RevPAR based on matching factors from a historical period. The ROI benefit in this example is actually achieved in more than just the revenue opportunities. It can also be achieved in the “improved costs” column by spending fewer hours entering information into spreadsheets.

the pos story
The POS story I think is one often left behind, but it is one near-and-dear to my heart. Your POS (and PMS) system holds real data about customers that they pay you to keep so you can know more about them. How wonderful is that?! Grocery stores have the POS BI story down…it’s a science of revenue for them. Hotels, resorts, and other venues should be watching and learning from their successes and their mistakes. As a quick story lets meander into a world where all your POS data means something (meaning versus what you have now). It means what do your customers like, what do they not like, and what should they like but just are not finding and buying. By “should they like” I’m referring to placement, description of the item, presentation on the plate, verbal marketing, and price. BI with POS allows a manager or chef to aggregate and compare data for items that are selling well to items that are not selling well, and possibly against the day of the week, time of the day, and temperature outside.

the inventory management story
You get an even better story if you tie POS to Inventory Management and look at actual cost versus selling price data. A manager can run pricing strategies and get concrete data back on how well or poorly it worked. For example, take your top 10 selling entree items and increase the price of each of them by 5%. If you have historical price and cost for those items for the previous three months you should have food costs, theoretical and actual yields, margin, and profit for those items. Track on a weekly basis for three months how the 5% price increase affects each of those performance monitors and you begin to understand exactly how much items should be priced for in order to achieve minimum food costs, maximum margins, and maximum profits. You may tell me you can do this now, but I’m going to tell you only with a small troop of analysts and well massaged data.

the employee performance story
Wouldn’t it be great to have a better understanding of what made great employees great, good employees good, and poor employees…well…suck? I’m sure you can tell me about personal drive and character and customer relation skills and I’ll agree with you. But what if you could see metrics about employees like how many more transactions they perform, or how efficient they are in certain work areas, or why they are always able to predict what needs to be done before it needs to be done (okay…that one may be harder to figure out). Again, manufacturing plants have been dong this for years…we just have to catch up and figure out how to make it work for hospitality A BI solution should have all the data points where an employee enters information into your technology solutions, and that transaction is tied to an employee ID. Employee ID is often the ONLY common thread among disparate technology solutions so this specific area can be one of the easiest to achieve. The benefit of seeing performance information on your performance range of employees is to spot operational efficiencies that great employees implement and then work to train those into the rest of the staff.

If you are shaking your head at me saying, “Employees won’t do it even if I show them how to be better”, then I’m going to tell you that you have bigger problems. Employees suck either because of lack of education or apathy. BI can help you fix the education part and then you can help yourself and fire the apathy part.

the staff management story
The last story we’ll weave is the magic tricks around staff management. I never ceased to be amazed at the creative processes that I find managers and client venues using to estimate staffing requirements and build employee schedules. It is an artful guessing game made more accurate after years of experience and some trial and error. But if you have employees entering information for time and attendance (if you pay people you have this I think), and you have historical revenue information (for a specific day of the year possibly for multiple years), and you have employee performance detail (for example revenue per hour) for a “good” employee then you could have the best staff management procedures on the planet based on BI data and predictive modeling. Bringing this information together into a BI solution gives you forecasted revenue expectations with forecasted costs for which you can then effectively manage your schedule and get maximum revenue potential at minimum cost from your staff. I have a dream….

See, you find it attractive…admit it. But (yawn) sooo un-sexy. Who wants to talk about boring operational efficiency metrics to executive management so you can purchase a BI solution? I hope you.

I would love to hear from you if you have other great examples of ways you achieved the ROI of your BI solution. I’d also like to hear from you if you think mine are ridiculous. And as always, if you’d like to find out more about kevin sturm Consulting please visit my website or email me.

find out about "Nutricate"

One of the hot new emerging technology companies in hospitality is Nutricate. I had the opportunity to spend some time at the Nutricate office and find out about the solution and story behind their initiative to “Nutritionally Educate” hospitality venues and guests. It was also a fun reunion as my former boss and mentor, Brad Bennett, is their VP of Products. Before sitting down with Jay Ferro, Nutricate CEO, I was treated to lunch at Silvergreens to experience the Nutricate brilliance.

One of the most interesting things about this interview was hearing about Nutricate’s birth from social concern versus financial purpose.

Me and Brad

1. What exactly does Nutricate do?
I guess the problem we’re ultimately trying to solve from more of a global perspective is there is an obesity problem on our hands, and the food service industry has responsibility in that. What you hear a lot about is legislation for trans fat and other things. The one you probably don’t hear as much about is the need to tell us what’s in their foods with nutritional labeling. What Nutricate does is we attempt to solve a problem from both the operator perspective as well as the consumer perspective. We try to create that “win-win” opportunity. What we have is a patented software tool that enables personalized nutrition information to print right on the receipt at restaurants, hospitals, work site cafeterias, or any food service environment. What we end up trying to do is take that opportunity to not only engage the consumer and let them know what they are eating, but also to educate them on how to eat healthier and make recommendations. We call it our “Did you know?” section. For example if you order a chicken sandwich we can put something like, “Did you know if you substituted grilled chicken for crispy chicken you would save this many calories and this much fat.” From the operator perspective this is huge because you want to move the accountability off of you the operator and put it on the consumer. It’s not that my food is bad for you, you just chose the french fries. You could have chosen the side salad as your side. I’m going to educate you on my options, tell you how to eat healthier, and then of course it’s on your shoulders. Don’t blame me for how many calories or fat is in this meal because you have plenty of options. Getting the consumer more educated on this is primarily where we are going, and then we will have peripheral products along the way that can add value for both the consumer and the operator.

