INFS7040 - ICT Business Case

Research School of Accounting and Business Information Systems

GROUP ASSESSMENT COVER SHEETStudent Names & ID Numbers:

MohD Adel AlSharif u5454956Steven Portelli u5148337Mohammad Tapal u5849005Zhen Zeng u5345816

Course Code: INFS7040

Tutor’s name: Dr Armin Haller

Tutorial Day/Time: Tuesday 12:00 pm, Group 7C

Assignment No: 1

Title: Business Case Report Project

Word Count: _____________________

Due Date: 16 Oct 2915

Date Submitted: ____________________

We hereby confirm that the work contained in this assignment is solely our own, except for reliance on material that is identified and cited according to accepted academic practice.

We have read and understood the ANU’s Code of Practice for Student Academic Honesty.

Signed: Date: 11 Oct 2015




| A N U C O L L E G E O F B U S I N E S S A N D E C O N O M I C S

ICT investment business case

electronic check-in and room access system

Crowne Plaza Hotel Canberra

INFS7040 group assignment

Moh'D Alsharif - u5454956

Steven Portelli - u5148337

Mohammad Tapal - u5849005

Zhen Zeng - u5345816

October 2015

Contents1. Introduction..........................................................................................................................3

2. Overview...............................................................................................................................4

Vision........................................................................................................................................ 4

Organisational objectives..........................................................................................................4

3. Business case........................................................................................................................5

Objectives.................................................................................................................................5

Outcomes................................................................................................................................. 5

Benefits.....................................................................................................................................5

Project governance...................................................................................................................6

4. Situational analysis and problem statement.........................................................................7

Operating environment............................................................................................................7

Problem statement...................................................................................................................8

Gap analysis..............................................................................................................................9

5. Assumptions and constraints..............................................................................................10

6. Identification and analysis of options.................................................................................11

Identification of options..........................................................................................................11

Recommendation of options..................................................................................................16

7. Implementation strategy....................................................................................................17

Implementation risks and risk management for Option 3......................................................18

8. Project preparation.............................................................................................................21

Sources and References..........................................................................................................21

Appendix A: Project Governance Model.....................................................................................24

Appendix B: Process overview....................................................................................................25

Appendix C: Work Breakdown Structure....................................................................................28

Appendix D: Schedule and Milestones........................................................................................29

Appendix E: Cost model and estimates, including NPV..............................................................31

Executive SummaryThis document outlines the business case for implementation of an electronic check-in and

room access system at Crowne Plaza Hotel Canberra.

The Crowne Plaza Hotel Canberra specialises in providing high-end accommodation for

business travellers. To remain competitive, Crowne Plaza Hotel must continue to refine its

focus on convenience and customer service.

The existing manual check-in process is time-consuming for staff, and guests can spend long

periods of time waiting in line to check-in. This sometimes results in complaints and can

result in the need for compensation.

Three options are assessed to address the problem:

1. No change to current practices.

2. Implementation of a Key Card Mobile System (KCMS) for check-in and room access

using an enterprise cloud located off-site.

3. Implementation of a KCMS using an enterprise server located on-site.

The aim of the Key Card Mobile System (KCMS) is to enhance the customer experience and

customer service provided by the hotel. The project will see the replacement of the

automation of the check-in process and room access system. The KCMS will allow guests to

use a mobile application to check-in and receive a barcode. The barcode will provide

electronic access to their room. The application will integrate with Crowne Plaza Hotel

Canberra’s existing reservation system (ERP system). ASSA ABLOY will build and supply

services for the KCMS.

Option 3 is considered the best option to deliver on this aim as it will reduce guests wait

times during the check-in process, KCMS will also free-up the front-desk staff for better

customer service, reduce guest complaint levels and compensation level should decline.

An onsite server provides greater data security and better privacy protection of guests’

information. The significant capital investment required for the hardware and facilities

should be offset by the flexibility gained through an on-site enterprise server and the

reduced data security risks. Security and guest privacy are critically important to the hotel.

The NPV for Option 3 is $151.98 million and is 29.55% greater than the NPV for Option 1.

Page 2 of 40

1. IntroductionCrowne Plaza Hotel is part of the Intercontinental Hotel Group (IHG) international chain, one

of the world's largest hotel group by number of rooms. The Crowne Plaza Hotel specialises

in providing high-end accommodation for business travellers. This focus provides Crowne

Plaza Hotel’s with the opportunity to tailor their product, offering comprehensive business

services and meetings facilities. Crowne Plaza Hotel continues to find innovative solutions to

improve their guests’ experience.

Technology remains at the centre of Crowne Plaza Hotel’s growth, providing guests with the

conveniences of home and the environment to do business. Technology continues to offer

ways to increase productivity and free-up time for leisure. A recent focus for Crowne Plaza

Hotel has been the development of a sophisticated service and application to make it easier

to find, book and manage accommodation. Guests can manage reservations, get hotel

updates and offers, find and book hotel rooms and view their reward points balance.

