Much as already been written about 2021’s budget. It is undoubtedly one of the most challenging exercises in many professional’s careers due to the degree of uncertainty that the pandemic brings to the year that is fast approaching. Outbreaks, regional travel limitations and other harmful external factors cannot be ignored in the budget exercise.
Information Technology, as any other discipline, faces a budget season where extreme cost control and alignment between the different stakeholders are crucial to success. I believe that, regardless of the enthusiasm about digitally transforming our businesses, the key concern for owners will be cost. There will be in-depth scrutiny on every single expense, and the information technology department will not be an exception.
I had the opportunity to discuss and observe several realities, mainly European based, relative to this budget season. I created a shortlist of the Do’s and Don’ts that I believe helpful for planning 2021 as a year of creation of significant savings without losing sight of the aimed digital evolution. These are my two cents for 2021. Good luck all.
- Think like the owner or asset manager- Your mission is to save every possible penny and support initiatives that capture revenue. The first goal is to break even. Be an influential contributor to avoiding debt and asset devaluation.
- Multiple budgets. The uncertainty that will rule our lives in 2021 should materialize in multiple budgets that portrait different scenarios. Plan for the worst-case scenario as a starting point and create alternative versions that mirror more favourable macro scenarios.
- Move to the cloud but fight price and, above all, conditions. Just pay per occupied room (e.g. PMS), transaction (e.g. POS, Channel Manager ) whenever the model makes sense. Prefer monthly subscriptions, don’t accept a higher 12 months price than the “yearly” subscription.
- AI-enabled services – Revenue management and digital customer service can’t cope with Excel and the human response time as the core of their architecture. Real-time data, AI-enabled interactions and decisions, rich integrations with other hotel systems.
- Consolidate 2020- The emergency of the pandemic, the phenomenon of remote work and the new operational requirements caused rapid deployments of technology. It is now time to optimize the rushed deployments and value digital assets.
- Outsourcing processes – The lean organization doesn’t incorporate full processes that can be outsourced. A mix of processing engineering, technology and clear SLA’s allows hospitality organizations to move to third parties functions related to accounting, payroll processing, customer service voice agents among a longer list of functions.
- Relax on cybersecurity – The pandemic brought exponential growth in cybercrime. Some areas of criminals actions like email threats increase more than 500%. It is unlikely you can cope internally with the cybersecurity function. My advice is to grab every single dollar you can assign and outsource the process. At least firewall management, email security and endpoint protection must be covered by specialized professionals. 24/7
- Ask for considerable Capex funding – Unless the operation is at risk, I strongly advise against even trying to push for large Capex projects like WI-FI upgrades, new TV systems and similar. You won’t look nice in the picture requesting significant funding in the current times and the most likely reply you will get is a no. The only exception I see as a feasible option is IoT solutions that can return the investment within the year and contribute to the cost-saving effort.
- Buy hardware – If your organization has evolved to a decent degree of cloud maturity, you can recycle those old machines to lighter and free open-source operating systems (e.g. Ubuntu Linux) that are easy to use. After all, your users should only need applications that run within a browser to do their jobs. Convert servers to cloud servers and complimentary services like printing and document management can be obtained via renting or lease models.
- Think office – Work from home has come to stay. While the nature of the hotel business will still require much staff on the premises, multiple functions don’t need now or ever to return to the office. Sales, Marketing, Reservations and HR, are good examples. Design and adapt your systems for the old premise; anytime, anywhere, any device.