My actual meal and Nutricate Receipt

2. What triggered the idea to put the nutritional data on the customer receipt?
Well, it was 1994 and I had just graduated from UC Santa Barbara and was writing a business plan for a restaurant. I wanted to go do my own thing and didn’t want to work for anyone. I knew Isla Vista and the community here. I said, “I think this place needs a healthy restaurant about salads.” Kinda take the salad bar concept and modernize it from the 80′s. While I was writing the business plan for that restaurant I started to research nutrition. I didn’t know a lot about nutrition, I just knew I thought the market was looking for a healthier alternative at that time. I started thinking I gotta get nutritional information for my restaurant, and then asked, “Wait, why don’t restaurants have to do this?” Turns out in 1990 nutrition fact labels were mandated and restaurants were made exempt at that time. It was 1994/1995 at this point and timing was basically bad for the idea. The idea was why not put it right on the receipt, it doesn’t change anything from the operator perspective. The customer gets exactly what they’re eating. One of the biggest reasons restaurants were exempt was I think 70% plus of your orders at restaurants are customized. Preprinted nutritional information whether on a brochure, poster, or menu board is inaccurate the vast majority of the time to begin with.

3. What is the value proposition that Nutricate offers the venue?
Well, I think it depends on what operator you’re going to. We segment the food service industry in two areas. One is restaurants and the other is the institutional market. For restaurants there has to be a tangible ROI. There does on both sides, but the ROI is how can I increase sales, how can I decrease costs, how can I improve customer loyalty, how can I improve brand. We’re targeting in the restaurant side those that are maybe socially responsible and trying to position their brands with more of a health conscience perspective. Obviously that’s not everyone out there, but they see the trends like everyone else and they know they have to change in some way. So, for those people were saying you have a competitive advantage potentially on what your nutritional information looks like compared to some of your competitors. There are so many dynamics in this because there is a perception versus reality. Subway may be perceived as healthy, but when it comes right down to it maybe they’re not. Disclosing nutritional information may be bad for business in that way. But if you’re getting just killed from the media like a McDonald’s, and your not that bad there may be a good business decision to do it. There are several dynamics within it, and we are way to communicate that. And then of course from real tangible ROI what you find is your drawing attention to a piece of paper that has been thrown away forever. And now you can leverage those new eyeballs for new marketing opportunities or new third party advertising opportunities. What do you want to know that you have some attention on there? It’s a new medium of marketing of sorts. That’s the restaurant side.

The institutional side we’re selling to for a totally different reason. Some of the barriers that may exist from an embarrassment factor (“I don’t want anyone to know”) that is on the restaurant side are not there. If you are talking to a cafeteria, education, or hospitality that’s not their concern. Their concern, certainly from work site perspective, is primarily my health care costs are out of control and I need my employees to be healthier because I need to drive these costs down, and what kind of health and wellness programs can I put into place that can engage these employees of mine and give me measurable data I can give to my insurance company so they can justify lowering my rates. There is this a huge pain out there and that’s “dollars”. So they’re trying to reduce costs by implementing programs like this. Or obviously in K-12 there is a lot of public pressure. It’s kinda of like “walk-the-walk” is what’s going on in that side. So they’re not necessarily saying, “I want this to drive my sales.” They’re trying to do it for totally different reasons than why a restaurant would do it.

4. How is it that you can integrate with almost any Point of Sale System?
What our technology solution is….well you’re the one who is going to tell me if I’m right or not in this because this is your area of expertise.

Here’s how we look at it. We have the POS side of things and it’s an extremely fragmented industry. I think MICROS is the leader and they have maybe a sixth share of the entire market. That’s how many different players there are out there. So yeah, we can build software and it can certainly sit on the POS and we can integrate with it. But do we want to do that with 200 plus POS? When you look at what we are trying to do, we just have to affect the printer. And the printer market as you know is 80% owned by Epson, and the rest are Epson compatible. So that print stream is really easy for us identify and map to. So what we have is a proprietary device that essentially intercepts the print stream and adds all the necessary nutritional information and marketing message based on triggers, makes the receipt look pretty, and then passes it right on to the printer with no speed latency. Everything is managed via of the web so you don’t have to worry about where you’re at. It can be hard wired via Ethernet or a wi-fi dongle so it can be accessed. Essentially all we are doing is just matching what’s coming out of your POS at the item level, and if there are certain things we don’t want like a credit card receipt we just pass through. If we want it we make it a Nutricate receipt.