To remain competitive, Crowne Plaza Hotel must continue to refine its focus on convenience

and customer service. As such, the existing manual check-in process at Crowne Plaza Hotel

no longer aligns with the company’s strategy and should be automated where possible.

To maximise Crowne Plaza Hotel’s investment in technology and the flow-on benefits to

guest, the company should now consider expanding the accommodation management

service and ICT application. This expansion would include the implementation of an

electronic room key system, managed through a mobile application.

The implementation of a Key Card Mobile System (KCMS) will provide two direct strategic

outcomes for Crowne Plaza Hotel:

• allow front-of-desk staff to spend more time on customer service

• reduce guest wait times and complaint volumes

• ensure that rival companies of Crowne Plaza Hotel are not seen to be innovating

quicker or providing a better product for business travellers.

This business case focuses on the Crowne Plaza Hotel Canberra and outlines what would be

required to implement the KCMS, and the potential benefits of installing the system.

Page 3 of 40

2. OverviewInvestment in Crowne Plaza Hotel Canberra’s customer service is critical for company

success. This report outlines an investment project to further enhance positive guest

interactions with the company.

The project will implement a Key Card Mobile System (KCMS).

Implementation of the project will see the automation of the check-in and room access

system. Guests will be able to use an application on their mobile phone to check-in and

receive a barcode on their phone that will provide electronic access to their room.

The application will provide the guest with the details of their room number. The application

will integrate with Crowne Plaza Hotel Canberra’s existing reservation system (ERP system).

Design and planning of the project are focussed on Crowne Plaza Hotel Canberra.

If successful, there is potential for the project to be applied to all of IHG 4,700 properties in

almost 100 countries.

VisionThe aim of the project is to enhance the customer experience and customer service

provided by the hotel.

The system will allow guests to control their experience at the hotel and reduce waiting

times for hotel services. The KCMS will see a significant reduction in human resources

required for the manual check-in procedure, freeing up the front desk staff to provide better

customer service.

Organisational objectivesCrowne Plaza Hotel’s focus is to encourage repeated stays at their hotel chain by business

travellers. As such, all investment and decisions should be to support Crowne Plaza Hotel’s

focus strategy.

Implementation of a KCMS aligns with Crowne Plaza Hotel’s objectives and strategic plan.

A KCMS will contribute to the company’s trend of improving customer services through

technology.

Page 4 of 40

3. Business caseObjectivesObjectives of the project are:

1. Increase guests’ loyalty

2. Increase occupancy rate

3. Increase revenue

OutcomesThe anticipated outcomes of the project are:

1. Reduced check-in time

2. Increased customer service

3. Increased guests’ loyalty

4. Increased competitive advantage

5. Reduced number of front desk staff and consequently reduced cost

6. Increased revenue

7. Increased staff retention rate

BenefitsThe project should result in non-financial and financial benefits.

Non-Financial Benefits1. Streamlined front-desk operations, reducing costs and freeing up the front desk

team to focus on other important aspects of guest service.

2. New hotel experience. Guests book room using their mobile phone or device. Then,

they can use the phone to check-in.

3. Skip front office desk (no queues): When they arrive, they can go straight to their

room and use their own smartphone to open the door. No need for keys or key

cards. No need to wait in a queue at the front desk after a long journey.

4. Better guest experience: Mobile Access builds customer loyalty as well as the hotel’s

image and brand.

5. Revenue and Cost: More efficient operations that reduce cost and drive revenue,

improved profitability and increased competitiveness.

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Financial Benefits1. 8% increase in sales.

2. 10% decrease in HR cost.

Project governanceThe business case has been prepared by Group 7C (Project Champion), to seek funds from

IHG (Funder), in order to implement the KCMS project in Crowne Plaza Hotel. The business

case will be presented to the general manager of Crowne Plaza Hotel who is the project

sponsor.

The project will adhere to clear project governance protocols. The project manager will

coordinate project implementation and will report to the project sponsor and steering

committee. Reference groups and assurances advisors will be used to ensure the project is

informed and considered. A complete project governance structure is provided in

Appendix A.

Page 6 of 40

4. Situational analysis and problem statement Operating environmentCrowne Plaza Hotel is a five-star hotel located in Canberra city. It is a 5-storey hotel with

296 rooms. A large proportion of Canberra’s potential hotel guest are made up of business

travellers, including government workers. While Crowne Plaza Hotel is well positioned to

capture the business traveller, there is strong competition in Canberra. The Canberra

Crowne Plaza Hotel is over 25 years old, and there are several new hotels located in the

same geographic area. The situation of the hotel’s environment reinforces the need for

Crowne Plaza Hotel to continue to find ways to encourage business travellers to stay in the

Hotel.

Competitors have begun to rollout mobile check-in options, though some still require a

physical key-card to gain access to the room.

The organisational structure of the Hotel includes the general manager, human resources,

finance, sales and marketing, procurement, functions and conferencing, food and beverage,

reservation and front desk.

