Hilton Hotels CIO Talks ‘OnQ’

James T. Harvey (Tim) became chief information officer and senior vice president for Hilton Hotels Corp. in Memphis, Tenn., in December 1999. He is responsible for providing technology solutions to the Hilton family of brands and their franchisees and owners with superior business solutions to drive greater profits and better access to hotel performance information. Harvey was formerly chief information officer and executive vice president of Promus Hotel Corp. before it was acquired by Hilton Hotels Corp. in December 1999. Headquarters is in Beverly Hills, Calif.

A 23-year veteran in the hospitality industry, Harvey has held various positions in Information Technology supporting various computer, hotel and marketing business functions. A Mississippi native, Harvey earned a bachelor of business administration from Delta State University in Cleveland, Miss., and received his Masters of Business Administration in management from the University of Memphis.

Q: What is the greatest challenge you face trying to deploy new technologies across hundreds of hotel properties including several franchises?

First, by far, I think, it’s the people adapting technology…technology is not very good unless it’s used and embraced and the information it provides really infiltrates the business processes: how service is delivered and the information that technology can provide has to get consistently across 2,100 hotels. It’s great to have the water there but it’s wrong to expect the horse to come up and drink it. You have to make it part of the way the service is delivered in order to make technology successful.

The real value of the technology is the information it can provide. Here’s a good example: If we’re going to have a “customers really matter” strategy and we’re going to put information in the hands of the employees that work at all the touch points… you’ve got to simplify the information that the technology gives so it’s easy to understand by those employees working those frontline jobs and you have to give it to them at right time when they’re talking to the customer.

The other point is you have to get each and every one of those 2,100 hotels to deliver on the promise of the brand. We’re going to know who you are, what your preferences are…how do we put them in the right room, how do we welcome them to the brand, how do you tell them about the amenities of hotel? I estimated one time across our 2,100 hotels and touch points we have over 200,000 employees of all of the hotels within our brand, and how do you get them to consistently use the information and get them to use the vision we have? It’s not [franchise] owner acceptance — they understand, they see the vision of how we treat customers the same way regardless of where the customer stays, so it’s not the economics of the investment. All owners believe in the value equation of creating a delightful experience for our customers, so they’re not saying ‘I don’t want to invest in the technology,’ it’s about maximizing the investment.

Q: How many brands does Hilton own?

There’s Hampton Inn, Homewood Suites by Hilton, Embassy Suites, Doubletree, Hilton Garden Inn, Hilton Brand and Conrad. So across all of those brands there are 2,100 hotels. Of the 2,100 hotels over 1,700 of them are franchised.

We just announced recently an enterprise solution called OnQ. It’s a proprietary software to Hilton. The idea was we want our technology to provide the information to our people so they can provide our guests with customer service, so they are ‘OnQ,’ standing by waiting to perform.

OnQ is comprised of six major business functions; the idea was to take all the business functions required in a hotel business and make them all work together as one system so it’s highly integrated. They are: reservation access through the Internet, call center and hotel. The second one is customer, and that is really customer profiling so it collects information about a person’s preferences, where they have stayed, how many times, so they can be welcomed to the brand if it’s their first time and can be told about the amenities of the property. Reservations are made using that profiling capability as well. It has their room type information also. All that information runs seamlessly across all brands. The third big component is revenue maximization and sales and that’s all our revenue management technology — what rooms should we be selling based on demand, selling to groups, knowing who our national accounts are. The fourth is property. So there are a lot of property operational capabilities, like checking people in and out, sending bills, when to clean rooms, close out bills, etc. Then there is a back-office component for the hotels we own or manage, so the financial and HR functions, so all the daily information that is maintained in the property system for billing purposes automatically flows into the back office financial systems. When you pay an employee, it automatically shows up in our financial systems.

Lastly, there is ownership reporting, where we actually share information with the franchisees. So as an example, a franchisee with an office in Wisconsin with 10 hotels spread throughout the Midwest, instead of the franchisee having to call all 10 properties they can go out on the Internet and see how the hotel is performing and download their system into [the franchise owner’s] back-office system. So owners have a way to interact with this enterprise-wide capability. So instead of this system costing the owner money, they’re actually getting valuable information from it. It’s a highly integrated system. We actually use Peoplesoft, but we built all the integration so information can flow seamlessly into OnQ.

Information seamlessly flows around the six different functions…[the challenge is] in how you tie them together. In the OnQ property component, its proprietary system was built by Hilton. Some [technologies] are purchased and some are proprietary but they are all highly integrated. If they don’t integrate together then profitability is impacted because some human being is trying to take information and translate it over to another business function. OnQ drives efficiencies and it’s also known for any place we touch a customer…[employees] all see exactly the same information about a customer so we’re treating the customer consistently. If you have a change of address, OnQ knows about it instantaneously, so all the information is consistent across all the touch points. So the two value propositions are, it’s one system highly integrated driving out efficiencies and second, to take care of customers efficiently. The goal is it’s in every one of our hotels by end of the year. Right now it’s in all but 80 properties. We do add from 100 to 130 new hotels, primarily in Hampton and Garden Inn brands, each year in the U.S.