5. Quick service and chain restaurants are obviously a key market segment. Do you see hotel, resort and other high end venues adopting providing nutritional information to their guests?
I think you earlier were talking about the spa market. If you look at where maybe opportunities exist and where it would be more in demand by customers spas are one. Another interesting one in the hotel market is room service eventually. I think that could be a good application. Initially we’re not targeting the casual or fine dining for a variety of reasons. Typically you’re finding those in hotel atmospheres. I think there are certain places it makes sense in hotels and there are certain places it may not be the right fit today. And as you know many hotels are one-offs. If there is a one-off opportunity I need to feel like it is worth while to go in there and make enough money. The nice thing about chains is I do it once and I can duplicate it by the number of chains. For the institutional market it is our second product offering that excites them more than our first product offering, and that is a totally different revenue model for us that is very very attractive.

So I guess we are not initially targeting the hotels of the world, but I think spas is a good one. LifeTime Fitness sort of fits in the same model. As we look at what we are targeting today it is a big market, and we’re choosing quick service and fast casual in the restaurant side. The whole institutional market is pretty good for us, but work sites ultimately are in the biggest pain. They are the one paying all the health care costs and that is where we are targeting.

6. Why do think there has been a lag in the adoption of providing nutritional information to guests?
I think it is a couple reasons. One is the potential embarrassment factor, there is no doubt about it. You have the media making it sound really bad and beating restaurants up. I think the media has just done a terrible job of everything. We are kind of finishing out the “Supersize Me” era. From mid 1990 to mid 2000, in that ten year stretch bigger was better. If you could give me more french fries I would go to you because that is more value in my eyes. As portions sizes continued to grow over time it turns into a really really bad time to expose nutritional information. It’s all about quantity, which is why the casual dining market is so bad for us and them. If you get a BigMac and fries at McDonald’s and you get a burger and fries at Chili’s you feel better about yourself for eating the one Chili’s; maybe because it is being served or because you think it is a higher quality of food. But you are eating two to three times the amount of calories and fat, and that is not because it is worse for you but because that is how big everything is. But we don’t think like that from a consumer perspective. The last thing Chili’s needs to do is tell people now, “You just had 2000 calories.” And McDonald’s can say, “You had the BigMac and fries and your the one beating me up when it is only had 800 calories here.” I think it is different reasons for different venues, but ultimately the market is so nervous about how consumers are going to respond and react. “Are we going to get killed on this or appreciated. How mature is the audience out there?”

Two, if you look at what alternative methods there are to disclose this nutritional information, outside of Nutricate’s solution, there are no good methods. They’re going to put it on the web, but who goes and accesses the web before they eat. It just really doesn’t happen very often. They are going to put it on posters on the the wall. But the problem with posters or brochures is customized orders. You cannot put that in a preprinted format of any use to a consumer. No one is going to go find their specific desire and then order it. It is just impractical. If you put it on a menu board there are tremendous problems. Logistically finding the space for anything on a menu board is hard. What it could potentially do to line speed is also a problem; operationally another variable that confuses my customer and makes them ask questions potentially negatively affects line speed. But I think still at the end of the day venues would figure out a way to do it if they felt comfortable there would not be a backlash. They are not looking for everyone to say, “Wow, I’m going to eat out more often now.”; really they just don’t want people to eat out less. So we are obviously being very selective with who we target because our solution may not be the right solution for half of the restaurants out there.

7. Who are some customers that “Got Nutricated”? What has their customer feedback been?
Right now there are four. Silvergreens was the initial restaurant, which was the restaurant I founded, so it was the perfect place to put in a product that hopefully would work. There were a lot of questions like, “How is the technology going to work.” When we put it in in April ’06 at Silvergreens we had Maitre’D and we integrated it. There was not an agnostic piece to it. We did it and it was painful. 99% of the things the POS did we didn’t care about but we still had to make it work with. So it was a long frustrating process. What we were trying to do was figure out 1)does the technology work, 2)what happens to the restaurant’s sales, and 3)what was the customer’s response. We needed to test this and do a market test on it. All of those, with the possible exception of the technology, went great. Sales went up 20% unbelievably! It’s crazy! It is hard to say it because I know people don’t believe it. Here’s the reason it did – you get PR out of this thing. It’s different. It’s unique. We had news people come; we got some articles printed on us. Already when that happens you’re gonna get new people trying your restaurant. But we’re in Isla Vista, and for anyone coming into IV it is tough enough with the competition. Also people don’t want to challenge the bikes and are intimidated of IV outside of the students and those that are accustomed to it. So we got a new batch of people that were saying, “Wow, this new kind of restaurant.” Whether that was because of the Nutricate receipt, the food, or a combination of both is hard to determine. But we got the PR to get them in and prove ourselves.

Also, I think the coupon aspect on the receipt works pretty well. It is a very inexpensive way to target your current customer. Hopefully it doesn’t cannibalize sales, but overall if you grow your volume you’re going to be fine. Usually you target. If it’s lunchtime and you’re trying to drive breakfast business, you know that person can come in so your going to try and target breakfast or a new menu item. Whatever it is, there is a lot to the tool of couponing. It’s neat and it’s based on lot of triggers.

