Hilton to Develop Implementation Strategy for POS System

Case Type: operations strategy; organizational behavior.
Consulting Firm: Deloitte Consulting first round full time job interview.
Industry Coverage: tourism, hospitality, lodging; information technology (IT).

Case Interview Question #00905: The client Hilton Worldwide Holdings, Inc. (NYSE: HLT) is an American global hospitality company that manages and franchises a broad portfolio of hotels and resorts. Hilton Worldwide has 13 brands across different market segments including Conrad Hotels & Resorts, Canopy by Hilton, Curio — A Collection by Hilton, Hilton Hotels & Resorts, DoubleTree by Hilton, Embassy Suites Hotels, Hilton Garden Inn, Hampton Inn, Homewood Suites by Hilton, Home2 Suites by Hilton, Hilton Grand Vacations and Waldorf Astoria Hotels & Resorts. As of January 2016, Hilton Worldwide’s portfolio includes 4,610 hotels with more than 750,000 rooms.

Hilton Worldwide has just completed the development and testing of a POS (point of sale) application for its worldwide hotel chain. The client Hilton Worldwide has retained Deloitte Consulting to develop an implementation strategy. What process would you go through in developing your implementation strategy, and what assumptions would you make in preparing your recommendation?

Additional Information:

The point of sale (POS) or point of purchase (POP) is the time and place where a retail transaction is completed. It is the point at which a customer makes a payment to the merchant in exchange for goods or after provision of a service. At the point of sale, the merchant would prepare an invoice for the customer (which may be a cash register printout) or otherwise calculate the amount owed by the customer and provide options for the customer to make payment. After receiving payment, the merchant will also normally issue a receipt for the transaction.

The client Hilton Worldwide is primarily considering a decision between a phased deployment across various international regions, or a big bang approach that would simultaneously update all the sites concurrently.

The client Hilton Worldwide recently used a big bang strategy to deploy a customer service application in all its hotels. This release did not go well due to poor training and lack of adequate testing.

The Hilton Worldwide hotel chain has recently made some acquisitions that will require some system integration. These systems have some time-consuming manual operations they would like improved when integrated.

The new POS systems contain functionality that must be implemented in the North American Region within six months. Failure to do so would expose the client to possible regulatory litigation.

Hilton Worldwide Hotels are divided into regions as well as by service tiers:
* Service Tier 1 – Luxury 4 and 5 star hotels catering to top executives and other premium clientele.
* Service Tier 2 – 3 and 4 star hotels catering to business travelers, and vacationers with moderate to high spending preferences.
* Service Tier 3 – 2 and 3 star hotels designed to meet the needs of the budget market.

The Service Tier 1 hotels help to define the overall brand for the company, so problems with customer service due to a system upgrade would be very damaging.

The Service Tier 2 hotels are the largest source of revenue for the client.

Possible Solution:

Question 1: What additional information would you seek from the client when developing the implementation strategy?

Possible Answers:

A good answer will include information about the company’s lessons learned about the recent big bang deployment.

A great answer will also include information on logical market groupings based on user base and system synergies to identify markets or regions that can be implemented first as well as considerations of the impact of the recent acquisitions including the systems affected to understand if the POS implementation will intedere with the current ongoing activities or if there are synergies that can be leveraged.

Question 2: What are the different implementation options that the client should consider?

Possible Answers:

A good answer would list the different options: Big-Bang, Phased, Pilot approach.

A great answer will include different implementation strategies and rationalization behind choosing an option.

* A Big-Bang approach where all the hotels are updated simultaneously in a short period of time.
* A Phased approach by region, or Service Tier of hotel.
* A Pilot approach where the application would be deployed in a small number of hotels and contingent on a successful implementation, the application would be deployed quickly in the remaining hotels.

Question 3: What are the benefits, disadvantages, and risks that stem from various options?

Possible Answers:

A good answer will include advantages, disadvantages, and risks of the options such as:

* Big-Bang approach – this approach solves business issues quickly, however it also involves the highest level of risk.

* Phased approach – this approach does not necessarily meet the business needs quickly, however it is a safer approach. A use of this approach should include a discussion of deploying by region or by Service Tier and the risks and advantages associated with the various sub-divisions.

* Pilot approach – this approach is very much like the big-bang approach, however it blunts some of the risk by the use of a small deployment as a test of the system.

A great answer will include mitigations for the risks. For example, possible mitigation strategies for the Big-Bang approach could include ensuring proper training and testing.

Question 4: If the candidate opts for a phased approach by service tier, what service tier would he/she recommend implementing the application for first?

Possible Answers:

A good answer will acknowledge that implementing the POS first for Service Tier 1 may not be optimal since in case of a failure the brand image may undergo the most significant damage.

A great answer will recommend either Service Tier 2 or Service Tier 3 as the first implementation along with the
reasons for the choice:

* In case the candidate opts for Service Tier 2, he/she should voice the logic of realizing earlier benefits from upgrading the tier that generates the most revenue.

* Likewise, if the candidate opts for Service Tier 3, he/she should express opting for a “safe strategy” where the upgrade is first tested on the low revenue tiers where a failure will not significantly impact the brand image.

Overall Evaluation:

This is a standard IT implementation strategy case where it is important to understand the client’s needs and determine the best implementation options along associated risks and mitigating actions.

A strong candidate will:

* Probe the interviewer for additional information to assess client needs.
* Consider all options and related advantages and disadvantages before selecting an option.