Q: What’s your view on the implementation of new technologies and bleeding edge versus a more conservative approach?

We don’t want to be on the bleeding edge. We are more about taking practices that have happened in other industries from a technology perspective and bringing them to bear into our company, so we’re not out manufacturing new pieces of hardware to do things. We like to pick hardware that is available in the marketplace and adapt that into our business. We’re out on the leading edge with engineering software development projects but in general I would definitely not classify us as bleeding edge.

Q: How has the economic downturn affected the pace of technological change and change management in IT?

Our CEO had a strategy of managing for recovery so even though the economy is down and we had the tragedies of 9/11, we continue to believe and say the hotel business will return to strong economic performance, so we continue to invest in technology with rollout of OnQ to prepare for strong economic times. Technological innovation has slowed (from an industry perspective) and it has slowed because businesses are not willing to invest. Hilton, however, has taken a little different approach and has continued to invest.

Q: Is more money being spent on network security this year?

Yes. Privacy and information security is a major focus for us. We deal with a lot of customer information for the purposes of making the transaction easier and faster and providing better accommodations for people and that puts us in the position where the customer trusts us and we have to guard that information. That means we have to do three things: have policies around what were going to do with the information; protect from intrusion outside; and the encryption of information so if by chance [hackers] could get into our network they can’t do anything with the information. We invested in the past about $5 million annually in security from firewalls to passwords to encryption technology and we expect that investment will continue for the next several years. If you think about it, servers and computers are relatively inexpensive to acquire…if franchisees don’t have proper safeguards and they’re on our network, there’s a problem. So it needs to be a continued focus of a company like Hilton to keep people from getting access to information. We’ve been pretty successful so far.

Q: Where is the majority of your IT dollars being spent right now?

In OnQ. Particularly around the technology that supports all 2,100 hotels — in reservation access, property operations and customer and revenue and sales.

Q: What else is occupying the bulk of your attention these days?

I’ll tell you strategically…with the acquisition of [several] hotels, you had different technologies although similar, so how do you pick the best of breed and then go and deploy it everywhere? That’s been the focus through 2003. Now, going forward, how do I leverage those investments to create a competitive advantage to better serve customers and be smarter about selling the right products and services to the right set of customers at the right price? So it’s really leverage for intelligence.

Q: How large is your IT staff and what skills are you in need of?

There are 550 people in IT and the primary skills are project management and design skills of translating the business requirements into the correct technologies. The technology skills we’ve covered in the UNIX area and in the Microsoft toolsets. Our real focus is how do you deliver business value through technology and that’s done through project management and analysis skills that can help you determine the correct value propositions and delivering technology to get that value.

Q: Which of your skills has served you best in managing IT?

Leadership, really in building trust with business clients, or partners. And that trust comes by doing what you say you’re going to do. Making commitments and delivering on them. Being able to lead the IT resource, so clearly, leadership. A second is really my business orientation. I’m a lot less of a technologist although my undergraduate degree is in MIS and I got an MBA. But my understanding of the business and my ability to communicate about technology in an easy-to-understand way and being very passionate about delivering what we said we were going to deliver.

Q: What advice would you give someone looking to advance his or her career the same way you have?

Probably exactly what I just said. I really believe it’s about building the trust with folks inside the business who will be using the technology to deliver quantifiable business results. You can’t give ROI on everything so you have to build trust, let them know you understand what they’re trying to do and deliver on it. Being accountable to the end result; don’t offer excuses why it didn’t work — find ways to do what you said you were going to do.

Q: What keeps you awake at night?

I believe that we’ve got with OnQ a technology platform and capabilities that really can create a point of competitive advantage for Hilton and its brands. What keeps me up is that passion to make sure that each and every employee that touches customers knows how to use that technology and create a delightful experience so customer won’t go to one of our competitors. Making sure the technology makes the difference I said it would.

Q. What do you do in your spare time?

Family. I try to spend as much time with them as I can. I’ve been married 23 years and I have two kids, 20 and 16, and they’re both very active in sports so attending those sporting events and being there for them. So family-oriented activities. I’m a huge sports fan, I played baseball in college, and my son plays in college, so I try to attend all his games and the 16-year-old plays football, and he’s also in the competitive choir in high school, so I try to go to all those events. So I’m very busy. But it’s fun stuff that creates memories you keep forever.

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