The consumer response was fantastic. We did a bunch of market research independently. CSP did it and surveyed tons of people. There was really positive response to the receipt. It’s an interesting market, not to get on a side not here. College students for the most part don’t care as much. As you get older your body responds differently to what you eat. If you can be successful in a market where people don’t care as much as when you become more educated on nutrition I think it’s pretty impressive.

Then there are three locations in San Diego. Two Extreme Pita‘s, a pita concept out of Canada trying to penetrate the US market. They have probably 30 restaurants in the US and a couple hundred in Canada. They are competing with the “bigger is better” mindset in the US. It’s hard, but they are inherently healthier and they have a good nutrition story. We have tested in those two locations and are now putting it in Phoenix, their biggest US market. Then they will test it out in Canada.

8. Recently the the New York City Board of Health voted to require all chain restaurants to post caloric data on their menus. How long do you think it will take for this trend to reach other cities?
It’s a good question. I mean that’s legislation. Obviously that is a great driver for us. Nutrition disclosure strategy is on the board agenda this year, so it is something restaurants have to think about and try to figure out. It is going to make some of the bigger players out there think, “How do I want to do this? Do I want to be proactive? Do I want to be reactive? Where are we with this?” What New York City has done now is chosen the method of putting it on the menu board, and that is a very easy one to fight because it is such a bad choice of solution. One, it is very dangerous. You could give someone extremely inaccurate nutritional information just with the customization of it. If a venue puts one on their menu how in the world are they going to know what a guest actually orders? If the item defaults with wheat bread and no mayonnaise or cheese someone is thinking they are eating 400 calories when it is actually 700 calories. You can put up whatever you want to put up, so it is very dangerous I think in that regard. As well with meal totals and other things that are going on. The restaurant industry has got lots of legs on this one.

And, why would you think this would possibly work? Since nutrition fact labels have been put into work our obesity rate has doubled. So this really is the same thing but even worse than what we have been doing. Essentially the restaurant association sued again, because this happened twice. Essentially we are focusing in California. Something similar happened in California and went all the way up to Arnold, and Arnold vetod. It was a good thought and I agree the restaurant industry has to do something, but it was the wrong solution for a variety of reasons. Obviously we’re now getting active and saying look at the Nutricate solution and why we think it makes sense for everybody. But I think cities and states is where it is going to be driven. It is going to pop up all over, and then at some point go federal. The chains want it to go federal because they can’t have different legislation in different cities all over, it is just too much for them. So there is a point where they will say, “Let’s just find out what it is and just do it, and and move past this so we can go back to making our burger and fries.”

And this is the perfect place for technology to come in! They are so far behind in technology anyways at least use this as an advantage for you.

9. Starbucks is now offering a pamplet with nutritional information. They have upward to 87,000 drink combinations. Would Nutricate be a good fit for an operation of this size?
That is where we excel! That is the reason we’re relevant is because you order your latte your way. We can key off any of that stuff, that’s what we do. That is what Brad is doing. We are basically building that flexibility. If you want a “grande mocha” with six pumps of chocolate I’m going to come up with the number whether you want it rolled up, by item, or by individual pump. The venue gets to choose because there is marketing there. Do I want my customer to see it all rolled up? Or is the whole milk such a bad part of it that I want to show them it’s not me, and then recommend skim milk via “Did You Know”. And skim milk costs me less per gallon, but the drink costs the same so I save money! The point of “Did You Know” is to educate the customer and hopefully do it in a way that makes the customer healthier and the venue more money.

That is where Nutricate is of huge value to the coffee segment.

10. As someone arguably successful in both the restaurant and technology market, what advice would you give to entrepreneurs wanting to provide a technology solution to the hospitality space?
You should ask me when I become successful as I’m still trying to figure this out a little bit. I founded a technology company with no technology background. I have all food service. Being somebody who is pretty hands on and wants to know about everything, that is the space I couldn’t dive deep in. If something was wrong it was just wrong. For me, it is just get the right people. As you know in Santa Barbara that is such a challenge. But it is no different than any other business. Get well funded so you can afford the right people and the right technology.

11. You have an “Ask the Dietician” section on your website. What is the weirdest question that has come in?
(laugh) Unfortunately I’m not even a participant in that. We have our dietician who does that and I don’t know how much it is used or not. I could make one up for you, but I honestly don’t really know even one question that has been asked.

I was immensely grateful for the opportunity to sit down with the team at Nutricate. They are truly onto something great and everyone there is deeply passionate about the solution and the benefits of it for society in general.

The Nutricate team hard at work

If you are interested in finding out more about Nutricate you can visit their website or contact them here.

For more information about kevin sturm Consulting please visit my website.

relax your spa staff with RFID

A few weeks back Chrystal treated herself to a pregnancy massage with another “expecting” friend at Burke Williams Spa in San Jose, CA. The day spa offers a pregnancy package with a lavish milk bath, which Chrystal and Christy thoroughly enjoyed. Chrystal loved it and was definitely more relaxed afterwards. But upon her return from the spa she said that although the guests were becoming more relaxed the staff seemed harried.

