Oracle, Hewitt, Marriott, BPO, HRO

Process Improvements Without the Pain

Process Improvements Without the Pain

Business process outsourcing helps Marriott Hotels, Ltd., save money and focus on its core business

By Alan Joch

Orignially published in Profit: The Executive's Guide to Oracle Applications, May 2008. Reprinted with permission.

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 time frame, Marriott Hotels 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 busi¬ness 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 asso¬ciate with Hewitt Associates, a U.K.-based consulting firm hired by Marriott Hotels to help with the transition.

But Marriott Hotels execu¬tives had a plan. They selected a strategy called business process outsourcing (BPO), which meant contracting with Hewitt to provide the expertise to run Marriott’s business operations and tapping into Oracle On Demand for all of the necessary technol¬ogy and infrastructure.

Marriott Hotels is now reaping the benefits of this decision. BPO has not only meant improved cost transparency and business efficiencies for the company; it’s also helping Marriott Hotels transform its business processes to address constantly chang¬ing 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.”

Potent Partners

Ironically for Marriott Hotels, the Whitbread organization announced the hotel spin-offs in the same week that Marriott Hotels completed a new imple¬mentation of Oracle E-Business Suite 11i for supply chain, finance, HR, and payroll. The North American operations of Marriott International, Marriott Hotels’ parent company, had a long history of using Oracle’s PeopleSoft applications, so Marriott Hotels and Hewitt faced a decision: 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 implementa¬tion 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 recom¬mendation that we look at reimplementing the Oracle plat¬form 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 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.”

The HR and payroll applications now run within the Oracle On Demand data center, located in Austin, Texas. During the one-year transition phase, Marriott Hotels had to move to Marriott’s GL system, a new expenses solution, and the new payroll application, as well as a new network¬ing infrastructure to allow desktop PCs to communicate. “All of that had to happen at the same time, so we had to find ways of minimizing impact where we could,” Rasched recalls. “In the HR and payroll areas, we had the opportunity to effectively do a ‘lift and shift,’” thanks to the preceding work Marriott had done.

The organization now uses Oracle E-Business Suite HR and payroll applications, relying on Hewitt’s expertise to help run the processes and Oracle On Demand to host and manage the programs. Rasched’s group and the Hewitt team manage the activities between the U.K. hotels, Hewitt, and the Oracle On Demand team. “We will control the treasury side of the payroll, for example; we will maintain the bank accounts and deal with out-of-process requests and emer-gencies,” Rasched says.

Concrete Benefits

In addition to helping to meet its restructuring deadline, what does BPO mean to Marriott Hotels? At the top of the list, according to Rasched, are transparency of cost for key business processes and a flexible model that can quickly adapt to the needs of Marriott’s rapidly growing business. He adds that individual hotels have the opportunity of reducing their expenses as they move from their standalone payroll applications to the BPO model.

However, cost and process efficiencies are only a piece of the value that the hotels now see, says Rasched. “We are not just giving them a payroll solution. We also give them a whole end-to-end process for regulatory filings, standardization of processes, better cash control, and a maximization of cash as a result of being able to do it all in one place,” he explains. “That’s entirely facilitated by Oracle E-Business Suite applications, and because we have merged the HR and payroll databases into one data store.”

Partnering with Oracle gives Marriott Hotels and Hewitt access to industry-leading applications and IT services, as well as implementation expertise gained from the company’s extensive experience with global corporations. “Oracle’s involvement has been invaluable, and it was one of the major reasons for choosing this partnership,” Hewitt’s Randall says. “We felt that Oracle’s BPO partnerships and Oracle On Demand services provided the other two legs of the partnership.”

“If providers want to have full control over the cost of the operation and run the whole operation independently, obviously that’s a feasible choice,” says Tibor Beles, vice president for business process outsourcing at Oracle. “But if they prefer to rely on Oracle’s IT management expertise and applications management expertise, that is certainly available.”

In addition to quickly coming online to serve Marriott Hotels’ needs, the applications fit into the company’s long-term plans. “Although there are a myriad of payroll platforms that we could have chosen and operated here in the U.K., we were also looking for a model that other Marriott operations could use to expand across Europe, the Middle East, and Africa,” Randall says. “Two of the reasons for choosing it were the scalability it can provide and the ability to eventually do multicurrency and multicountry payrolls.”

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