HITEC 2024: What I Learned
I set a goal for HITEC to visit as many back-office software vendors as possible to stay abreast of their latest enhancements. This included those with core accounting applications, purchasing, human resources (HR)/payroll, and others designed to fill gaps for budgeting, analytics, and accounts payable (AP) automation.
What I learned is that today’s back-office applications are starkly different from those available 10 years ago. Most of the vendors are the same, but the enhancements to their solutions have certainly grown, with features that improve efficiency and accuracy. My high-level observations of the core accounting applications were:
- Each solution is full of features, though they vary between vendors.
- Most vendors have strategic partners to fill in functionality gaps.
- Most offer cloud/hosted environments.
- Application programming interfaces (APIs) are the leading method of data integration.
- Artificial intelligence (AI) is showing up at a rapid pace.
If you haven't considered replacing your back-office apps in the past 5 to 10 years, then you might benefit from a digital transformation — using the latest technology to change the way you do business. For hotels, this transformation is already underway in the guest-facing world of central reservation systems (CRS) and property management system (PMS), but many organizations overlook advances in backoffice technology.
How Do You Get Started?
Updating your applications alone won’t help you achieve the greatest digital transformation. In simple terms, there are three phases to digital transformation:
- Assess your current environment.
- Configure applications and integrations.
- Transform your organization’s operating effectiveness.
The first step in preparing for a digital transformation is to perform an objective assessment of your current environment, which includes practices, processes, and tech stack. This step shouldn’t fall to a single individual, it requires input from all stakeholders. Engaging an independent third-party to guide the process can often improve outcomes.
Your goal is to find opportunities to enhance operational support. Management reporting should be at the top of this list. It requires information to be consistent, accurate, and timely. Taking data from different reports and entering it into Excel for reporting purposes is both error-prone and time-consuming.
A key element to focus on is streamlining data flow as it passes from one application to another. For instance, does your point of sale (POS) data flow seamlessly into your PMS, and from there seamlessly into your back-office accounting application? Or is the flow interrupted because your staff constantly finds errors that require correction? For example, does a new POS menu item get mapped to a new PMS transaction code with no associated general ledger account? This is just one example of the need for a digital transformation. Think of other key systems that deliver data to your core financial applications.
How smooth is the data flow from timeclocks to payroll to general ledger, including the calculation of month-end payroll accruals? Do you use purchasing software to electronically place orders using catalog-specific products from vendors, but then post invoices manually into accounts payable (AP) followed by printed check payments mailed through the post office?
What You’ll Learn
Completing the assessment phase should provide you with a comprehensive gap analysis highlighting inferior or missing features.
The summarized gap analysis will likely fall into one of these areas:
- Minimal changes needed, with minor tweaks to processes and improved integration with current applications.
- Current tech stack and processes are somewhat optimized, but you have major gaps in desired functionality.
- Processes and tech stack are so antiquated that it’s best to consider a complete overhaul.
If you’re in the first category, congratulations! Consider yourself lucky, and in the minority among most hospitality businesses. Often, minor changes to an application’s configuration are all it takes to alleviate what were once essential workarounds. These often come about when you need a feature or integration that doesn’t exist in your system. You may find it’s available in a recent upgrade.
Those in the second category can often benefit from configuration updates, but still find their current tech stack has key functionality gaps. Today, it can be easy to fill these gaps with third-party solutions such as analytics, budgeting or AP automation. You might be surprised at how many solutions exist, so be specific on the features and integrations you need.
However, if your organization is in the third category, or even somewhere between 2 and 3, then you have an opportunity to create meaningful changes in the way you operate and manage financial reporting. You might find some low hanging fruit that’s easily checked off someone’s to-do list, but the process will probably reveal a true need for organizational change management.
Do you still follow legacy processes that conflict with the parallel application data flow? Purchase order and invoice approval hierarchies are good examples where the software and physical practice may not be coordinated.
Throughout the assessment process, you should spend time reviewing application configurations. Many configurations that were set up when you originally installed the product may no longer be relevant. Conduct a vendor-led configuration review at least once every three to five years. Involving new managers in this review can often bring about innovative ideas on how to improve a process.
One last critical step in performing an objective assessment is to understand how much you’re presently paying to vendors involved in your tech stack. Finance and IT need to work together on a full inventory of all current applications in use with specifics about cost and contract terms. This process is often revelatory. You may find several overlapping features amongst your tech stack that you can replace with one product – or a single vendor – that provides cost savings and enhanced integration.
How Long Does a Digital Transformation Project Take?
Depending on the project’s scope, the full process could last six to 12 months, including planning, training, and implementation. There’s a lot to think about when charting a course for digital transformation in your backoffice tech stack. Try to be objective and consider various approaches. Take the time to check references and develop vendor demo scripts designed to answer your questions.
A thorough assessment phase might take three to six months, depending on how extensive your needs are. This might include proposed rewrites of policy and procedure manuals throughout the organization.
The configuration phase might begin during the assessment phase, but a major overhaul could require another three months for vendors to configure the underlying applications and integrations. The vendor should offer a test environment to check the configurations without interruption to production systems.
The last phase, transformation, might take another three to six months if you’re doing a major overhaul. In these scenarios, the configuration phase would have laid out a roadmap for a logical migration from existing to new systems. Some modules may need to be live before you can use other modules. Training is a major part of this phase and a key to a successful transformation.
Here’s one last reason to look at your back-office tech stack. The Uniform System of Accounts for the Lodging Industry (USALI), 12th Revised Edition goes into effect Jan. 1, 2026. It will include many changes that will impact your financial reporting. In short, now is an excellent time to assess your back-office tech stack for efficiency and needed modifications.
