CIOs need to know the cost of their operations to manage pressure from above. CIOs need to know the cost of their operations to manage pressure from above.

Hotel CIOs need to understand exactly how much their IT systems and resources cost in order to manage pressure from chief executives, chief finance officers and general managers.

That was the recommendation of Movenpick Hotels & Resorts Management AG chief information officer Willi Tinner made during a presentation at last month’s Hotel Technology Middle East conference.

One of the issues noted by delegates at the conference was that it was challenging to get requests for investment in IT approved.

Tinner said: “CEOs and CFOs are asking the question to the CIO: how much does IT cost? Is outsourcing cheaper? You have to know how much your IT costs, then you have better arguments to get more resources, or you find out that it is costing too much”.

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He said Movenpick had been analysing the cost of its IT in 18 out of its 70 hotels, looking at all areas except website, distribution and CRS.

“The aim was not to exceed 1.5% of gross operating revenue for the IT budget,” said Tinner.

He referred to useful benchmarks for the IT yield — the GOP achieved by each IT dirham/dollar/euro spent — established by Lausanne Hotel School.

“For each unit spent in IT, 82 units should be achieved in GOP, for example. These kinds of figures are important for us in finding our total cost of ownership,” said Tinner.

Movenpick vice president technology Middle East and Asia Roger Macfarlane added that when educating owners and financiers about IT investment, CIOs needed to explain the tangible and intangible benefits.

According to Macfarlane, looking at financial outlays was not enough.

“They are only looking at 25% of the picture”, he said.

He noted tangible benefits such as increased occupancies and repeat guest ratio but noted intangible benefits such as having an edge over other competitors.

“We need to look at that. Yes, costs are important but it is only a small part of the picture,” asserted Macfarlane.

 

 

 

Hotel Technology Middle East was organised by IQPC and held at Atlantis, The Palm, Dubai.