by Scott Berinato

Merging Business Cultures to Support Common Goals

May 15, 200215 mins

Every other month, Marriott International convenes its technology brain trust at its Washington, D.C., headquarters. The hospitality giant’s senior IT staff meets to hash out how a corporation with six business units, 10 hotel brands, 1,300 technology staffers, 2,200 of what Marriott calls operating units (which are mostly hotels) and 140,500 employees will, on the whole, approach technology. At the head of the table sits Marriott Executive Vice President and CIO Carl Wilson.

His homegrown CRM system, Marriott Rewards, has enrolled more than 10 million members. Wilson is now thinking about check-in kiosks. A guest would enter the lobby, swipe a Marriott Rewards card at a kiosk, and the machine would spit out a room assignment and a keycard. This would save business travelers time, give them a sense of independence and control, and free the hotel desk to focus on more valuable customer service tasks. Kiosks would also integrate nicely with systems such as billing and CRM.

Also at the IT table is Pam Angelucci, vice president of IT and CIO of the jewel in Marriott’s crown, The Ritz-Carlton Hotel Co. Angelucci wants nothing to do with kiosks. To Angelucci, kiosks at the 43 Ritz-Carltons worldwide would be like ATMs for Swiss bank accounts: inappropriate. Ritz-Carlton guests, research suggests, want to feel like they’re at Mom’s house, and Mom would never have a kiosk in the vestibule. So if Wilson does eventually pilot the kiosk program, the Ritz-Carlton will likely opt out.

Wilson’s goal for these meetings is to create a corporate technology policy and push for IT standardization. He is looking for areas where Marriott can use its size ($20 billion in 2001 revenue) to create economies of scale and generate efficiencies, shortening time-to-market on new technology programs. Standardization will also yield savings in areas such as training and staffing. For Wilson and Marriott, the more standardization the better.

Angelucci, however, comes to these meetings to promote the uniqueness of the Ritz-Carlton brand. That often means raising her voice against standards and arguing that her hotels should be the exception to Marriott’s rules. This is a dichotomy familiar to any corporate CIO who seeks to rationalize IT across business units, and to any divisional CIO who understands the singular needs of a business unit within a larger corporate entity. At Marriott today, these challenges are particularly urgent. In the hospitality business, IT is moving from cost center to profit center. In hotel parlance, it’s moving from the back of the house, where the business is run in florescent-lit cubicles, to the front of the house, where guests wander and appearance matters.

How Angelucci and Wilson manage this change?and how they manage their differences?will define their success as business and IT leaders. And meeting these challenges successfully will keep those every-other-month meetings as pleasant and productive as they both wish them to be.

Where the CIOs Differ

there are nine other marriott hotel brands, including the Fairfield Inn (“Yes, you can feel a little spoiled for $49 to $79 per night”), Renaissance (“Haven’t you always searched for a hotel that’s more like you?”) and Courtyard (“The hotel designed by business travelers”). Then there’s the Ritz.

The Ritz-Carlton, which Marriott acquired in 1995, is different. Unlike every other Marriott hotel, it has its own CIO. Unlike every other Marriott hotel, it has its own headquarters (in Atlanta). But those are only the superficial differences.

At Marriott, Wilson focuses on organization, architecture, purchasing and corporate application development. The CIO of Marriott keeps his eye on MAR (Marriott’s NYSE ticker symbol) and maximizing shareholder value.

Angelucci’s focus is narrower; she thinks about hotel guests individually, not in the aggregate. And given the nature of her guests, her predilection is toward less adventurous technology. If the Ritz-Carlton CIO can get software off-the-shelf, she will.

When a question arises concerning a Marriott technology standard or program, Angelucci’s first question is, How will it affect the Ritz-Carlton guest? When Marriott considers a Ritz-Carlton IT process that it might use as a standard across the corporation, Wilson’s first question is, Can it scale?

How They Like Their CRM

THE DIFFERENCES BETWEEN MARRIOTT’S and Ritz-Carlton’s CRM systems clearly illuminate the differences between the two IT cultures.

Class is the Ritz-Carlton’s 4-year-old CRM database. It keeps detailed data on 1.4 million Ritz-Carlton guests?data collected by anyone who sees or hears anything they believe would make the guest more comfortable. According to the 20-rule pamphlet that the Ritz-Carlton issues every employee, “To provide the finest personal service for our guests, each employee is responsible for identifying and recording individual guest preferences.” So if a guest happens to mention to a waiter that she likes chrysanthemums, the waiter must note that fact. Eventually, the information will find its way into Class, and the guest could find chrysanthemums in her room on her next visit. Angelucci says any quirk, allergy or preference can and will be noted and entered into Class. Red or white wine. Rooms with morning sun. The hometown newspaper.

On the other hand, the CRM system for every other Marriott hotel, Marriott Rewards, is a Herculean, massively integrated system. It’s a reward system in the classic frequent flier sense. “Hold a meeting with Marriott and earn up to 100,000 points!” was one recent promotion. Those points can be redeemed for special offers. Integration with the airlines’ Sabre reservation system allows guests to turn a dollar spent at a Marriott hotel into frequent flier miles. Integration with the Skymall shopping website lets guests redeem points for merchandise.