A SWOT analysis of the external and internal business environment is shown in Table 1.

Table 1 - SWOT Analysis

Inte

rnal

Strengths Strong brand name and international hotel chain. IHG is one of the world’s largest hotel groups with professional management, and experienced IT personnel.

Weaknesses High cost and low staff retention rate. In particular, front desk staff is overwhelmed and under continuous work pressure due to lengthy and manual check-in procedures and resulting guest complaints.

Exte

rnal

Opportunities New Information Technology solutions can be implemented which reduce cost, increase guests and staff satisfaction.

Threats Stiff competition in Canberra with other hotels such as Hilton, Accor, Marriot and Hyatt. Those hotels are implementing technology projects to attract guests and take better market share.

Page 7 of 40

The current hotel information system is a major ERP server connected to an ERP system.

A number of areas, including finance, human resources, functions, food and beverage,

reservations and front desk, uses the ERP system. The Reservation and Front Desk functions

are interrelated because the booking goes through the ERP server to the reservation system

and then generated at the front desk system to perform the check-in and check-out process.

The current business process model is presented in Appendix B.

Problem statementThe check-in process is lengthy and the procedure is manual, it includes: guests arrives to

front desk, waits in queue, identification, looking up booking, filling out check-in form,

provide credit card and issuing key-card.

The time-consuming check-in process creates a problem from two perspectives:

the hotel must use staff to conduct the manual check-in process, which reduces the

time staff can spend on other customer service activities, and

guests can spend long periods of time waiting in line to check-in. This sometimes

results in complaints and the need for compensation.

To help address the problem, the existing manual check-in process at Crowne Plaza should

be automated.

Analysis of problemCrowne Plaza Canberra consists of 296 rooms, with five front desk receptionists.

The average check-in time is 5 minutes. Thus, every receptionist needs 4.92 hours every day

to check-in 296 rooms. See calculations in Table 2.

Table 2 - check-in time for every receptionist

Rooms Average check-in time /guest

Total time in minutes / day (296*5)

Total time in hours / day

Receptionist Check-in time for every receptionist (24.6/5)

296 5 minutes 1480 minutes/day 24.6 h/day 5 4.92 hours a day

The project will:

• eliminate up to 4.92 hours of dedicated staffs’ time• free-up the front desk staff for customer server• reduce the number of required staff at the front desk from 5 to 3 • introduce a service that other hotels are installing.

Page 8 of 40

Gap analysisThe hotel objectives are to increase guests’ loyalty to increase the occupancy rate.

Consequently, it is expected that this will lead to an increase in revenue. However, current

practices lead to lengthy and manual check-in procedures. Guests’ complaints are increasing

due to the long queues, and they are switching to other hotels. As a result, the occupancy

rate is not reaching the hotel’s target and the hotel loses bookings and revenue. On the

other hand, the front desk staff are also exhausted because they spend hours processing

check-ins and fail to deliver the customer service guests expect.

By automating the check-in procedures: KCMS will greatly reduce queues, and reduce

pressure on front desk staff. Guests’ will be satisfied and their loyalty should increase.

Eventually, the occupancy and the revenue should increase and the hotel’s objectives met.

Page 9 of 40

5. Assumptions and constraintsAnalysis conducted for the Business Case considers a number of assumptions and constraints.

Assumptions:

the new server will be compatible with the hotel IT infrastructure the new KCMS will be compatible with the hotel existing ERP system the mobile application will be compatible with most android and iPhones the hotel’s IT personnel will have the expertise to install and maintain the new

hardware (e.g. the server) and software with some support from the supplier hotel maintenance personnel have the skills to install and maintain hardware

(e.g. new electronic door locks) with some support from the supplier. supplier will supply the required hardware and software on time and within the

budget. supplier is reliable and has expertise into the ICT industry budget will be sufficient from the project a series of costing and calculation assumptions have been made to calculate

costs, return and NPV. These financial assumptions can be viewed in Appendix E.

Constraints:

time: transition from old system to new system space: hardware must be installed on premises reliance on external service providers competition in the hotel industry and technology advancements may change in

ways not anticipated by this business case, constraining the benefits available to the project.

Page 10 of 40

6. Identification and analysis of optionsIdentification of options Three business investment options are considered.

Option 1 No change to current practices.

Option 2 Implementation of a KCMS using an enterprise cloud (off-site).

Option 3 Implementation of a KCMS using an enterprise server (on-site).

Option 1 – current practice (no change) It is important to assess whether existing processes are satisfactory and whether possible

investment may be too risky or costly to justify a change.

As shown in Appendix B, the current business process model (BPM) follows these steps:

1. Guest arrives to the hotel

2. Guest walks to the front desk

3. Guest waits in queue

4. Guest starts check-in procedures which is 5 minutes on average:

a. Guest identification

b. Booking identification

c. Arrival registration form

d. Room allocation

e. Processing payment

5. Guest is issued by a key-card

Option 1 presents the continuation of existing practices. Guest will continue to check-in at

the front desk and guest will be required to wait in line to be served. This option has the

benefit of continuing with existing practice, where guests are familiar with what their

experience they will be and staff will not have to go through a period of change.

