BPM: The time frame for your implementation seems pretty compressed …
Anderson: We started our budget application selection process in late April of 2008 and it ran to the end of May, when we selected Host Analytics. However, we didn't begin the implementation process until approximately the second week of June, and it ran until around the second week of August. I think it took longer than we initially anticipated because we were actually going through two chart-of-accounts conversions on our Oracle financials system, so we were doing a lot of data validation and balance transfers before we could put it into a format to load into Host.

BPM: And that was connected with the fact that you’d just been spun off?
Anderson: Yes, absolutely. We had a service agreement with our parent company, but the budget software application was not covered under this agreement. The Oracle financial system was included, but only for a year. We were sold in September of 2007, and we had about a year to set up our own Oracle systems, which the accounting department and the IT department focused heavily on and rolled out in August of 2008, about a month ahead of schedule. But in the meantime, we in Financial Planning and Analysis [FP&A] were on our own from a budget software system standpoint.

BPM: Sounds like a hectic time. So this was pretty much a budget-focused implementation?
Anderson: Yes. Initially we had to figure out how we were going to be able to produce budgets. That was the original plan, but we didn't want the program we were seeking to be just one-dimensional; we felt that we needed to tie in formal dashboard, scorecard, and data consolidation tools. So we expanded our view to see what other services and synergies we could realize through selecting the right application.

BPM: How does your process work? Do you do a rolling forecast?
Anderson: We do rolling forecasts every month, but not down to the entity level, meaning to specific locations. We take them in groups, whether it's by geographic region, market, or segment, because we have certain groups or pools of assets that we specifically highlight. 

We do those at the corporate office, but from a budget standpoint the formal process is once a year, typically in September and October. We focus on revenue for about two weeks with the vice presidents of operations, who are located regionally and supervise the hotels, to set the budget for each location. Then we take a couple of weeks off, and finally we return for two more weeks to focus on expenses.

BPM: As you were looking around for solutions, what were the criteria that you had in mind?
Anderson: We go live with budgets in September, and we started the selection process in April, so that effectively ruled out some of the larger platforms that would have had a longer implementation process.  We knew we needed the new program to be able to talk to Oracle, because that's our main financial platform. Also, we needed something that IT wasn't going to be involved in; FP&A needed to be able to maintain this within our own department.

We also wanted something cost effective. We were trending into a down economy, and it was a case of “not only do we need a budget application, but we’re going to be able to save money using this application in other areas — for operations and for cost control.” But you can't justify a quarter-million-dollar price tag on the grounds that it will save money, because in the end it's going to be difficult to save that much through cost control. 

Ease of use was important. Our vice presidents of operations are hoteliers, and they don't necessarily sit in front of a computer every single day like I do. While they’re plenty computer-savvy, I still wanted something that would speak a language they’re comfortable with, and Host is nice because if you’re familiar with Excel, you don't feel like you have to relearn everything.

BPM: You mentioned that you wanted to go beyond a bare-bones budgeting implementation. What other areas have you looked at?
Anderson: The ability to move the hierarchy is key for us, being distributed through 36 states and having 300-plus units. We can move those units around and consolidate and blow up the data very easily and quickly in a way that Excel can’t. 

All of our dashboards, all of our reports, everything that we generate and automate comes right off of that initial hierarchy. We do lots of “what if” reporting, just moving properties in and out of districts, of pools of assets, of markets, so we can see who the top and bottom performers are; we can also see what happens to various operational metrics and performance just by moving properties around.

BPM: Who are the actual end users? How many people do you have in the system?
Anderson: In our finance department there’s myself, and I have four analysts; we’re the primary power users. All of what we do caters to the vice presidents of operations. We have 12 VPOs who are responsible for running the hotels, and ultimately their decisions and what they do drives 90 to 95 percent of this brand. Our goal is to help them make the best decisions possible, so whatever we can do to illustrate trends, isolate inefficiencies, or point their attention towards things that we think can really help the brand — those are the things that we’re going to try to do.

On top of that, of course, we have the department heads at the corporate office — sales and marketing, for example, and our design and construction team that's responsible for renovation.  They can use the system to see what we’re projecting as far as down times (which are more appropriate times to do a renovation so that it doesn't displace occupants). All of that is a nice byproduct of what we can prepare and provide. But our biggest end-users are the VPOs.

