Benefits Evaluation of ICT Investments in International Hotel Chains: An ICT Benefits Scorecard Approach Dr. Panos Louvieris & Hsueh Chun Tang

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Benefits Evaluation of ICT Investments in
International Hotel Chains An ICT Benefits
Scorecard ApproachDr. Panos Louvieris Hsueh
Chun Tang  

• Centre of e-Tourism Research (CeTR)
• School of Management, University of Surrey

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CONTENTS

• Introduction
• Research Objectives
• Proposed ICT Benefits Framework
• Research Methodology
• Analysis of Findings
• Benefit Scorecard
• Conclusion

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Introduction

• 1995 to 1999 the U.S. hotel industry has
  increased ICT expenditure by 15 annually (
  nearly 8 billion dollars) Brown and Stanges 2002
• The average capital expenditures for technology
  increased from 4.26 (percentage of total
  revenues) in 2000 to 4.98 in 2001 technology
  operating expenditures increased from 5.59 to
  6.26 Armijos et al. 2001
• The failure rate for ICT projects in the
  hospitality industry in 2000 70 average
  cost overruns 45 over budget and the average
  time overrun 63
• Piccoli and Wagner 2001

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Research Objectives

• To investigate the perception of the actual
  impact of hotel managers own view on ICT
  investments
• To determine and categorise the set of critical
  success factors for an ICT benefits scorecard
• Facilitating the identification of areas where
  future ICT investment decision-making can be
  improved.
• To identify the gap of the body of knowledge, and
  to gain a deeper understanding about these issues
  

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Construing the ICT Benefits Framework

• Step 1- The reputable hospitality ICT vendors
  websites and general publications - general
  features offered by ICT applications and what
  benefits can be gained from investing in them
• Step 2- Academic literature - benefits relevant
  to hotel ICT are identified
• Step-3 From the previous two steps a consolidated
  list of ICT benefits is produced-60 variables

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Research Methodology

• The initial hypothesised framework - Kaplan
  Nortons (1996) balanced scorecard
• An exploratory research design with quantitative
  survey  (A Web-survey)
• approach
• Population frame - hotel organisations from the
  2002 Hotels Corporate 300 ranking, as listed at
  www.hotelsmag.com
• Purposive sample of 20 international hotel chains
  (upper-scale or upscale brands)
• Non-probability judgment sampling approach
• 1) A senior decision-maker whose formal job
  responsibility included either a design
  purchase or implementation of ICTs investment for
  the firm with the intimate knowledge
• 2) In possession of the knowledge of financial
  or benefit evaluation metrics used to track
  performance or impact of ICT investments
• 3) A senior corporate level staffs
• 200 electronic emails - 51 questionnaires were
  valid for analysis
• which generates 25.5 response rate.

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Analysis of Findings

• Annual budge of 1-5 for ICT investment
• The investment in people and change management
  investment was about 1/10 of the ICT
  investments.
• Most notable ICT investments decision-makers-
  financial controllers and general managers
• Measurement problems difficult to identify the
  contribution of ICT to business value.
• ROI related questions -19.6 of hotels are using
  the payback period method.
• 86.3 of respondents do not have the ability
  to measure their ROI from ICT.

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Analysis of Findings Cont.
Analysis of Findings-Gap Analysis
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An ICT Benefits Scorecard
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Conclusion

• Ward et al. (1996) the reality of ICT
  investments is that benefits do not
  spontaneously arise when a new technology is
  delivered and rarely happen as planned
• ICT investments need to be dynamic in nature to
  take account of changing requirements throughout
  the whole life cycle of an system (not only
  pre-investment assessments and project management
  metrics)
• New methods to improve the quality of decision
  making pertinent to ICT investment
• The need for contingencies that allow on-going
  maintenance, support and upgrades
• ICT implementations should be regarded as change
  programmes

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An ICT Benefits Scorecard

• To provide the basis to track benefits delivery
  by asking mangers to assess benefits realisation
  over time on each of the nine dimensions
• An appropriate strategic and operational tool
  for evaluating ICT investments
• Enhancing the ability of hotel operators to
  maximise their chances of realising the full
  benefits of ICT investments
• It shows cause and effect relationships and this
  can be used to determine how the business results
  are created through the impact of technology