When she checked in she did not fill out any paperwork simply signed in and was presented with a key and keychain for her locker. Her schedule was in the computer and on a printout. Throughout her three hour visit she had spa employees pop into the public areas (like the quiet room, sauna or hot tub) and ask, “Do you have an appointment and 2:00 PM?” or “Are you so and so.” If the person was there they informed them of their next appointment time and location. Chrystal had two problems with these very common operations. First, keeping track of a key at a day spa is an inconvenience. At one point Chrystal accidentally grabbed Christy’s robe and then could not get in her locker, as her key was in her robe. Second, consistently having employees ask me if I’m someone I’m not does not equate to the experience associated with a high-end spa.

I know Chrystal would go back to Burke Williams Spa if given the opportunity, but the prices may not be in line with the “experience”. We have a place in Santa Barbara where she can get the same massage treatments for 1/3 the price (maybe less) and many spas where she can get exactly the same treatments for the same price. At core a spa must be measured on the value and quality of the services it offers. But if those services are equal to competing spas then what incentive does a customer have to return?

Answer: A unique experience.

What if Chrystal’s experience instead went like this. After making her spa reservation she had the option to complete the majority of the information online (some HIPPA stuff may be only allowed on a form) and was able to note any preferences, allergies, etc. When arriving at the spa, the information she provided online is complete on the form and she is asked to take a quick profile picture and then sign the form (waiver and legal stuff). She is presented with her schedule of services and a small Breast Cancer Awareness wrist band outfitted with an RFID tag. She is assigned a locker number that can be opened with her wrist band. After relaxingly loosing track of time in the sauna a staff member pops in to let her know it is time for her milk bath. The staff member speaks directly to her and knows her by name, though has never seen her before. This happens throughout her day and both her and the staff are relaxed and enjoying her time.

With the growing number of guests willing to spend money for a unique experience, this story brings customers back. It is not only possible but simple to make a reality. Just about every spa already has a loyalty program and most of them accept a small profile picture to associate with the guest, so that part is done. Implementing location services using RFID is becoming more mainstream with vendors like Motorola, PDC, and Microsoft leading the way. Guest information is linked to the RFID wrist band, which is small, inexpensive, completely waterproof, and even stylish if so desired. The entire staff has access to the guest’s picture and knows where each guest is at all time because of RFID scanners at each door. An added benefit is the spa gets automated guest preferances by reporting each room that a guest goes into and the amount of time they spend in it (this has to free up at least one administrative job). This information is also golden when it comes to personalized marketing with solid Business Intelligence data.

If your spa has a restaurant there is an added option to interface Point of Sale (POS) with Loyalty and allow guests to buy food and other items available for sale with their wrist band. LifeTime Fitness, a specialist in the “health and fitness experience” uses photo recognition at the POS as an added security measure. It also means the customer doesn’t have to carry anything with them.

Implementing location services with RFID obviously is not free. But balance it against the decreased cost of manual system entry and paying staff to herd customers, and the revenue opportunity of very effective personalized marketing campaigns and I believe you’ll find the numbers make sense.

You can call any of the vendors above if you want to look at implementing location services. Or, if you want someone to help you create a memorable guest experience give me a call or send me an email. I’d love to help!

For more information about kevin sturm Consulting please visit my website.

enterprise software, hoax or holy grail – part three

This is the third post in a three part series on enterprise software solutions.
Read part one here and part two here.

Document features under development.Okay, you have your lab in place and it is setup to mimic what you want for your live enterprise system. All the vendors you want are interfacing to the fullest capabilities of their individual solutions. The reality is that through this process you have found features that do not exist or do not work as you expected. These features are either currently under development, scheduled for a future release, or no plan exists to develop these features.

Do not leave your vendor(s) responsible for documenting these features, and do not expect they truly understand your business requirements. When you have the complete list of required features that are not working or missing, document both the requirements and use case of how these features will be used. This is an important point, as generally the requirements for these features are loosely worded. The vendor will interpret them and develop something that may not be what you want or need. You want to avoid this by getting a very detailed use case documented for each feature. Recognize if you get something you do not want, it is both your fault and the vendors as neither party did due diligence.

The other big reason you want all of these features documented in detail is for contract negotiation and success criteria.

Get beta feature requirements and dates in the contract.
If you have required features that do not yet exist (and you will, specifically with interfaces from vendor to vendor), these features need to be outlined in your vendor contract(s) with commitment to dates and software versions. Many vendors will attempt to avoid this completely, and some may simple refuse. It will be a negotiation and some of your required features will get negotiated off the table. Set your expectations low so you are pleasantly surprised when you get more than you expected.

It is important that the contract point to the use cases that you created in the previous step. You want no ambiguity on what is delivered by the vendor. Now, you may be saying to yourself this is all great but you have vendors who defaulted on their contractual commitments in the past. If you are concerned about this, the best option is to create payment stipulations in your contract tied to each feature. But this must be a win-win situation. Generally vendors invoice you at the end of the project and you pay them upon project completion You can create incentives to complete contractual features by tying delivery of features to progress payments for services and/or software provided. Adding these stipulations to the contract means you may be paying your vendor earlier than normal (win for them), but it also adds the stipulation that you will not pay them some portion at all if they do not deliver (win for you). I may do a separate post on this subject at a future date, as it warrants a more detailed discussion.

