The Hospitality Executive’s Essential Checklist for ERP Investment

Hospitality businesses, like hotels and restaurants, are notoriously difficult to manage because you need to stay on top of bookings, front-desk performance, menu management and inventory. In the recent past, these businesses relied on several separate, disparate management tools, which was utter chaos. Modern ERP (Enterprise Resource Planning) systems establish order by collecting and integrating systems under one roof.

The thing is, how do you know if you’re getting a quality system that will meet your business’s unique needs?

We’ve prepared a checklist to help you make that decision.

Strategic Alignment & Integration

The first thing you must do is set goals. What do you want to achieve with your ERP system? For example, do you want to increase the efficiency of integrations or focus on customer metrics, like cost-per-guest? 

You can of course do both and a lot more besides, but sometimes it’s better to focus on one or two features at a time, especially when you’re in the first stages of rollout. 

Let’s look at some of the most useful features to look for.

• Drives sales. In hospitality, this means getting more people through the door. You want flawless integration between core ERP and CRM systems. This provides insights into customer behavior so you can adjust services to increase personalization, as well as the effectiveness of your sales and marketing strategies. 
• Unification of financial and operational data. Uncover important sales-related and operational data, like seasonal performance, off-peak performance, and cancelled bookings. Delve into financial metrics for a comprehensive view of customer dynamics and operational activities. 
• Accurate profitability calculations. This requires detailed data regarding all income (revenue) and expenses. For example, room service revenue and cleaning staff-related costs (time tracking). Match costs and income in the right period to determine true ROI. 
• Support for Best-of-Breed integrations. ERP systems are designed to integrate with other systems to round out their features. You want a system that easily integrates with things like POS (Point of Sale).

Your ERP system must align with your work processes and successfully integrate or incorporate your existing system to ensure continuity of data. 

Scalability & Control Design

Can your ERP system cope with increasing demands, like adding new locations, hiring more permanent than temporary staff? What about fluctuations within the market, locally and globally? You need ERP tools that:

• Are designed for multi-entity management. This includes multiple properties and multi-entity environments, like hotel rooms, restaurants, and gift shops. The aim is to lessen the complexity of admin and maintenance across the board. 
• Use dimensional accounting. Dimensional accounting uses tags (much like Facebook tags) to record transaction context, for example, transactions by franchise. It can even drill down to employees.  
• Manage multi-currency exchange. Many hospitality franchises (hotels and restaurants) cross borders and, unless you’re in the EU, that means different currencies. This is tricky because the value of currencies changes daily. Your ERP system must work in real-time for absolute accuracy.
• Provide real-time visibility. Systems should provide complete visibility and drill-down capabilities via centralized dashboards. Managers can then monitor performance and identify areas needing improvement. 

Markets fluctuate, seasonal demand changes, and expansion increases the pressure on your financial accounting system. Your new setup must be able to accommodate all of these scenarios (and more) with ease. 

Implementation & Go-Live 

This is the technical back-end stuff and the most critical component of implementing an ERP system. After all, a system that’s not properly implemented won’t work and then all of the above is useless. Ask yourself:

• Do you have someone who can oversee the process? This person is actively involved in the process. No passive observation from the sidelines.
• Have you allocated enough time for system design? The process takes up to six months for small businesses and 18 months for large businesses. Accept that and don’t try to rush it because this is the design, the platform, that will support all your operations going forward. 
• Are key users available? Basically, have the people who will actually use the system been given the opportunity to provide input during the design phase?
• Do you have clear KPIs to measure post-launch success? How will you know if your new system is on track to achieve your goals? KPIs are the key, so create some that cover enhanced productivity, scalability, and accessibility of reports.

You and your provider will work together to develop a rollout plan that minimizes resistance from staff with a few quick wins to build momentum and motivation. 

Tick the Boxes

These are the basics that you should include in your ERP checklist, but they are more than sufficient to provide insight into your ERP requirements and guide your decision when it comes to choosing your platform. 

Get it right and you’ll soon see the benefits of unified guest preferences, operational metrics, and financial data.