Business process outsourcing helps Marriott Hotels, Ltd., save money and focus on its core business.
by Alan Joch, February 2008
Marriott Hotels, Ltd., faced huge challenges in 2005 when the U.K.-based management company needed to separate its IT infrastructure from its parent company, Whitbread PLC, after hospitality company Whitbread sold its hotels business. Marriott used a strategy known as business process outsourcing (BPO) to plan the separation, introduce new HR and payroll applications, and rebuild the IT infrastructure. The company hired U.K.-based consulting firm Hewitt Associates to help with the transition and tapped into Oracle On Demand for all the necessary technology and infrastructure.
Marriott now uses Oracle E-Business Suite 11i's HR and payroll applications. The company depends on Hewitt's expertise to help run the processes and Oracle On Demand to host and manage the programs. Karim Rasched, business change manager for Marriott Hotels, and his group and the Hewitt team manage the activities among the U.K. hotels, Hewitt, and the Oracle On Demand team.
Read how Marriott executives credit BPO with helping the company save money and improve business efficiencies, while also transforming its business process to address constantly changing global requirements.
The clock was ticking for Marriott Hotels, Ltd., in 2005. The U.K.-based management company needed to separate its IT infrastructure from its parent company Whitbread PLC after hospitality company Whitbread sold its hotels business. That meant that at the conclusion of the two companies' one-year transitional services agreement, Marriott could no longer access the financial applications it had shared with Whitbread, recalls Karim Rasched, business change manager for Marriott Hotels.
In that tight timeframe, Marriott would need to accomplish a seemingly impossible feat: plan the separation, launch new HR and payroll applications, and rebuild the IT infrastructure—not to mention hire the technical and business staff needed to run everything. "Marriott would need to suddenly pay about 10,000 employees who had previously been Whitbread employees," recalls Stephen Randall, an associate with Hewitt Associates, a UK-based consulting firm hired by Marriott to help with the transition.
But Marriott executives had a plan. It chose a strategy known as business process outsourcing (BPO), which meant contracting with Hewitt to provide the expertise to run the business operations and tapping into Oracle On Demand for all of the necessary technology and infrastructure.
Marriott's U.K. operations are now reaping the benefits. BPO has not only meant improved cost transparency and business efficiencies for the company; it's also helping Marriott transform its business processes to address constantly changing global requirements.
"The reality, from Marriott's perspective, is that we have one cost, and that cost is entirely transparent to us," Rasched says. "We also have clarity about what the cost will be for the duration of the agreement, regardless of what our business sees in terms of growth."
Ironically for Marriott, the Whitbread organization announced the hotel spin-offs in the same week that Marriott's U.K. franchise completed a new implementation of Oracle E-Business Suite 11i for supply chain, finance, HR, and payroll. Marriott's North American operations had a long history of using Oracle's PeopleSoft applications, so Marriott UK and Hewitt faced a decision: to stay with Oracle E-Business Suite or switch the U.K. operations to PeopleSoft or even another platform.
"We had to consider what the overall impact would be on the hotels, after they had just gone through the implementation of the new Oracle applications," Rasched says. "We had just gone from a very centralized infrastructure to one that was significantly more reliant on self-service applications."
Rasched's group decided to stay with Oracle E-Business Suite and capitalize on the training and data mapping it had completed for the implementation. "Hewitt made the recommendation that we look at reimplementing the Oracle platform for HR and payroll because we'd just developed a good solution for our business, and it was working successfully," Rasched says. "The processes were already well defined. From a technical perspective, moving to the Oracle On Demand environment was relatively simple because all we had to do was to figure out the network connections among Hewitt, Oracle, and Marriott and design a new interface to Marriott's PeopleSoft-based general ledger [GL]. This was relatively easy to achieve due to Marriott's extensive in-house expertise at operating and maintaining various GL solutions for its global financial processing requirements."