How to overcome the barriers of hospitality legacy systems

By Pace Dimensions’ Tim Davis, leading management consultant for the hospitality, travel and leisure sector

Today, hotel companies have invested and built out a range of point solutions around the key functions of their business, such as property management, revenue management, central reservation systems, point of sale, service delivery, housekeeping, concierge and more.

Most of the solutions that have been developed over the last two to three decades have been “black box” point solutions, meaning that they automate a particular function.

There are two major problems that have arisen from point solutions:

1. They only automate a single function and not the end-to-end business process that drives improvements to business performance. For example, a revenue management system tends to automate inventory availability controls and price levels but does not automate the end-to-end process of assessing, forecasting and planning business performance or making and applying pricing decisions to operations systems. So, despite improving productivity in one area through insight to make smarter decisions, it makes little impact on efficiency. The revenue manager still needs to manually go
through the required processes.

2. They create a very complex ecosystem of technology, which is difficult to innovate. Each function and the data from that function sits in its own database. It imports data from where it needs it and outputs either insight or decisions that are applied to another system. As requirements grow, there is an abundance of interfaces – a many-to-many ecosystem – that all need to be maintained. Each time a change is needed, it can impact multiple interfaces to make it work. These multiple systems also often store duplicative data about customers, inventory, pricing, availability and revenue, and there is no single source of truth that gives a holistic view of how the business is performing. This creates complexity in trying to deliver great customer service, gain insight across the business, and make smart decisions.

Imagine now, in the modern world, where a business wants to achieve a task across the customer journey or across multiple channels. This complexity of systems with many point solutions, each with its own database and multiple one- or two-way interfaces, makes for increasing levels of complications.

This spaghetti junction of single-function interfaces is very brittle, complex, difficult to manage and maintain, difficult to innovate new capabilities, and easy to break.

To give an example, the Covid pandemic demanded that hotel companies invest in guest applications to reduce human interaction, eliminate the need to physically check-in and be able to access and manage in-room services remotely.

Where the problem arises is, for that guest app to work, it must interface with at least six different systems (PMS, CRS, loyalty programme, door locking system, hotel Wi-Fi and the payment system). To know what the guest has booked, it needs to interface with the booking system; to know what room has been allocated and confirm payment has been received, it has to interface with the property system, and so on and so on. It needs to interface with multiple single-function systems to enable a guest digital application to work. And if these systems remain synchronised the final product is unreliable.

As a result, while hotel companies were promoting the fact that they’d launched a new guest app, the functionality was difficult to deliver, and guests were frustrated with its abilities… that’s if they managed to get onto the hotel Wi-Fi for the app to work in the first place.

This demonstrates how difficult it is, with legacy, single-solution systems, to bring multiple functions together and empower customer action. When companies aim to innovate and add specific capabilities to their existing technology ecosystems, often they are adding more and more complexity to an already complex and brittle technology environment. It’s impossible, with the cost and complexity, to transform all of the current systems all at once and start afresh with modern technology. As well as being extraordinarily difficult to deliver, the risk involved may cause disruption to the business.

Hotel businesses need to evolve from the black box ecosystem to a more modern, integrated technology architecture that creates a single view of the business.

In order to evolve from this complex technology environment to an integrated technology architecture, a good place to start is creating a single view of customers in order to improve marketing effectiveness and a single view of inventory, availability and revenue to enable improved distribution and revenue performance.

A modern architecture is characterised by having single sources of truth for critical business information, a common library of technology services that can automate different functions and, separate from that, brands and points of sale that may call upon those services to execute a particular task for an employee or a customer.

It is then possible to prioritise and renovate other capabilities in the new architecture. So, separately building core business services, one function at a time – e.g. marketing, content management, e-commerce, service delivery, etc. – surrounding and eroding where the existing operating systems have those functionalities so that they can be ‘switched off’ in the legacy systems.

Three common ways that hotel companies can deliver a modern serviced based technology architecture:

1. Use a single, tier-one vendor to undertake the entire project. While it might not be best-in-class for all functions, it simplifies through a single-vendor approach.

2. Select best-in-class vendors where the solutions are all modern, service-based and exposed for integration through APIs.

3. Building middleware, which creates a translation layer between the legacy systems and the channels and points of sale.

All travel and hospitality businesses are likely to have some version of the ‘spaghetti junction’ of legacy systems hampering the ability to improve efficiencies. To get past the legacy technology, it’s important to manage risk and time to avoid disrupting the business and to invest in keeping the business running and improving while using the surround and erode strategy to deliver more modern and efficient technology systems to improve business capability and, ultimately, performance.

PACE Dimensions is expert in opportunity identification and prioritisation, business architecture and design, operating model design, transformation delivery and change management. Find out more about how PACE Dimensions can help your business to excel at www.pacedimensions.com.