Robert Kugel's Analyst Perspectives

Infor Simplifies Hospitality Management Software

Posted by Ventana Research on Jun 23, 2010 6:46:53 AM

Midsize companies typically lack the economies of scale that larger ones can bring to bear when it comes to buying and implementing software. They usually don’t have the resources to customize packages such as generic enterprise resource planning (ERP) systems, and they don’t have enough internal IT staff to make ongoing refinements in response to business needs. Observing these constraints, software vendors selling to companies of this size range long ago discovered that verticalization is a necessary market strategy.

Two of the biggest challenges in the day-to-day management of any retail business are handling the mass of details and coping with competitive pressures. Minimizing the number of errors in when margins are tight is a key success factor since mistakes can drive away customers and cost money to fix. Consider the hospitality industry for example. In today’s travel and leisure markets, most people rely on the Internet and social media (rather than travel agents) for recommendations, and pricing is transparent and therefore fiercely competitive; in this environment, hospitality companies need software that will help them improve operational execution. Smaller operators must be able to offer the same sorts of services as the big chains. They need to maintain guest profiles to offer consistent, personalized service, especially if they operate multiple locations, and must be able to market to specific affinity groups with tailored offerings. They need to understand their most profitable customers and to devise ways to cater to their wishes. On the efficiency side, hoteliers must be able to manage their inventory of rooms and facilities to maximize revenue, quickly and easily execute core business functions such as bookings, human resources, customer inquiries and complaints, and manage food and beverage operations. From a performance management perspective, they need easy-to-use planning, business analysis and reporting capabilities.

Infor is a software company that focuses on midsize and larger companies, addressing broad requirements such as performance management and customer relationship management but also offering products tailored to specific vertical markets. Recently it acquired SoftBrands, which provides a hospitality package for hotel and lodging companies, especially midsize chains and smaller operators. The acquisition enables Infor to offer a suite of applications including a central reservations system, reservation distribution (to view inventory and rates), property management (used, for example, to track which rooms have been cleaned and can be offered to guests), leisure and activity management (to handle on-site businesses such as spas or banqueting), human resources, food and beverage management (for restaurants, bars and in-room mini-bars) and customer relationship management as well. The package also includes some level of financial and performance management capabilities.

Infor also announced SoftBrands HMS, a suite using its Infor ION applications and component-based middleware. It is based on a service-oriented architecture (SOA) designed to simplify configuration and integration across the enterprise and on the Internet. Today Infor sells these applications for on-premises deployment, but I expect within a decade a majority of customers (and just about all of those with five or fewer sites) will want these capabilities delivered as software as a service (SaaS). Infor ION should simplify future transitions.

Hospitality is more than an interesting minor niche for the software business. There are about 50,000 hotel and lodging establishments in the United States alone, and a majority of these are small and midsize operations – the target customers for SoftBrands’ software. This is already an attractive market, and I think the shift to SaaS will provide a way for these operators to acquire sophisticated IT capabilities that help them provide better service to guests, automate routine business tasks and supply management with deeper insight, all without having to employ an IT staff to support and update the underlying software. This delivery model will enable all companies in the hospitality business to gain capabilities that are expensive and too difficult for them to access today. Infor should be in good position to take advantage of this opportunity.

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Robert D. Kugel - SVP Research

Topics: Big Data, Operational Performance Management (OPM), Hospitality, Business Performance Management (BPM), Infor

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