Marriott built both Class and Rewards. They even share some back-end technology. But while Rewards looks outward, Class looks in.

Their Digital Divide

FOR ANGELUCCI, TECHNOLOGY is an off-the-shelf tool she can customize with process in the Ritz-Carlton way. So when she needed to upgrade and standardize her core hotel management system last year, she chose Fidelio, a system she praises as tried and true.

Her choice may at first seem surprising given that this kind of software, called property management in hospitality lingo, is the beating heart of any hotel. Some two dozen systems, from HVAC controls to cash registers to the systems that cut room keys, are networked into the property management system. The Ritz-Carlton had been using a system called Encore since 1982, but the company that made Encore didn’t exist anymore, and support was hard to find. Angelucci could have seen this as an opportunity to introduce the latest, greatest property management technology, but instead of a DVD player, she chose a solid $85 VCR. Ritz-Carlton Technical Systems Director Darrin Hubbard, who began his hospitality industry career 14 years ago as a 15-year-old dishwasher, calls it prudent technology. “Fidelio has no bells and whistles,” he says. “What it has is a track record of 18,000 deployments. It’s well debugged by now.”

From Marriott’s perspective, Fidelio is simply old. That means it will have to be replaced sooner than a newer system. And Marriott is not using Fidelio in any of its other U.S. hotels, although it is using it in its full-service overseas hotels. Choosing a property management system the company had already deployed stateside would have helped Marriott integrate Ritz-Carlton’s and Marriott’s infrastructures. But it was not to be.

Angelucci says she will not risk a bad customer experience on the chance that a new technology might give the customer a better one. If she can’t guarantee a technology won’t negatively affect the Ritz-Carlton guest, Angelucci won’t consider it.

Wilson understands. In fact, he says one of his rules for working with the Ritz-Carlton?and for standardization in general?is to work backward. Conventional wisdom says that the parent company creates a standard and then allows exceptions where necessary. Wilson, however, lets the brands create their own processes. When the senior IT folks meet, they look at the various approaches and then identify targets for consolidation.

“We can’t start by saying what’s the cheapest way to provide a service,” Wilson says. “If we start by driving costs out and forcing brands into overall standards, we’ll lose the trust of our guests. We have to make conscious decisions to let the hotels be different where it makes sense.”

Managing Differences

ANGELUCCI COMPARES THE RELATIONSHIP between her group and Wilson’s to a good marriage. The phrase give-and-take comes up often. “We feel aligned in general,” says Angelucci. “But sometimes you just have to agree to disagree and move forward.”

Ritz-Carlton shares a few systems with Marriott. There’s Marsha, for example, Marriott’s homegrown reservations system. But more often than not, even for prosaic technology decisions, Angelucci chooses to be different?and Wilson lets her be different.

Wilson, for example, has been testing a migration to Microsoft’s ActiveDirectory services, but Angelucci has decided to stay with Novell directory services for now, and will consider moving to ActiveDirectory later. Marriott signed a long-term deal with OnCommand, a digital in-room entertainment network. The Ritz-Carlton, however, maintained its long-term deal with another digital provider, LodgeNet.

Two years ago, Marriott standardized on PeopleSoft for accounting. Again, Angelucci kept the Ritz-Carlton separate, using Scala, a smaller-scale system. One reason for that was because Marriott’s accounting is done in 13, not 12, periods each year. Ritz-Carlton accounts by the month. “We all agreed we’d get [to PeopleSoft],” says Angelucci. “But it’s not the right time.”

This kind of give (“We’ll get there”) and take (“It’s not the right time”) is typical of the way Angelucci manages the inevitable disagreements between her and Wilson. When check-in kiosks are brought up, she says, “Really, they’ll be great in certain properties. Not here.”

Angelucci and Wilson have a history. They worked together at paper, pulp and packaging colossus Georgia-Pacific up through 1997. Wilson was CIO and Angelucci’s job was to explain his IT initiatives to the business side. Wilson, in fact, encouraged Angelucci in 1998 to apply for the vacant CIO job at the Ritz-Carlton.

Angelucci chalks up her success in maintaining the Ritz-Carlton culture to education and preparedness. Education, Angelucci says, has been her biggest challenge. Right now, she is trying to get Marriott IT people to visit Ritz-Carltons. The more Marriott people that experience “the Ritz-Carlton way,” her argument goes, the easier it will be for them to understand technology decisions, even if those decisions make it harder for Marriott to lower costs and standardize.

For preparedness, Angelucci leans on her staff of nine. They prepare presentations and technical materials that Angelucci presents at the IT brain trust meetings. Similarly, she returns from the meetings with notes that she’ll hand over to her staff for analysis.

“It’s a matter of understanding what I’m presenting to Marriott so that it doesn’t sound like we’re asking for an exclusion from a program just because we’re the Ritz-Carlton,” Angelucci says.