The manual check-in process has worked well for the hotel over the years and cannot be

refined. It is efficient and practical as a manual solution and has a very low risk of failure.

Page 11 of 40

However, continuing with existing practices will lead to a number of dis-benefits. Long check-in

lines will not be resolved and guest complaint levels will remain higher than acceptable. In

addition, rival companies will continue to leverage technology and gain a competitive

advantage over Crowne Plaza Canberra. Competitors have already begun rolling out mobile

check-in solutions, which could become increasingly attractive to business travellers looking

for convenience and flexibility.

The status-quo is estimated to cost the company $2.9 million in 2015, with this value

increasing in future years.

To continue with this option, the return is estimated to be $ 26.07 million in 2015 with a

Net Present Value (NPV) of $117.31 million (see Appendix E for calculations).

Option 2 – KCMS enterprise cloudTo address the problems created by a lengthy, manual check-in process, Option 2 proposes

to install a mobile check-in system referred to as KCMS. The system will use an enterprise

cloud service to store data and process mobile bookings. ASSA ABLOY will build and supply

services for the KCMS.

Guest must download KCMS application on their mobiles phones or tablets in order to

receive the Mobile Key-Card when they make a booking. The process for Option 2 is

presented in Figure 1.

Page 12 of 40

Figure 1 – relationship flow of options 2 – KCMS using enterprise cloud

To shift to Option 2, the hotel will require physical and cultural change. New door locks will

be installed on all doors and affected stuff will have to be trained in new areas.

An enterprise cloud will create a significant risk to security of guest information and room

access information. Data security and guest privacy is critical to the hotel. An off-site server

may generate too great a risk for the hotel even when considering the likely benefits gained

from implementing Option 2.

A contract manager will be required to oversee the service level agreement with the

infrastructure-as-a-service operator.

The total initial investment for Option 2 is $400,142 (refer to Appendix E). There is an annual

cloud service fee of $43,416 and an initial project investment cost of $0.4 million in 2015.

Total cost to the hotel in 2015 to implement Option 2 is estimated to be $3.15 million.

Option 2 is estimated to have a return of $28.13 million in 2015 and a NPV of

$151.79 million.

Page 13 of 40

Cloud ComputingOff-Premises ServerCloud Computing

Off-Premises Server

Hotel ERP ServerHotel ERP ServerHotel ERP System

KCMS Mobile

App

Door Lock

System

1Integration

KCMS Software

Further cost and benefit calculations are presented in Appendix E.

Option 3 – KCMS enterprise serverOption 3 will implement the same elements as Option 2 with the replacement of the

enterprise cloud with an on-site enterprise server. As such, Option 2 and Option 3 offer

similar benefits and limitations.

The key difference between Option 2 and Option 3 is that an on-site enterprise server will

provide the hotel with increased control and protection of their guests’ data and decreased

risk for guest information to be compromised.

An onsite server also provides greater flexibility to the hotel for future customisation.

This option will require significant capital investment for hardware and facilities. The on-site

enterprise server will require a dedicated storage location. Hotel ICT staff will require

training to maintain and troubleshoot the server.

The total initial investment for Option 3 is $350,530 (refer to Appendix E).

Total cost to the hotel in 2015 to implement Option 3 is estimated to be $3.10 million.

Option 3 is estimated to have a return of $28.18 million in 2015 and a NPV of

$151.98 million.

Further cost and benefit calculations are presented in Appendix E.

The process is presented in Figure 2

Page 14 of 40

Figure 2 – relationship flow of options 3 – KCMS using enterprise server

As shown in Appendix B; The new Business Process Model follows two instances:

Instance 1

1. Process stars2. Guest make a booking using KCMS Application from mobile phones, tablets, or

computers.3. Booking requests goes through to the hotel ERP server.4. ERP server check for availability.5. If there are no available rooms; a notification is sent back guests with rejection.6. If approved; the ERPS server generates the booking to KCMS server in order to issue

a confirmation number and the Mobile Key-Card.7. Process ends

Instance 2

1. Process starts2. Guest arrives to hotel and heads straight up to the allocated room.3. Guest swipes mobile on the door-lock system on the door.4. A notification is generated to inform KCMS server to activate the Mobile Key-Card.5. KCMS server activates the Mobile Key-Card instantly.6. Process ends: Guest enters the room.

Page 15 of 40

KCMS ServerOn-premisesKCMS ServerOn-premises

Hotel ERP serverHotel ERP serverHotel ERP System

Mobile Key Card &

Booking Confirmation

KCMS Mobile

App

Door Lock

System

1Integration

The mobile application will be designed to remove the need for any human contact during

the check-in and room access process.

Recommendation of optionsA comparison of key considerations between the options is presented in Table 3.