Prioritize order of software implementation.
The timeline of your contract negotiation may have some affect on the order of software implementation, but this is a topic that needs careful consideration. This is an easy decision if you are only implementing one enterprise solution. But if your enterprise project has multiple solutions the order they are installed is important. In my experience there is always a right order, and there will be dependencies. You should have a good idea of the order based on your lab setup experience as well as the interface diagrams that you created. But if not my rule for implementation order is based on a single question.

Is the solution primarily used for finance, operations, or reporting?

This is an important question as finance solutions generally should be installed first. A solution may be used in all three areas, but it’s primary purpose is the point. The reason finance software should be installed first is the setup will trickle down to the setup of operational systems. Defining financial standards in operational systems may lead to limited functionality of your financial systems. Also, reconfiguring your operational systems creates a mess of problems you want to avoid.

Here are some examples of how I categorize some standard hospitality technology solutions.

• Banquet & Catering – Operational
• Business Intelligence – Reporting
• In Room Services – Operational
• Loyalty & CRM – Operational
• MRP& ERP – Financial
• Point of Sale – Operational
• Property Management System – Financial
• Purchasing & Inventory Control – Financial
• Reservations – Operational
• Security & Surveillance – Operational

Prioritize order of site implementation.
Again, this may be an easy decision if you have only a few sites. But for companies with many locations this decision can either positively impact or kill your project. The tendency is to have the first site either closest to corporate or the site with the most experienced/tenured staff. In reality these are poor qualifications for the site that will define your initial success. Very experienced/tenured staff can be very reticent to change, which you want to avoid. Venues in close proximity to the corporate office generally have extra pressure because of consistent visits and tours, and creating additional pressure with a new technology system is not fair to the staff. My experience is any problem at a site already under the microscope of corporate is just exemplified. With a new technology system you will have problems that need time to resolve. Install sites close to corporate once you know things work. It will be easier on everyone.

Really it is only the early phase of the project where the order of implementation is important. Look for locations that meet these qualifications.

• You want a site where employees are accepting of technology and proficient at it. Generally this means you need to look at a location that is within close proximity to a major university. But you do not want a transient staff. Continuous training at your pilot location is especially troublesome when trying to define operations.
• Chose a site that is easy and affordable to get to. Your staff and vendors need to be able to reach the location quickly without breaking your budget.
• It is important to have as staff that experienced with your current operations. But as previously mentioned the most tenured staff is not necessarily best.
• Choose a site where the infrastructure can be updated if required. Older properties can make getting a new cable run almost impossible. Newer locations have been designed to accommodate newer technology.
• The property should be low season during implementations. A really busy property will mean the staff is really busy with other things, which means your technology solution implementation is not the most important thing. For much of the staff in needs to be the most important thing.

The most important order of implementation decision is which location will be your pilot site. This site will define the process for future implementations and ideally be the standard for implementations moving forward. It should meet each of the above qualifications.

Install pilot location.
Now that you have your pilot site chosen it is time to move into implementation phase. However, my advice is to have your lab installation setup with the software versions and features that you are going to install at the pilot location. The lab should be used as the template for installing the pilot location. Implementing a handful of new features during the pilot is a dangerous gamble that can create major problems. Management from locations communicate with each other, and any significant problems encountered at the pilot site will be passed around the management community. From a momentum standpoint you need the pilot to have minimal problems.

Your pilot site should have three major goals. First is a technical proof of concept in the production environment. This means that you should not move past the pilot project until all software solutions are installed successfully. Second is documenting installation standards and procedures, and third is confirming operational corporate standards that were documented in the first step of this process.

Document standard installation procedures.
Documenting standard installation procedures is worth a more in depth conversation because it will save you time, money, headaches, and heartache. Whether you, a contractor, or your vendor completes this is up to you, but it is vital to your project success. It will cost time and money to do, but is worth doing. The main reason is that resources on your project will change. Knowledge transfer is simple when it is written down. You will most likely have standards document for each technology solution that you install.

This document should read like a manual for someone that knows nothing about you business or your technology decisions (this is probably not possible but a good goal). Here is what the table of contents would look like to give you a head start.

• Project Overview
• Business Case and ROI (if exists)
• Project Stakeholder Contact List
• Project Team Contact List
• Project Communication and Escalation Procedures
• Architecture Diagram (including interfaces)
• Planned Installation Timeline
• Installation Prerequisites and Milestones
• Configuration Standards (may reference a template database)
• Standard System Files
• FAQ (list of commonly found problems with resolution)

If you have additional questions that were not addressed in this series feel free to send me an email or post a comment. Good luck with your technology decisions!

For more information about kevin sturm Consulting please visit my website.

enterprise software, hoax or holy grail – part two

This is the second post in a three part series on enterprise software solutions.
If you have not read part one you can see it here.

build your requirements document.
You’ve made it this far, so now it’s time to dive deep into the viability and validity of your prospective solutions. For venues implementing a standard technology system this could be the normal RFP process that is common (read more below why I do not like RFPs). But if you are implementing a large scale enterprise system, specifically with multiple vendors, it is now time to discover how well you did your leg work and if all your prospective vendors were completely honest with you through the early discussions.