Case Study: The Ugly Box Negotiations

FOR WILSON, WHO HAS BEEN MARRIOTT’S CIO for five years, new applications?omnipresent Internet access, smart conference rooms with high-speed digital lines for teleconferencing, online shopping and reservation service through the digital TV in each room?represent the best hope for a solvent future. And if the stuff doesn’t always work, well, the future comes with risk. More important, it comes with fixes.

Angelucci, on the other hand, believes that her guests, who are paying anywhere from $400 to well over $1,000 per night, will not tolerate technologies that don’t work the first time, every time.

So when a customer-touching IT initiative?high-speed Internet access in rooms?got contentious, Wilson’s patience and Angelucci’s diplomatic skills were tested.

In this case, Marriott purchased a system from STSN, a Salt Lake City company that specializes in broadband connections for the hospitality industry. The Ritz-Carlton, eager to get high-speed access, agreed not only to go along with Marriott but also to be one of the hotel brands that would pilot the program.

This was an all-in-one package. STSN provided the DSL broadband connection and the box it would come through. STSN’s boxes, which sit on a desk in each room, provided an autoconfiguration feature that made it literally plug-and-play. STSN also handled the ISP relationship for Marriott. And it did all this for free. STSN would make its money through a revenue sharing deal. Guests would be charged on a per-day basis. STSN would take most of that fee, but the higher the volume of usage, the higher Marriott’s cut.

For the Ritz-Carlton, the plug-and-play feature offset the fact that the boxes were, well, ugly. Looks are important at the Ritz-Carlton, where the motto is: “We are ladies and gentlemen serving ladies and gentlemen.” But Angelucci wasn’t going to fight a major technology initiative over aesthetics, especially as her guests were demanding high-speed Internet access.

The pilot went well and the Ritz, along with all of Marriott, started deploying.

But then some of the boxes proved to be faulty. Service was spotty. The connection to the room failed 15 percent to 25 percent of the time, partly because some guests were unwittingly unplugging the ugly things.

Wilson, according to observers, approached the problem as something to fix. Marriott had invested too much just to ditch the service and try again.

Angelucci didn’t see it that way. The ladies and gentlemen were already getting complaints from the ladies and gentlemen. “We got on the phone, Carl [Wilson], me and the business person in charge of the relationship with STSN,” Angelucci says, “We said that until there’s a better solution from STSN, the Ritz-Carlton is better off doing this on our own.

“I had to provide the business reasons for the decision,” Angelucci continues. “I said, ’It’s not good for us to be on the front end with the technology. Our guests are temperamental. They’ll let it go once if something’s wrong with the service, but if it happens twice, that’s trouble.’

“In hindsight,” she says, “it probably wasn’t the best idea for us to pilot it, because our guest set is probably the most critical.”

In the end, Wilson understood the ramifications of forcing the Ritz-Carlton to stay with the original STSN system, as Marriott planned to do. He agreed to let Angelucci and her staff pursue alternatives, where they were viable. Today, about half of all Ritz-Carlton hotels still have the STSN connection. But in new hotels, with higher-quality category-5 wiring, Ritz-Carlton was able to find (with Alpharetta, Ga.-based Elastic Networks, which was recently acquired by Paradyne Networks) a fully meshed Ethernet solution. The team tried the new system at the Half Moon Bay Ritz-Carlton in California. Since it avoided DSL completely, there was no need for the little boxes that guests could unplug?they would use a wall socket. Hubbard says the disconnect rate has dropped dramatically.

Marriott would have liked it if the Ritz-Carlton could have done this with STSN, but STSN simply didn’t have the capability to offer the new service at the time. The Ritz-Carlton would be the exception to the rule again, and a Marriott standard would have to be amended, again.

In the end, Wilson had a happy subsidiary that was able to go out on its own. Angelucci had a happy parent company because her guests were happy with the new solution, and because she has agreed to reconsider STSN now that it has come up with a solution similar to Elastic’s.

The front of the house was back in order.

Together at Last

ULTIMATELY, WILSON AND ANGELUCCI’S relationship works because they both share the same goal.

Wilson is averse to even acknowledging that there may be cultural differences between the Ritz and Marriott?as if by doing so he might jinx the chemistry Angelucci and he have going. He sums it up this way: “When I open The Wall Street Journal, I see one company?Marriott International. Now, that’s made up of many brands, but we always work in a way that maximizes shareholder value. That’s part of Marriott’s culture.”

The process of maximizing shareholder value may be less obvious at the Ritz, but it’s no less relentless. At a training session for new Ritz-Carlton employees at the recently opened Battery Park hotel in New York City, the trainees are asked, “How much of our guests’ disposable income do we want to capture?”

They reply in unison, “All of it.”

“Sometimes I have to remind the staff about that,” Angelucci says later. “People think this culture, where we say ’Certainly’ and ’My pleasure,’ is a gimmick. It’s not. Everyone here really is polite and professional. But look, we’re trying to make money here.”

And on that point, the Ritz-Carlton and Marriott are in complete and total harmony.