Table 3 – summary of key advantages, disadvantages and stakeholder impacts for each section.

Option 1 Option 2 Option 3

Advantages Stability Data security Low risk

Provide better service New customer

experience Higher revenue Lower HR cost

Provide better service New customer experience Data security Higher revenue Lower HR cost

Disadvantages High HR cost Reduced

competitive advantage

Security risk High annual fee for

cloud server

Dependence on ASSA ABLOY

High capital cost Dependence on IT

personnel

Stakeholder Impact No risk of failure

Risk of project failure Take risk on project

Risk of project failure Take risk on project

Option 3 presents a great opportunity to maintain and grow the hotel’s competitive

advantage and reduce staff investment in the check-in process. While this option initially

requires significant capital invest, an enterprise server will provide the hotel with flexibility

and will greatly reduce data security risks. Security and guest privacy are critically important

to the hotel.

The return for Option 3 in 2015 is $28.18 million and is 8.09% greater than the return for

Option 1 ($26.07 million). The NPV for Option 3 is $151.98 million and is 29.55% greater

than the NPV for Option 1 ($117.31 million).

Option 3 is recommended for implementation.

Page 16 of 40

7. Implementation strategyThe KCMS project consists of the following deliverables (outputs):

Key Card Mobile System – KCM

o KCMS Lock System

Wireless card

RFID: Radio Frequency Identification

Built-in Software

o KCMS Server

o KCMS Software

o KCMS Mobile Application

o KCMS Integration

o Training

o Marketing

The Work Breakdown Structure is available in Appendix C.

The lock system, server, software, and mobile application will be purchased from external

supplier—ASSA ABOLY (http://www.assaabloyhospitality.com/). However, the internal

IT hotel staff will perform the installation and integration.

Implementation of the KCMS includes:

the new KCMS server will be integrated into the current ERP server

the new KCMS software will be integrated into the ERP software

the electric readers (KCMS lock system) will be installed on all room doors of the

hotel

the mobile application will be installed by whoever would like to make bookings

the communication between the Lock System, the KCMS server, and the mobile

application will be through built-in wireless cards

the KCMS software will control the whole system.

Page 17 of 40

There will also be training for the front desk and reservation staff on how to use the KCMS

software. Most importantly, the marketing campaigns will focus on the new check-in

procedures to attract more customers.

The project is proposed to last for three months from 1st November2015 until 31st January

2016. There will be three milestones during the project: the first milestone is on 30

November 2015 when testing the server, the second milestone on 31 December 2015 when

launching the Mobile Application, and the third milestone on 9 January 2016 when the

entire system is tested. The schedule, milestones and tasks are shown in the Appendix D.

Implementation risks and risk management for Option 3Risk AnalysisTen potential risks have been identified as follow:

R1: ERP server downtime: The ERP will be switched off during the integration, which

may cause errors, delays and confusion in data.

R2: ERP system downtime. ERP system will be switched off during the integration,

which may also cause delays and errors.

R3: Some room-doors not compatible with the new lock-system; new doors may

need to be purchased.

R4: Internal IT staff unable to install new system: Internal IT staff may not be able to

install some parts of the new system, which will cause delays and budget overrun.

R5: Delays from suppliers: Suppliers may not deliver on time and could affect the

schedule.

R6: Low quality hardware and software: The quality may not be as expected, causing

the system to be unstable or unreliable.

R7: Noise pollution: Noise when installing the system. The IT staff will be using the

front desk area to install the new system, this will cause noise and untidy hotel

image. Guest may switch to other hotels.

R8: Scope creep: The scope may be changed due to the existence of other options in

the project (cloud computing); this will cause cost and schedule overrun.

R9: Project not attracting guests. The project may not attract more guests and that

will lead to revenue deficiency.

Page 18 of 40

R10. Guests are not using the new service. Guests may not use the new booking

system and the queues will remain the same.

Analysis of the risks is shown in Table 4.

Table 4 - Likelihood and Severity MatrixSe

verit

yLikelihood

High Medium Low

High R1,R2 R4,R8

Medium R3,R5 R6

Low R7 R9,R10

The red highlighted risks are the most serious risks and highest priority, the yellow

highlighted risks are medium priority, and the green highlighted risks are low priority.

Detailed interpretation of the Likelihood and Severity Matrix:

High likelihood and High severity: R1 ERP server downtime. R2 ERP system

downtime.

Medium likelihood and Medium severity: R3 Room-doors not compatible with the

new lock-system. R5 Delays from suppliers.

Low likelihood and High severity: R4 Internal IT staff unable to install new system. R8

Scope creep.

Low likelihood and Medium severity: R6 Low quality hardware and software.

Medium likelihood and Low severity: R7 Noise pollution.

Low likelihood and Low severity: R9 Project not attracting guests. R10 Guests are not

using the new service.

