ERP (1 of 2)

…Let's shine a light on ERP.

If we here at Prism Hospitality Consulting were to have generated periodic Hospitality IT Word Clouds related to all our professional discussions, proposals, and assignments for each quarter trailing back to, say, 2015 we would have seen a recurring theme of top Words, Terms or Acronyms related to what might be described as the Bright Shiny Object of the day. Think Blockchain, IoT, Attribute Based Selling, Cloud, Touchless, and latterly the tsunami of references and claims related to Artificial Intelligence and Machine Learning.

All these Terms or Acronyms would have grabbed that top word spot throughout the peak of their ‘buzz’, and then faded into the background. However, there is currently a long-time background candidate that has been sneaking into the Word Cloud top spot, and that is ‘ERP’.

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Taking a wild guess, it might be reasonable to estimate less than twenty percent of our colleagues in the Hospitality industry would know what the acronym ERP stands for, let alone what an ERP really is. Despite this, there appears to be a current surge of Hospitality companies looking to implement, extend or replace their Enterprise Resource Planning technologies.

Let’s take a moment to shine a light on Enterprise Resource Planning. While an ERP is commonly thought of in terms of an Accounting and Finance centric tool, and certainly can be deployed for just accounting and finance purposes, it can also support significantly more of the overall scope of differing business functions. Depending on the business type in question an ERP will comprise select modules and functions that other business types may have no need of. By way of example: for the logistics industry speciality modules handling Supply Chain, Warehouse, and Transportation functions would be incorporated. For the Engineering and Manufacturing industries Product Management, Component Management, Production Routing might have roles. For the Hospitality industry, Purchase Order & Inventory capabilities attuned to Food & Beverage purchasing (catch weights, menu item ingredient calculations, etc.) would be incorporated.  Or Time & Attendance functionality fully supporting variable pay rates, multiple positions per employee, and unique overtime regulations common in hotels.

Let’s look at all the modules and functions that in part, or in whole, constitute an ERP solution relevant to the Hospitality industry.  Keep in mind that these are a collective of modules and applications and rarely from a single vendor.

Accounting & Financial Modules

• General Ledger

  • The core of the system, hosting Chart of Accounts that together can define the enterprise in financial and statistical terms.

• Purchase Order & Inventory

  • Module or external application for processing Purchase Orders and maintaining inventories, with great efficiencies enabled by workflow automation for approvals. §  Often a specialized F&B component is in place in hotels, supporting not only purchases of food items, but also menu engineering, menu costing, etc.

• Accounts Payable

  • When a PO becomes an invoice to be paid, the A/P module generates the payment, whether by check, ACH, or other mechanism. This often includes automated processes that match Invoices to their POs using an Optical Character Recognition (OCR).

• Accounts Receivable

  • Usually in a single hotel, A/R is done in the PMS, but hotel corporations will often need an A/R component for the management and collection of receivables such as franchise fees.

• Financial Statements and Reporting

  • This module handles the formatting and maintenance of Financial Statements that most hotels companies and owners require to be compliant with the Uniform System of Accounts for Lodging Industry.

• Budget, Forecast & Consolidation

  • Often an external system with integration to the G/L, these Financial Planning & Analysis components enable the creation of multiple Budgets and Forecasts and support the consolidation of statements from multiple entities into a whole.

• Fixed Assets

  • Tracking the acquisition, depreciation, and disposal of Fixed Assets, usually more important to owners than to managers.

• Income Journal

  • The daily process of creating a record of all revenues (income) from all sources of revenue, auditing those values, and posting to the G/L.

• Payroll

  • Mission-critical application, often outsourced to a specialist firm, requires integrations to Time & Attendance and G/L at a minimum, often also to benefits carriers and tax jurisdictions.

Human Capital Management Modules

• Time & Attendance
  

  • Often an external system, records punches in and out for hourly employees by job code and revenue centre, tracks overtime and usually processes Paid Time Off.

• Recruiting & Onboarding 

  • Module(s) to support the Recruiting process that has become so crucial and also bringing the new hires into the company with tax forms, benefits enrolment, policy acknowledgements, orientation and more.

• Employee Performance

  • Tools for tracking performance reviews, measuring progress, and managing merit increases.

• Benefits

  • Module for tracking the various employee benefits offered (health insurance, retirement, etc.), who is enrolled in what program and interfacing with Payroll to manage deductions; getting carriers paid.

• Training

  • At one end of the scale, simply recording who has completed a training or certification; in the middle tracking when a certification or license has expired and needs to be renewed; at the high end of the scale, a fully loaded Learning Management System with custom content, tests, full tracking, etc.

• Compliance

  • Reporting on Equal Employment Opportunity (EEO) statistics and other key metrics.

Business Intelligence

• KPI Dashboards

  • Tailored to the individual hotel, cluster, and/or corporate KPIs that matter most to a hospitality operation, all using consolidated data from most of the above-mentioned modules.

• Consolidated Reporting

  • Typically, able to take detailed data from any number of source systems and combine them into meaningful operational and financial statistics.

• Data Mining & Modelling

  • A BI platform allows a skilled user to drill down into the number, get details and then bring them into a model to estimate the potential impact of a given decision, such “What happens to Net Operating Income (NOI) if we shut the South Tower for the slow season, spend $18 million on renovations and re-open it as a five-star experience?”

Our industry is well served by many ERP solution providers, each often serving a slice of the ERP pie. Most notably we have several hospitality-dedicated stalwarts who you will find on these pages, including Data Plus Hospitality Solutions, Aptech, M3, My Digital Office and a slew of younger companies.  Unifocus offers hospitality-specific Time & Attendance and Labor Standards applications.

The big-name ERP vendors are invariably cross-industry players; Infor, Oracle, Sage, Epicor, Workday, etc., and because they supply scores of different industries they are generally partnered with many different Value-Added Resellers (VARs) who specialize in specific industries.  For example, Professional Accounting Solutions (PAS) is a hospitality specialist in deploying Infor’s SUN Financials.  Acumen and TBSP are skilled implementers of the Sage Intacct platform. 

Hospitality ERP VARs will have deep understanding of our industry’s USALI accounting practices and hospitality industry business models and structures.  You will not need to explain RevPAR or Big Four to a hospitality specialist, but you might to a random implementor.  So, the choice of implementation partner is as important as the choice of the actual system itself.

Enterprise Resource Planning (ERP), selected and implemented well, will leverage your ability to adapt and align your hospitality business processes to both predictable and unpredictable market conditions. You will be better equipped to control costs, identify new business practice opportunities, generate more accurate forecasts, better measure therefore better manage, and not least of all report results more effectively and efficiently.   

Perhaps the very unpredictable travel and hospitality market conditions we have experienced over the last several years is the catalyst for ERP having elbowed its way to the front of our Word Cloud.

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: www.PrismHospitalityConsulting.com, or call +1 (770) 675-9930.