What IT Execs Need to Do Now

By Cihan Cobanoglu | December 09, 2008

During these hard economic conditions, many hospitality organizations are asking themselves if it's healthier to trim back on IT expenditures or invest in IT with the goal of increasing efficiency. The argument in favor of IT investment isn't necessarily the easiest one to support when budgets are being cut across the board, especially since technology initiatives can be tricky to quantify and are met with skepticism even during healthy economic conditions.

So, what's an IT executive to do? Is it more prudent to call a halt to IT investments, and wait out the storm with hopes of a speedy economic recovery? On the contrary, now is not the time for technology departments to remain quiet; doing so will only lessen the credibility technology has as an overall enabler for improved performance across the organization. By contrast, IT executives should continue to push for technology objectives that will increase efficiency and help the company ride out the negative affects of a down economy. Here are five core areas IT executives should place their focus during an economic slowdown.

1) Focus on strategic goals. Those companies that see IT as a strategic enabler, not as a cost center, are the ones that will be best positioned to gain the most from their IT investments. This differentiation is fundamental to success. Otherwise, a company might invest in IT just because they feel they must or because a competitor has done so. However, if the mission of the company is clearly defined and communicated across all departments, from top executives to entry level personnel, then selecting the right IT solutions becomes easier. For these companies, the question should be: How can this IT investment help us reach our strategic goals?

Consider Affinia Hotels (www.affinia.com), for example. When a guest visits the company's website to make a reservation, he or she will be asked several questions aimed at customizing the guest's profile. This has two immediate benefits. First, the guest feels that he or she is receiving a customized room (i.e. iPod, pillow choice, fitness kit, etc.). Second, collecting such data provides the company with important insights into their customers' preferences. With this information, the hotel can now predict this particular customer's potential lifetime value based on spending patterns and preferences. In turn, the hotel may choose to offer this customer special packages to increase their loyalty. In addition, this valuable information will be used to create an effective CRM program for the chain.

2) Focus on efficiency and cost cutting. If you are not using cost control software, now is a great time to leverage such a tool. Most software of this type offers an exception alert system that will prevent unnecessary food cost increases.

3) Focus on future legal and contractual needs of the company. Certain technology requirements must be addressed regardless of economic stability, and in particular those that relate to legal and contractual requirements. Compliance with the Payment Card Industry Data Security Standard (PCI DSS) is one such area. Hospitality operators, and in particular restaurants, are susceptible to security breaches that threaten the safety of their customers' credit card data. Breeches result in significant fines, loss of consumer confidence, and a financial burden for hospitality companies. Don't allow budget reductions to impact business areas that have legal requirements for technology tools and procedures.

4) Negotiate discounts. Vendors may be more willing to negotiate discounts during these economic times. Shop around. Do not forget that there are hundreds of hospitality technology vendors out there and competition is tough for them, too. Create a request for proposal and send them to several vendors. Once you select your top three vendor choices, negotiate the price and don't be afraid to ask about financing options.

5) Consider the Software as a Service (SaaS) model. There are many advantages of SaaS over the traditional client-server model of software. In the short run, SaaS could be significantly less expensive than traditional models. Broadband connections are more reliable now than ever before, and the number of companies that offer some form of SaaS is continually increasing; confidence in their solutions is higher than ever.

These hard economic times continue to present opportunities for IT departments to innovate, not just in products but in processes. Economic hardship historically exposes opportunities for improved efficiency. I have no doubt the same will happen this time. We just need to be ready.

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