Risk managementThe risks will be managed by applying risk strategies, including mitigation, avoidance,

transfer and risk acceptance. Mostly importantly, the highly severe and likely to occur risks

(ERP downtime - R1 & R2) will be mitigated by applying the best IT professionals at the hotel

at the time of server and system downtime. This will minimise the time of installation and

errors and the time taken to get the system back online as soon as possible.

Page 19 of 40

8. Project preparationThis business report was prepared as a result of a concerted effort by Moh'D Alsharif,

Steven Portelli, Mohammad Tapal and Zhen Zeng. Following is a brief schedule showing the

work done by each group member in the completion of this report.

Team Member Tasks Completed

Moh'D Alsharif Implementation strategy

The business case and situational assessment

Problem statement

Business processes maps and steps

Report review

Steven Portelli Introduction

Overview

Assumptions and constraints

Description and analysis of options

Report review

Mohammad Tapal Project preparation

Development of presentation slides

Zhen Zeng Cost and financial analysis of options

References and sources

SourcesOur research into the business case has revolved around how to create a business

opportunity and competitive advantage for Crowne Plaza Canberra by the implementation

of the latest ICT in the form of key card mobile systems (KCMS).

The financial reports of Crowne Plaza and their competitors were analysed to gain a better

understanding of how the Crowne plaza could benefit financially by implementing this latest

ICT development.

Our group member, Moh'D Alsharif has previously worked at Crowne Plaza as a night

manager. He has been a key source of information and has provided contacts for within the

organisation for further information.

Page 20 of 40

The supplier for our KCMS technology, ASSA ABLOY has been contacted on several occasions

for information and quotes.

The data is also drawn from the global website which shares revenue, daily occupancy rate,

and average rate for all the hotels worldwide www.strglobal.com.

Online journal and articles have been taken into account to assess how ASSA ABLOY and the

KCMS can help create an opportunity for Crown Plaza.

ReferencesAlibaba 2015, Alibaba, viewed 10 September 2015, <http://www.alibaba.com/trade/search?

fsb=y&IndexArea=product_en&CatId=&SearchText=vingcard+hotel+lock+rfid>.

Assa Abloy 2015, Assa Abloy, viewed 10 September 2015, <http://www.assaabloyhospitality.com/en/aah/com/products/hotel/mobile-access/>.

Australian Bureau of Statistics 2006, The cost of training Australia's workers, Australian Bureau of Statistics, viewed 10 September 2015, <http://www.abs.gov.au/ausstats/[email protected]/Previousproducts/1301.0Feature%20Article152004?opendocument&tabname=Summary&prodno=1301.0&issue=2004&num=&view>.

Capterra 2015, Capterra, viewed 10 September 2015, http://www.capterra.com/hospitality-property-management-software/spotlight/13824/roomMaster/InnQuest%20Software>.

Dell 2015, Dell, viewed 10 September 2015, <http://configure.ap.dell.com/dellstore/config.aspx?c=au&cs=aubsd1&l=en&model_id=poweredge-t630&oc=u421604au&s=bsd&fb=1&vw=classic >.

Imason 2015, Imason, viewed 10 September 2015, <https://www.imason.com/mobile-app-calculator>.

Intercontinental hotels group 2010, Annual Report and Review 2010, Intercontinental hotels group, viewed 7 September 2015, <http://www.ihgplc.com/files/reports/ar2010/docs/ihg_annual_report_2010.pdf>.

Intercontinental hotels group 2011, Annual Report and Review 2011, Intercontinental hotels group, viewed 7 September 2015, <http://www.ihgplc.com/files/reports/ar2011/docs/IHG_Report_2011.pdf>.

Page 21 of 40

Intercontinental hotels group 2012, Annual Report and Review 2012, Intercontinental hotels group, viewed 7 September 2015, <http://www.ihgplc.com/files/reports/ar2012/docs/IHG_Report_2012.pdf>.

Intercontinental hotels group 2013, Annual Report and Form 20-F 2013, Intercontinental hotels group, viewed 7 September 2015, <http://www.ihgplc.com/files/reports/ar2013/docs/IHG_Report_2013.pdf>.

Intercontinental hotels group 2014, Annual Report and Form 20-F 2014, Intercontinental hotels group, viewed 7 September 2015, <http://www.ihgplc.com/files/reports/ar2014/files/IHG_Report_2014.pdf>.

Marriott International Inc 2014, Annual report 2014, Marriott International Inc, viewed 7 October 2015, <http://files.shareholder.com/downloads/MAR/828225050x0x819614/987062C0-247A-422A-B2EE-5A76FF60E1ED/Marriott_2014AR.pdf>.

Rackspace 2015, Rackspace, viewed 10 September 2015, <http://www.rackspace.com/en-au/calculator>.

The Australian 2013, ‘Smartphone mobile check-in starts at Sydney Harbour Marriott, to be rolled out at hotels across Australia,’ The Australian, 27 November, viewed 7 October 2015, <http://www.theaustralian.com.au/news/smartphone-mobile-checkin-starts-at-sydney-harbour-marriott-to-be-rolled-out-at-hotels-across-australia/story-e6frg6n6-1226769747438>.