Most venues, with the possible help of a consultant, will build a very long and wordy RFP. That RFP will be sent to all prospective vendors with a timeline for completion. I recommend to avoid this process. The venue or consultant will spend hours and dollars building a thorough RFP. When prospective vendors receive it, they filter it through a process where it first goes to a marketing person that generally has minimal knowledgeable of what the system can and cannot do. This person reviews the questions and pulls answers from previous RFPs or from an RFP Library that has been built over time. Any questions that do not have standard answers will then be delegated out to prospective parties for answers.

When all questions are answered the RFP will be sent through a sales or marketing resource that reviews it to ensure there are no answers that will prevent the vendor from getting further into the sale. For answers that are obvious disqualifiers careful wording will be used to ensure ambiguity. I am not saying this is all vendors, but I have never found one that did not word answers to their benefit.

My recommendation rather is to build a Requirements Document. This is a table of features that compiled based on research of both technical and operational requirements. From the work you have already done it should be simpler (though not quick) to build this. Group features logically, but only you should know at this point which are required, highly desirable, or nice to have (this helps you get an unfiltered response from the vendor). Your goal is to have “Yes” or “No” answers. Avoid wording where “Yes, but…” could be used as a response.

An example of why I like a Requirements Document versus an RFP is outlined below using a common POS function.

An RFP might say, “Please outline how your system handles transferred checks between employees and how revenue is tracked.” This is not a bad question, but allows for all kinds of interpretation. A Requirements Document has a list of features associated with transferring a check:

• A check can be transferred from one employee to another by a manager at the POS terminal with employees present.
• A check can be transferred from one employee to another by a manager at the POS terminal without employee present.
• Ownership of a check can be transferred by the current owner to another employee without manager intervention.
• Ownership of a check can be transferred by the current owner to another employee with manager intervention.
• Ownership of a check can be transferred by the receiving employee pulling it from the current check owner with manager intervention.
• Ownership of a check can be transferred by the receiving employee pulling it from the current check owner without manager intervention.
• Revenue associated with a transferred check is always assigned to the employee that owns the check at tender.
• A check can be transferred from one revenue location to another after items have been added to the check and saved.
• Revenue from a check that is transferred will be associated with the revenue center that the check is closed in.

It should be immediately apparent that this will be time intensive process. But if you compare this upfront time against reading all the vendor responses and figuring out which vendor has what you want based on those responses my experience is this is a better process.

When you get your Requirements Document back from each vendor you can quickly create a single table with all responses and have a simplistic view of which vendor(s) best meet your need. I’m going to end this section here to avoid a detailed post on the system evaluation and selection process. It is more commonly understood, but I may cover the process in a future post. You can email me if you have a specific question on how to build a Requirements Document.

build a lab.
Making the assumption that you have made your vendor selection(s) and are ready for install, it is time to move to implementation phase. But before you jump directly into the deep end and install your enterprise solution(s), you best bet is to build a lab. For clarity, I am referring a test system to prove the viability of your selection(s). Your lab system should mimic your planned production environment as closely as possible, taking into consideration hardware requirements, network setup (i.e. VPN, LAN/WAN/VLAN, dial-up, etc.), and interfaces. The one exception to this is if you selected a hosted solution. When possible have the lab installed at your location. Hosted labs generally come with limitations that will prevent you from having control over testing and timeline.

The lab step is critical to your success and control in the contract process as well. You may be asking, “How does a lab affect the contract?” Your contract at this point should be specifically for the lab. This type of contract is common, but many vendors do not offer this direction because it increases the sales cycle and increases the risk of having to commit to features in a final contract. So your contract at this point needs to be solely for a lab. However, make sure you have wording in this contract to not pay for software licenses twice. Negotiate to pay for software licenses only in the production system. You should however purchase a support contract for both your lab and production environment so you have full technical support of your lab.

An important point not miss is your lab needs to include all the enterprise systems you are installing. This was the reason for diagramming interface points and system architecture early in the process, ensuring interface functionality meets your requirements. During this process document the installation and configuration step of each solution for production implementation. This will save you time and headache when your business is dependent on getting in right he first time. Another benefit to building a lab.

In short there are two main reasons to implement a lab.

1. Ensure the enterprise solutions you are implementing will interface smoothly based on your operations and requirements.
2. Discover any feature gaps that must be resolved before moving into production. Generally you will find these, and you want to find them now versus in production.

From this information you should now be able to make a final decision if you can move forward with the vendors you have selected. Part 3 of this topic will review documenting feature development requirements, contract language, and implementing your enterprise software project.

For more information about kevin sturm Consulting please visit my website.

enterprise software, hoax or holy grail – part one

This is the first post in a three part series on enterprise software solutions.

“It’s an enterprise software solution.” This has become a loose and liberally used term by hospitality technology vendors and hospitality venues. It is for many technology vendors the everything feature, used to answer questions about consolidated ad-hoc reporting, multi-layer configuration, shared data elements, and next generation architecture and interface support. “Yes we can do that, it’s an Enterprise solution.” But the reality for most hospitality venues seeking the Holy Grail of enterprise systems is very different. Implementing a single enterprise solution is a complex task. Implementing multiple enterprise systems is difficult at best and may be impossible for some if not carefully planned and executed.

