FRAMINGHAM (07/17/2000) - In 1995, Carlson Hospitality Worldwide was on a roll.
The company had patented an incentive plan for travel agents, created a standard-setting, seamless interface between travel agents and the central reservation office and capped off a decade of adding a new hotel, mostly under the Radisson flag, every 10 days. The company's central reservation system (CRS), then bringing in 40 percent of the annual room revenues from those Radissons, was humming away at the heart of the business. "It was heresy inside our company to say that there was anything wrong with our reservation system," says Scott Heintzeman, then vice president of knowledge technologies, who was recently promoted to CIO of Carlson Hotels Worldwide.
AHEM. THE TECH GUY HAS SOME NEWS. "I remember coming into one of the board meetings and saying, 'You're not listening to me. We need a new rez system platform. Technology is changing, there's this thing called the Internet, there's the kiosk thing, there's interactive TV, and we can't handle any more growth,'" Heintzeman says. "I told them, 'Your system is over in two years.'
And they were furious." Not long before, AMR Information Services, Budget Rent a Car, Hilton and Marriott had abandoned Confirm, a multimillion-dollar effort to build a CRS. Eyeing headlines about this stunning failure and fearing a similar fate at Carlson, the board of directors held meetings without Heintzeman. "My job was in jeopardy," he says. The board hired consultants, trying to prove Heintzeman wrong, to prove that he was deluded or self-serving, to prove something that couldn't be proven--that the 10-year-old reservation system would last forever.
When the IT team asked for US$15 million to build a new CRS, recalls Steve Medina, director of application development, the answer "wasn't really, 'No thank you,' so much as, 'Hell no.'" Heintzeman and his team returned to the drawing board and came back with a solution they call "chunking." Instead of a one-shot revamp of the entire system, the team plotted to split the overhaul into discrete bundles of work.
Each task had a direct business benefit. No step could set up a prerequisite for the next step. And none of the projects would require major rework with any future step. These principles of chunking did more than address funding concerns. At reservation centers, extra minutes of downtime can add up over the course of a year and translate into millions of dollars in lost revenue, so creating new pieces that were compatible with a legacy system that was still bumbling along minimized Carlson's risk of losing money if the new system hit any hiccups. The board of directors could nix the rest of the project at any point without losing any of the benefits gained thus far. And as things turned out, the IS team could stay flexible as business and technology changed while the project was underway.
If the solution seems obvious, then you see the beauty of it.
CHIPPING AWAY AT IMPERFECTION Once Heintzeman and his team established their plan, they man- aged to get funding for the first chunk, and soon they started rolling out the new CRS. Along the way, they would insert one chunk and ditch another as needed to get the biggest payback, while staying open to suggestions and churning through 3 million reservations a year from 50-some countries. It was all part of the plan not to be wedded to the plan.
Aside from eight completed steps, the company can now count off its accolades--like an Industry Best Practice award from Cornell University, placement in the Smithsonian's permanent research collection and Heintzeman's induction into the Hospitality Financial and Technology Professionals' International Hospitality Technology Hall of Fame--but they'd rather wave you to a stack of press releases and talk about a term usually reserved for peanut butter.
"Chunking a project allows you to be more flexible as time goes on, as business priorities change, as you learn more about what you're doing," Medina says. "If you try to do the whole project all at once, often you'll find that functions you focused on weren't what you really should have been focusing on. For instance, we're interested in voice recognition, but right now there are more significant business drivers." An example of the payoff of flexibility: Medina says at the project's inception the group didn't anticipate the value of creating Web interfaces to the CRS.
Because of rapidly changing technology and a business pace quickened by e-commerce, working on a project in chunks or subsystems is becoming a popular tactic, says Danek Bienkowski from the Project Management Institute (PMI), a nonprofit professional association. Speaking generally, he says this tactic does have trade-offs. "There's always a certain amount of rework that you wouldn't have had if you'd done [a project] in one piece," says Bienkowski, cochairman of PMI's Information Systems Specific Interest Group. Plus, the time needed to build interfaces between the new and legacy systems is sometimes overlooked or underestimated. That doesn't mean Bienkowski isn't a firm advocate of the concept, though. "You need to have much shorter deliverables," he says, noting that some companies are breaking projects into chunks that can be completed in as few as 30 days. "The longer a project is, the more difficult it is to align with the business."
Indeed, for the Carlson CRS team, underlying this chunking strategy is a strong belief that there is no perfect system--that it's not even a good idea to aim for one. Purse holders may snap the purse shut if they don't start seeing results pretty quickly, and perfection takes time. Also, a "perfect" plan might lack the necessary ability to change. Carlson never could have built, say, the final version of the old CRS from the get-go. "Systems evolve," Medina says.
Carlson selected vendors along the way, of course--with less planning than might be expected. "More money is wasted in IT today searching for the best tool," Medina says. "It's a moving target. In the broad spectrum of tools that exist for any particular job, you really should only be interested in getting rid of the 20 percent on the boundaries that are completely inappropriate. It might sound a little cavalier, but you don't need a perfect solution. When you get down to the shortlist, any of them will work."
