ERP (2 of 2)

...Making Dollars and Sense out of ERP Implementation.

Every business of any scale, and certainly any hotel, has compelling requirements for at least the basics of Enterprise Resource Planning (ERP) software, the pure accounting components of General Ledger, Accounts Payable and Financial Reporting. The capabilities of a fully featured ERP applications suite are outlined in our previous ERP article “Shine a Light on ERP” and includes another great perspective by Ron Strecker in that issue. For this article we will elaborate not so much on the software itself, but the crucial role of the Implementation Partner.

ERP is unique compared to other software applications we procure for hotels, in that the software might come from one company and the implementation and support services from another. When you buy a PMS or a CRS, training and implementation will almost always come from the vendor that sold you the software. With ERP, that may or may not be the case. ERP software vendors are typically industry agnostic. Therefore, knowing a little about a lot of industries, but not knowing a lot about any specific industry. This class of accounting application vendor will sometimes perform implementations, but usually rely on a network of implementation service providers and value-added resellers to work with the client to get the software installed and the system fully deployed.

Our thesis is that for an hotel company, the hospitality-specific expertise of the implementation partner is at least as important as the choice of the software itself. Here are a few of the reasons why deep knowledge of hotels and hotel accounting are crucial for a successful ERP, or even a basic accounting system implementation:

The Uniform System of Accounts for the Lodging Industry (USALI[1])

o USALI, soon to be in its 12th Edition, codifies the classification of revenues and expenses and reporting formats for hotels and other lodging enterprises

o USALI has been broadly adopted by the industry as it allows comparisons of financial statements across hotel companies

This standardization is valued not only by hotel companies but also by investors, lenders, asset managers and other essential stakeholders

o If the implementor is not fluent with the requirements of USALI, then they will need to become experts on the fly, at your expense, and certainly with some trial and error

Industry icon Bruce Bensetler, founder of Data Plus Hospitality Solutions, has seen implementations by people from outside hospitality where “The client ended up with a Chart of Accounts that wasn’t USALI compliant and couldn’t support their reporting needs.”

Understanding the operational and financial rhythms of hotel operations, where some examples might include:

o Working around the resource constraints imposed by budget seasons for hotels, typically August – October

o Understanding how the structure of one hotel company might lend itself to a simultaneous ‘big bang’ deployment schedule, but another hotel company may require a phased rollout based on the segments the hotel company serves and how the Finance function is organized

Integrations to hotel-specific systems and data sources

o Minimizing manual input and errors means integrations to PMS, POS, Spa, and other transactional systems found in hotels

o If the implementation partner does not already have deep experience in hotels, they will be developing each of these integrations from scratch on your time, with extended implementation timelines for them to build each new interface as a one-off

Gayle Edwards, Managing Director of Professional Accounting Solutions, once took over a client from a provider with little hospitality expertise. Gayle shares, “The client was amazed that PAS could estimate and deliver enhancements and integrations in a third of the time and cost of the prior company, and without having to be educated on why they wanted an STR integration or what a RevPAR Index was.”

So, if you accept the premise that hospitality-specific expertise is essential to an ERP implementation, recognize that one way to get access to that depth of knowledge is to buy not only software but also implementation and ongoing support from a dedicated hospitality accounting software firm. Software companies fitting this description are likely familiar to readers of this publication. These include industry stalwarts such as Data Plus Hospitality Solutions (https://www.dphs.com/), M3 (https://www.m3as.com/), Aptech (https://www.aptech-inc.com/) and others.

But many organizations might want to buy a horizontal ERP system, perhaps because they are in other lines of business in addition to hotel management. These companies will be best served by choosing the horizontal ERP software best suited for their needs, with implementation services provided by a partner specializing in hospitality.

These implementation partner specialists generally align with a specific software vendor and focus on delivering that software product to hotel companies. Firms in this category include Professional Accounting Solutions (https://www.profact.com/), aligned with Infor SUN Systems; Acumen (https://acumenfl.com/), partnered with Sage Intacct; and Hotel Investor Apps (https://hotelinvestorapps.com/; Acumatica).

Obviously, there are other combinations of software developers and implementation service providers with the requisite hospitality accounting skills. Here are some tips on identifying them:

Quiz them on USALI compliance

o For example, ask how they intend to support their current hospitality clients through the adoption of USALI 12th Edition in place of the 11th

Request lists of PMS, POS, Spa, Golf, RMS, and data source systems (i.e., STR) that they have actual integrations in production with
Check references with hotel companies like yours
During the pitches, listen carefully for signs that the vendor really knows hotels and hotel accounting, and that those people are going to be the ones participating in your implementation

Whether you opt for a dedicated hospitality accounting solution or a horizontal application like those mentioned above or Oracle’s NetSuite, Microsoft’s Business Central, or one of the many others in the market, make sure that you understand fully who will be delivering the implementation services and what their depth of expertise is in hospitality accounting, especially as regards USALI, integrations and the realities of the hotel industry. Choosing otherwise will drive up the project budget and push out the timelines as the partner without this experience will have to learn to do all these things for your project.

First Published at Hospitality Upgrade

Mark Haley and Mark Hoare are Partners at Prism Hospitality Consulting, a boutique firm serving the global hospitality industry in technology and marketing. Managing system selection efforts is a core practice area. For more information, please visit prismhospitalityconsulting.com, or call +1 978-521-3600.