6S Marketing 2015, 6S Marketing, viewed 10 September 2015, <http://digitalmarketingcalculator.com>.

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Project Funder – Intercontinental Hotel Group (IHG)

Steering CommitteeIHG (COO) IHG (CFO)Reference Groups (Advisors)

IT Consulting Services

Project Sponsor – Crowne Plaza Canberra

Project managerIT Manager at Crowne Plaza

Project team

InternalProcurement officer

IT PersonnelFinancial officer

External (Contractors)Suppliers

Assurance CounsellorsOperation ManagerFront Desk Manager

Appendix A: Project Governance Model

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Appendix B: Process overview

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Appendix C: Work Breakdown Structure

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Appendix D: Schedule and MilestonesWBS Deliverables (outputs) Start Finish Milestones

1 Key Card Mobile System - KCMS 01/11/2015 31/1/2016

1.1 Hardware 1/11/2015 30/11/2015

1.1.1 Lock System (wireless card, RFID,

Built-in Software)

1/11/2015 30/11/2015

1.1.1.1 Identify Suppliers 1/11/2015 10/11/2015

1.1.1.2 Purchase Lock System 11/11/2015 20/11/2015

1.1.1.3 Install Lock System 21/11/2015 30/11/2015

1.1.2 KCMS - Server 1/11/2015 30/11/2015


1.1.2.2 Purchase Server 11/11/2015 20/11/2015

1.1.2.3 Install Server 21/11/2015 27/11/2015

1.1.2.4 Integrate KCMS server into ERP server 28/11/2015 30/11/2015

1.1.2.5 Test Server 30/11/2015 30/11/2015 Milestone 1

1.2 Software 1/12/2015 31/12/2015

1.2.1 KCMS Software 1/12/2015 31/12/2015


1.2.1.2 Purchase Software 11/12/2015 15/12/2015

1.2.1.3 Install Software 16/12/2015 20/12/2015

1.2.1.4 Integrate KCMS software into ERP

system

21/12/2015 26/12/2015

1.2.1.5 Test software Integration 27/12/2015 31/12/2015

1.2.2 Mobile Application 1/12/2015 31/12/2015


1.2.2.2 Purchase Application 11/12/2015 15/12/2015

1.2.2.3 Integrate App into ERP server 16/12/2015 25/12/2015

1.2.2.4 Launch App 26/12/2015 31/12/2015 Milestone 2

1.3 KMCS System Integration 1/1/2016 10/1/2016

1.3.1 Integrate the entire KCMS into the

Hotel ERP system

1/1/2016 8/1/2016

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WBS Deliverables (outputs) Start Finish Milestones

1.3.2 Test the entire system 9/1/2016 10/1/2016 Milestone 3

1.4 Training 11/1/2016 31/1/2016

1.4.1 Organize Staff Training 11/1/2016 20/1/2016

1.4.2 Conduct Staff Training 21/1/2016 31/1/2016

1.5 Marketing 1/1/2016 31/1/2016

1.5.1 Implement the new check-in process

into marketing campaigns

1/1/2016 31/1/2016

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Appendix E: Cost model and estimates, including NPVData in this report is calculated using following methods.

Expenses and revenues are based on 2014 levels and are calculated as follows:

room revenue = 296 rooms * $250 (average price)

= $74,000 daily

= $27.01 million per annum.

Salaries = staff payroll (reception + concierge)

= $54,000 a month + $54,000 a month


Staff payroll (reception) = $25/h * 8 hours = $200 / shift = $200 * 3 staff = $600

= $600 * 3 shifts = $1,800 a day = $54,000 a month

Staff payroll (Concierge): = $25/h * 8 hours= $200 / shift = $200 * 3 staff = $600

= $600 * 3 shifts = $1,800 a day = $54,000 a month

General and administrative cost = around $2,500 a day


Data from 2010 to 2015 has been used to forecast values for 2016 to 2019 (in $ million).

Calculations of forecasts in this business case used the following approach:

Firstly, calculate the moving average value of 2010-2015 and then take the average of each

two moving average values to find the central moving average value. Secondly, identify the

irregular factor by taking the real value and divide by the central moving average value.

Thirdly, use regression model to find the intercept and slope of time and real value. Finally,

using the intercept and slope of time and real value to determine output value, and then

multiply the irregular factor to get forecast value of year 2016 to 2019.

Our competitor Marriott hotel has launched mobile application for customer to check-in at all

its 500 hotel in the first half of 2014. Its revenue increased by about 8%. Therefore, it is

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reasonable to assume 8% increase in revenue in option 2 and 3. The data is drawn from the

global website which shares revenue, daily occupancy rate and average rate for all the hotels

worldwide www.strglobal.com.

The front desk staff will decrease from 5 to 3, or by 60%. However, HR cost includes the entire

staff in the hotel and front desk staff are part of HR so it should be much less than 60%.