Or maybe not. Along the way, the group had to deal with a vendor change, from Hewlett-Packard Co. servers to a Sequent (now IBM) NUMA-Q-based system. When Carlson made its initial choice, the team underestimated the horsepower the system would ultimately demand. HP at the time did not offer a big enough system, Medina says, so they made the switch. Another snag involved a latching problem with the Oracle database at the beginning of the project, which caused the CRS to come to a grinding halt for about 12 hours--the longest downtime throughout the project. The Medina moral here? "Help-desk support is OK for common problems, but when you have something different, you have to have a resource. Know who the real experts are. They're worth whatever the billing rate is."
Another key to the system's success--and the fact that team members say they could sleep at night--was that steps were done in a gradual rollout that could always be reversed. For instance, the new voice reservation system was initially installed on just 10 machines, and sales reps could toggle back and forth between the old system and the new. Becky Brechbill, IT account manager for project management, says they fell back to the old system only once, during the initial beta test. A hotel called to say that the CRS had delivered a reservation with incomplete rate information, and sales reps used the old system for 30 minutes while the IT team fixed the problem. "After that point, we never got to another situation where we said, 'OK everybody, back to the old,'" Brechbill says.
MAKING CHANGES In addition to the concept of chunking, another central tenet of Carlson's new CRS is this: Rather than distribute huge updates once a year or so, make it easy to release small changes as often as necessary. Heintzeman sums up the approach: "You go for small, frequent, painless improvements."
Critics of the client/server computing model might mutter about the time and energy that's been spent on getting these fixes and enhancements to Carlson's users--the more than 600 hotels, 455,000 travel agents and 350 call center employees, at both the main office in Omaha, Neb., and in satellite offices in Albuquerque, N.M.; Dublin, Ireland; and Sydney, Australia. Some experts might debate the wisdom of these continual updates and wonder about the risk of version mismatch problems. The PMI's Bienkowski warns that hundreds of changes flowing in at random intervals may become inefficient, but he says that's not always the case.
At Carlson, the approach seems to have worked. At change control meetings twice a week, anyone on staff can discuss needed fixes and enhancements. During the first quarter of 2000, the company made about 500 hardware and software changes, with scheduling based on whether a change was standard, priority or emergency. "We believe that change control works better when it's not such a formal process as you see at most places," says Tom Sikyta, senior director of distribution systems. "I don't believe in the kind of process where a programmer writes a change and it gets submitted to some change control group and then three months later it gets implemented."
When an update is available, an icon appears on the user's desktop, and he or she can double-click it to download and install the fix. Updates usually take 30 to 90 seconds to download, and users are warned if a big update is coming. A copy of the file is now stored at a site in Europe, too, since download times had become a problem across the pond. "As much as possible we want to reduce the overhead associated with change," Medina says. This strategy of small changes is a rallying point--and one of Medina's strong opinions that might cause fellow team members to warn you that he's a man you'll remember meeting.
In his opinion, users would rather deal with a big glitch for a day than a small one for six months. "The cost of a bug is a function of how long you have to live with it," he's fond of pointing out, noting too that the most expensive bugs are the easiest to find. "Even if it's a relatively minor bug, if you have to live with it for a long time, eventually it starts eating at your credibility. When we do an upgrade, sometimes a bug is introduced. No problem.
We'll do another upgrade in an hour."
A TEAM THAT WORKS As Heintzeman and his team work on chunks No. 9 and 10--a yield man- agement system that will make predictions about reservations demand, and imaging capabilities that will allow reservations agents to see maps and pictures--they don't have as much trouble getting the board's approval. "We've had some blunders along the way but I think also some phenomenal success," says Heintzeman, sitting with the small team that came together about five years ago: Sikyta, who oversees the daily operation of the reservation center; Medina, who knows the legacy system and focuses on fitting the IT wish list into time and budget constraints; and Brechbill, who knows the hotel industry and makes sure the system's graphical user interface fits the industry's needs.
In the evening, Heintzeman will catch a 50-minute flight back to Minneapolis and Carlson Hospitality Worldwide headquarters, but the rez system is housed under the roof of this 80,000-square-foot brick building situated right where Omaha starts to sprawl westward, with acres of luxury apartments on small lots and office buildings on big ones. The building itself was built in three chunks, 20,000 or 30,000 square feet at a time, and so efficiently planned that the final addition didn't require any plumbing. Sit down at a picnic table out back and you might find yourself chatting with a programmer, a technical support specialist, a person who sends out brochures or handles complaints, an agent for the five-ship cruise line or a new sales rep who's been fielding calls from around the world for one of Carlson's more than 400 Radisson Hotels & Resorts, 200-plus Country Inns & Suites and 13 Regent Hotels International.
"We're a small team that's stuck together for a long time, and we've benefited because a team gets to gel," says Heintzeman, whose Minneapolis digs keep him from getting distracted by the day-to-day operations of the center. "These principles are not birthed in a one-time meeting. They're birthed over months and years of working together."
