Omni Hotels & Resorts operates sixty upscale destination properties across North America, mostly self-owned and some managed on behalf of others. Its properties, divided into Resort, City Center, Convention, and Landmark “Collections,” total over 20,000 rooms and are staffed by 18,000+ associates.
Omni’s procure-to-pay initiative dates back to 2005, when Jim Kuthy returned to the company as VP of Capital Finance. Fairly soon thereafter, he was asked to get involved with their procurement group. “It didn’t take a rocket scientist to figure out where we were,” says Kuthy. “It was quickly apparent that our processes were extremely disparate. We had a variety of systems and processes – all separate, none cohesive, none seamless.”
This stemmed largely from their approach to the purchasing function, which has always been decentralized. “All hotels purchase on their own, making some decisions on a local level,” says Kuthy. “On the corporate level, we put in place the programs, contracts, and vendor relationships only for the categories that we require hotel purchasing compliance. Essentially, we have a bucket of programs, suppliers, and vendors that all of the hotels buy from: same sheets, same shampoo, etc., – everything with a brand standard on it or part of a mandatory brand-wide purchasing program. For the majority of everything else, properties can source and purchase on their own.”
That level of flexibility, while appealing to each individual property and part of Omni’s core values of reflecting the local market, made any form of centralized management or visibility difficult. Omni’s team wasn’t daunted, however. “I challenged myself and my team to create a procure-to-pay cycle that was seamless, end-to-end, and that would also fit our business processes and culture,” says Kuthy. “We’re control freaks. We want lots of visibility into everything. We also needed to mimic our existing business processes. They were disparate, but we were doing a decent job.”
That set the bar high for any potential solution: it would need to be broad enough to address every location, but flexible enough to account for individual properties’ needs – all while providing a consolidated view of the data to the strategic sourcing team at the corporate office.
Seeking a solution covering functionality and goals
Omni’s evaluation process was detailed and comprehensive. In order to be chosen, the prospective solution would need to:
1. Automate the entire purchase process,
2. Provide declining checkbook features embedded within the solution,
3. Provide receiving and accounts payable functionality,
4. Provide a supplier-neutral marketplace, meaning there was no fee involved for suppliers and anyone could participate,
5. Support integrations with major suppliers via punch-out, online catalogs, etc.,
6. Make supplier participation easy,
7. Offer a Software-as-a-Service model,
8. Reduce off-contract spend,
9. Reduce total spend,
10. Increase spend under management, and
11. Reduce requisition-to-order cycle times and costs.
Identifying the Contenders
At the beginning, Omni built an expanded list of potential providers by gathering information from a number of sources. Omni compiled a list of 12 potential P2P vendors that Kuthy engaged to kick off a round of conversations. After collecting enough information, he prepared an “RFP-like” document that identified the objectives they wanted to solve with the solution, placed in rank order. He then began visiting with the vendors, traveling to hotels where their systems were already installed, visiting offices, and ranking the providers according to the criteria that had been set out. After working through that scorecarding exercise, Omni refined the list from twelve down to three. With that focus, Kuthy’s team began to take deeper dives into the solutions, visiting more hotels, and talking to the Chief Procurement Officers of the companies using the systems.
“It became very clear, very early on – almost so early that I didn’t want to believe it – that BirchStreet checked all the boxes and then some,” says Kuthy. With that, they had found a provider they were confident could deliver on the aggressive goals they had set for the project. Kuthy also believed that while BirchStreet was a smaller company at the time, they were poised to become a major player in the hospitality space.
Omni was also cognizant of solution pricing as well. “The price was very, very, very right as well,” says Kuthy.
Taking IT to the cloud
The process began slowly, as the team worked its way up the learning curve. “We went live at our first property and had the normal deal of working out business processes and systems issues,” says Kuthy. “Once we did the first couple and perfected them, we rolled through the rest of the hotels one-per-week for the next six months.” That accelerated implementation cadence was aided by the solutions cloud deployment model and lower internal IT resource requirements.
Requiring that SaaS approach as part of the business case was done precisely for this reason. “I wasn’t a tech visionary,” says Kuthy. “I wanted it to be cloud-based because I didn’t want my IT people involved in it. They’re great, but already overburdened and under-resourced. I wanted to handle it with my team. IT just made sure we had the appropriate bandwidth within our [network] pipes to connect.”
Kuthy also put a lot of work in on the front-end to sell the solution ahead of implementation. “On the business unit side, we built a lot of buy-in,” he says. “We don’t have a top-down management mentality within our culture. So, first, I needed to sell it to the board. Then I had to sell it to the procurement folks in the field, and the finance folks in the field. Part of the rollout involved doing a lot of roadshows, demoing to procurement and finance and the management folks in the field. I thought it would be difficult, but lo’ and behold, they were so frustrated with disparate processes that they were on board after they had a chance to see the solution that was being proposed.”
That level of engagement helped include a wide swath of users in the selection process. Kuthy also used those interactions to scope project staffing for later phases: some of the people who showed the most interest during those roadshows were later tapped to be involved with the roll-outs.
Procuring comprehensive coverage and visibility
All owned and managed Omni hotels are using the BirchStreet platform. “We have almost 100%, crystal-clear visibility into everything purchased within our company,” says Kuthy. “Beforehand, we had almost zero. We had previously relied on our vendors to tell us what we were buying. From a spend aggregation and optimization standpoint, we only knew what corporate was doing, but not the hotels.”
The full report from Blue Hill Research can be downloaded here.
Scott Pezza is Principal Analyst for Blue Hill Research. Blue Hill Research provides unique and differentiated guidance to translate corporate technology investments into success for the three key stakeholders: the technologist, the financial buyer, and the line of business executive.