BPM: You chose to go with the software-as-a-service model. How is that working out?
Anderson: The first and biggest advantage we have with using Host Analytics’ software is that we hardly have anything to maintain on a monthly basis.  We've had almost zero downtime in the last year and a half while we've been using Host. We get requests at odd times of the day, but with this new software we never feel like our system isn’t going to be accessible, or isn't up-to-date, or doesn’t have the information it needs to be able to get our reports generated.

The program is accessible via the Web. If I'm at home for some reason, backing up my laptop or something like that, I can access the system and I don’t really have to provide anything except a PC and an Internet connection. It’s easy, it's lightweight, I don't need a huge powerful PC to run it, and I don’t have to do anything except update the balances every month, which is a five- or ten-minute process. And in the end it’s cost effective; you know what you're going to pay, and it doesn't vary from there.

We're able to make the changes we need internally, rather than relying on another department, say IT, to make it happen and make it a priority. If we think it's a priority, we take care of it and move on.

BPM: What are some changes you’ve seen since implementing?
Anderson: Coming from an analyst role a couple of years ago, I’d say time management is key; you never have enough time to produce the amount of output you need. For example, one of the little things with our version of Oracle is that we don't have an output to Excel.

Host Analytics can produce everything directly in Excel. You can cut and paste it directly into an Excel workbook, and it's what I would call “report ready.” It has a clean background, the numbers are organized, they're left-justified, it has consistent formatting.

Saving five to ten minutes per report adds up significantly. It allows you to produce more and move on to the next project quicker and more seamlessly than when you're dealing with a mess of text files that you've downloaded at different times or that you need to convert and pretty up. While it may seem an insignificant task — putting the lipstick on the document — all of that time adds up, and it really steals away from your ability to analyze and digest the results.

BPM: A psychological boost, too …
Anderson: Sure. If you're sitting there worried about borders and shading when you really want to be looking at numbers and saving the company money, it's kind of intrusive.

The other thing is, when we started this process we didn't really expect to be able to have the computing ability that we do as quickly as we did. As we started on the implementation and setup process we realized that we could write any formula that we wanted to in these templates, and by doing that we could do whatever we wanted from the modeling standpoint. In our old system we would load the budget data for our VPOs, and then we would send them a massive Excel file and supplemental documents saying “This is what your performance looked like, this is what you did over here and over there.” But it was never really tied together. 

Now we’re able to show historical costs and averages and run rates, but we can also actually go through and estimate every chart-of-account line that we feel there should be a budget input for. We can input a budget for every single account at every single property that the VPOs oversee.  Effectively we can create our own budget for the entire company by adjusting some metrics, putting in a new forecast for revenue, and driving some of these specific accounts.

That takes a huge weight off of our VPOs’ shoulders because they can defer to estimates or they can tweak the estimates. Just from a control standpoint, it's less of them inputting data and more of them reviewing our data to see if we’re right or wrong.

Another thing it gives us is a little bit of indirect control. Ultimately, of course, it's the VPOs’ budget, and we’re here to help facilitate it, but we’re also able to somewhat influence their decision-making by affecting the numbers and the estimates based on certain trends.  In the past, we’ve run into an issue when people use historical values as a crutch; if you’ve spent a lot of money, it's easy to look at past performance and say “I needed to spend that money.”  Well, we can identify inefficiencies and trend them down, and that can help us push a more accurate budget.

BPM: Do you let them know that you do that?
Anderson: Of course not … I can't give away all of my secrets! But it really helps them, because the knee-jerk reaction is that we are trying to trip them up by setting the bar way too high.  We understand, of course, that there’s a breaking point if you run everything as tightly as possible.  But the system helps us to influence their decision-making and to show why historical costs have moved higher and higher, and why that doesn’t have to continue as we move forward. 

This is especially key in the maintenance-and-repairs section. If you fixed that door last year for $1,000, do you really need to fix it again next year?  Of course, things are going to break, but the key is for them to understand that perhaps there was a big expense, but they don't need to cycle over it by budgeting for it again.