While the four tell the story, it's almost as if they could finish each other's sentences but know they don't need to. An idea gets thrown on the table, then an explanation, maybe a problem, and Heintzeman picks up the essence of what's been said, puts it into order and articulates what it means for the business.
"We all have grown up together," Heintzeman says. "Larger companies tend to have committees that work together or departments that work together, not people who just get together and make decisions."
Having almost everyone under one roof in Omaha pays off, too. Says Sikyta, "We're here every day, we have established trust with [the users], so they believe you when you say, 'This isn't going to work.' They don't believe you're just trying to get out of your job."
Ironically, the total outlay for the project by now has topped $15 million, since the system includes capabilities not in the original plan. However, the new voice reservation system alone, unveiled in late 1999, looks as if it will translate into $40 million a year in additional revenues from improved productivity because the agents can book more rooms more quickly. And in retrospect, the team isn't sure that getting one big check up front would have been the best answer.
"If there's a failure, it was the first time going in [to the board of directors] without a chunked model and trying to get it as one whole thing," Heintzeman says. "Two things really happened. The funding people were scared to death, and the IT people said, 'You know what, this is like the dog that caught the bus. What if I really did catch it, what would I do with it? Could we create a system that worked when we threw the switch?'" Staff Writer Sarah Scalet would happily take $15 million either all at once or in chunks. How do you prefer to get funding for projects? E-mail firstname.lastname@example.org.
PIECE BY PIECE Nine (or so) steps toward a new reservation system Carlson Hospitality Worldwide's central reservation system (CRS) handles 3 million reservations a year via the Internet, travel agents in 125 countries and sales representatives taking toll-free calls from 51 countries. Curtis-C (pronounced "courtesy," a play on the name of founder Curtis L. Carlson) was built in stages or "chunks" with the help of the Minnesota-based consulting group Born Information Services. By design, each step was completely interoperable with the legacy system to protect operations crucial to Carlson's checkbook. Each step also had a name, so that team members could easily talk about what they were doing:
1 Oracle Common Database Data migrated from a C-ISAM file system to a relational database. Carlson's IT executives compare this process to lifting a house, rebuilding its foundation with some extra rooms and putting the house back down--ready for a major renovation.
2 Decision Support System Migrated month-end reports to a separate system.
3 Curtis-C Communication Manager Implemented a new system for delivering reservations and other information to hotels.
4 Harmony Database Manager Allowed hotels to start setting their own rates and controls instead of sending written notice to Carlson. About 200 of Carlson's hotels have this step, which fits in with the existing Harmony Property Management System that allows hotels to keep track of property information.
4.1 Automatic Rate Update Manager Allows the central reservation office to load all kinds of rate information. Also includes a rate shopper so that hotels can compare prices at other Carlson properties. Part of this step was not anticipated, and other parts were pulled out of chunk 6.
5 Bridge Interface Built a bridge between the Curtis-C Communication Manager and Harmony Property Management System so that agents need not make inventory changes in two places. Eighteen hotels are live with the bridge system, and new ones are constantly being added.
6 (Skipped) This step involved rewriting the interfaces that are written in the legacy code, Action 4GL. The new system uses Forte tools that work with the legacy code. Because that code still works and because both the old and new applications share a common database, there's not yet a direct business need to complete this step. Action's provider, Action Software, went out of business, but Carlson's director of application development, Steve Medina, is a former Action employee, and the group has managed to hang onto another consultant from Action. So far, the acquisition of Forte by Sun Microsystems has not affected Carlson.
7 Curtis-C Voice System Carlson has gradually unrolled a new voice reservation system. Commission-minded sales reps clamored for the upgrade, which will be completely rolled out by press time.
8 Web-Booking Interface This step relaunched Carlson's website with a more advanced interface for making reservations.
PLATFORM DIVING, REVISITED Carlson isn't quick to jump off client/server When Carlson Hospitality Worldwide designed its new reservation system, client/server applications were all the rage. Now Carlson has a three-tier client/server system--but today most people are jumping into a different pool: the browser-based thin-client computing model, which claims lower costs and simpler version management. However, executives at Carlson are sticking to their guns, saying they made the right architectural decision.
"The biggest advantage of the browser that I see is you can build software for a universe of users that is unknown," says Steve Medina, Carlson's director of application development. "We know who the users are. It's not like we allow anyone to come on and set [hotel] rates." Carlson emphasized making updates easy to deploy, trading download and update times for smoother operation, such as instantaneous responses on their agents' screens. "I think we have mitigated most of the downside by investing in the ability to deploy applications easily with low overhead," says Medina, who doesn't think Carlson spends any more time maintaining PCs than it would if the company were using browsers.
Carlson Hotels Worldwide CIO Scott Heintzeman says the real debate should be about whether a system's logic is separate from its user interface and its data. "Once you have that very pristine separation, then you have the ability to make a thin-client or fat-client application down the road."
Carlson already has used a browser model where necessary: with the public website and at several locations in India where a third party makes reservations through a Web client that is based on the public website. "I don't think we've limited ourselves," says Tom Sikyta, senior director of distribution systems. "We can always move to a browser-based system." -S.D.