I consulted with a client who a few years back purchased a number of Enterprise software solutions with promises of decreased food cost, better financial reporting, improved menu analysis, and lower system support costs. They chose well established vendors with proven track records, working with each vendor to implement the system to take advantage of it’s enterprise features. But like many other venues with similar initiatives, they found the project to be highly complex with problems the vendors had not prepared them for. The current outcome of their initiative was to remove one solution all together, delay the implementation of other solutions, and focus on retrofitting a single Enterprise system to meet business needs.

For some venues installing multiple enterprise solutions is not currently a reality, but for others it can be accomplished with a well planned project and diligent management of the the individual sites and vendors. Venues currently planning on migrating or replacing disparate technology solutions with one or more Enterprise solutions must consider these items before selecting a vendor(s).

research and document technical and functional operations.
Before choosing an Enterprise solution it is important to ensure that you can feasibly implement an Enterprise solution. This will be different for each type of venue, but four important requirements are network architecture, security permissions, site operations, and financial reporting needs.

Most enterprise solutions require some form of network solution that connects all sites, and many vendors them will request a dedicated or isolated network. In this day and age it would seem simple to get Internet access with all the options, but time and again venues (especially remote venues) find that Internet access is difficult if not impossible to get. For many a T1 or Fractional T1 is the only option, which can break the budget of many technology projects. To add complexity to the situation, your security team is waiting to tell you all the reasons the desired solution will not meet security standards. If it is not documented already, request Information Technology (IT) to document permission and access protocol for your network, and involve IT in the process of selecting your system.

If you are contemplating an Enterprise system it often means you have multiple locations spread out over a geographic area. And unless you are McDonald’s each of these locations have defined their operations and are reticent to change. It is vitally important you understand and document these operations, from the front end user to the detailed reporting procedures used by finance. Be diligent in asking for any “customizations” that individual sites have made to their existing solutions. Pay special attention to finance since most established finance teams have custom spreadsheets or macros that have been created to work with their existing system. Interrupting this process without a replacement plan will not only create project delays but unhappy employees.

evaluate and change your operations.
When you have documented your operations it is time to make some hard decisions. One of the most difficult projects to undertake is deciding on your corporate standards. It is actually easy at corporate, but difficult at the site level. Management at individual locations are never excited about operational changes, and are often not willing participants. The success of your project(s) weighs heavily in the hands of local site management, and their participation is vital. Decisions need to be made in advance of your technology decision so that data requirements are understood and planned changes to operational processes documented.

Once these decisions are made, it is important to mandate the planned changes. Customizations at the site level will kill your enterprise project with poor transactional data. A top initiative of your Enterprise project should be to ensure quality data is being stored. Lots of operational procedures will ensure lots of disparate and duplicate data in your system.

understand hierarchy of data elements.
Now that you have your general operations down, you can begin to document the important data elements. These data elements are important for two reasons. First, they are the back bone of your reporting. It’s the old adage of garbage-in-garbage-out. If you don’t understand the data going it, the data coming out won’t make sense either.

Secondly, data elements will be the measure to understand Enterprise hierarchy of your technology solutions. Pay attention, because this is important. Enterprise solutions are based on a hierarchy of data elements. For example, at the most basic level they will have a hierarchy of the business.

Corporation – Ownership Entity
Business – The actual business
Region – Sub definition of Business
Site – Physical place of business

Not all technology solutions will have all of these data elements, but most will have some subset. This however is the most basic hierarchy of an enterprise system. Each data element will then be associated with one or more of the above data elements. Some examples of sub-data elements are employees, revenue types, revenue centers, inventory items (whether food, rooms, tables, or people), and point of service (POS) devices.

When reviewing your technology options request a detailed data hierarchy from all prospective vendors. If they do not have this information, demand it. It is too important to your success to overlook. If they cannot provide it, then they are not worth evaluating.

diagram interface points.
If you have completed all the above successfully, you have done the easy part. You understand the operational requirements, documented important data elements, and have information on how your prospective vendors define those data elements. As great as it would be if technology vendors designed their architecture with other vendors in mind, they did not. They designed them with release dates, internal initiatives, and other customers in mind. Each data element from each vendor is a puzzle piece and the puzzle pieces must fit in order see a holistic picture of your data.

Careful attention to this step will make or break the success of your enterprise solution project. It is also important that someone with a strong technical understanding be involved in this step. Enterprise projects succeed or fail on how well the data elements fit together. I recommend putting together a simple table that creates a single view of how these data elements fit together. Having this information in a single view defines how each vendor’s hierarchal structures complements and contradicts each other.

For example, if your Point of Sale (POS) solution defines revenue centers at the lowest level and your Property Management System (PMS) defines them at the highest level an interface architecture needs to be implemented to ensure maximum benefit is achieved from each system.
You’ve now made it to the vendor selection process. For tips on Enterprise Software implementations read Part 2 of this post.

For more information about kevin sturm Consulting please visit my website.