As such, a realistic percentage of the front desk staff compared to the entire hotel staff is

around a 10% decrease in HR cost for option 2 and 3.

For options 2 and 3, we assumed 8% increase in revenue annually and 10% decrease in HR

cost. The new forecast revenue value in 2015 is 1.08 multiplied the previous forecast value,

1.082for 2016, 1.083for 2017, 1.084 for 2018, 1.085for 2019. The new forecast salaries value is

0.9 multiplied by the previous forecast value.

NPV for Option 1 (no–change) in million dollars

The Option 1 forecast calculations presented in Table 5 consider a five-year life cycle, room

revenue, front-desk salaries and front desk-desk expenses, taking into consideration annual

inflation.

Table 5 - Five-Year forecast for no-change option in $million

Time Year Room Revenue

Front Desk Salaries

Front Desk Expense

0 2015 28.97 1.44 1.461 2016 29.92 1.52 1.582 2017 30.75 1.58 1.623 2018 31.63 1.66 1.694 2019 32.52 1.73 1.77

The cost and benefit analysis of Option 1 is shown in Table 6. The calculation considers the

total expenses for front desk expense:

In 2015, the total cost is:

= Front desk salaries + Front desk expense

= $1.44 million + $1.46million

= $2.9 million

The total benefit equals $28.97 million.

The return is:

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Total Benefit - Total cost = $28.97 - $2.9 = $26.07 million.

Table 6 - Cost and Benefit Analysis for no change option in $million

Costs 2015 2016 2017 2018 2019 Total

Front desk Salaries 1.44 1.52 1.58 1.66 1.73 7.93

Front desk expense 1.46 1.58 1.62 1.69 1.77 8.12

Total 2.90 3.10 3.20 3.35 3.50 16.05

Benefit 2015 2016 2017 2018 2019 Total

Room Revenue 28.97 29.92 30.75 31.63 32.52 153.79

Total 28.97 29.92 30.75 31.63 32.52 153.79

ROI 2015 2016 2017 2018 2019 Total

Costs 2.90 3.10 3.20 3.35 3.50 16.05

Benefit 28.97 29.92 30.75 31.63 32.52 153.79

Return 26.07 26.83 27.55 28.28 29.02 137.75

NPV at beginning of 2015 calculation:

NPV =26.071.055+

26.831.0552

+27.551.0553

+28.281.0554

+29.021.0555

= $117.31 million

*The NPV calculations has used 5.5% interest rate.

Time Year Room Revenue

Front Desk Salaries

Front Desk Expense

Profit (at the end of each year)

NPV

0 2015 28.97 1.44 1.46 26.07 $117.311 2016 29.92 1.52 1.58 26.832 2017 30.75 1.58 1.62 27.553 2018 31.63 1.66 1.69 28.284 2019 32.52 1.73 1.77 29.02

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Initial investment for Option 2 (enterprise cloud)

Table 7 - Cost estimation for option 2

WBS # Deliverables (outputs) Materials (Hardware)

Equipment (Software)

HR Total ($)

1 Key Card Mobile System (KCMS)

1.1 KCMS - Hardware1.1.1 Lock System (wireless card,

RFID, Built-in Software)19,872

1.1.1.1

Identify Suppliers 3,500

1.1.1.2

Purchase Lock System 9,072 3,700

1.1.1.3

Install Lock System 3,600

1.1.2 Cloud Server 18,7051.1.2.1


1.1.2.2

Purchase Server 43,415.88 3,650

1.1.2.3

Install Server 1,239

1.1.2.4

Test Server 3,600

1.2 SaaS1.2.1 Software as a Service 15,8951.2.1.1


1.2.1.2

Purchase Software 1,495

1.2.1.3

Install Software 3,800

1.2.1.4

Integrate Software to KCMS Server

3,650

1.2.1.5

Test software Integration 3,550

1.2.2 Mobile Application 139,6001.2.2.1


1.2.2.2

Purchase Application 128,800

1.2.2.3

Integrate App with KCMS Server 3,500

1.2.2.4

Launch App 3,600

1.3 KCMS System Integration 3,600

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1.3.1 Integrate the entire KCMS into the Hotel ERP system

3,600

1.4 Training 4,3801.4.1 Organize Staff Training 7801.4.2 Conduct Staff Training 3,6001.5 Marketing 57,6001.5.1 Include the new check-in

process into marketing campaigns

57,600

Cost 9,072 173710.88 113,619 29,6401.5Overhead Cost 10% 29,640.15General and Administrative Cost 10% 29,640.15Contingency 15% 44,460.2Total Cost 400,142

The total initial investment for the project is $400,142 (refer to Table 7), with the breakdown

of total investment as follows:

Material cost (Hardware): $9,072 Equipment Cost (Software): $173,711 Human Resource Cost: $113,619 Overhead Cost 10%: $296,401 General and Administrative: $29,640 Contingency: $44,460

There is an additional annual cloud service fee of $43,416. The project life cycle is predicted to

be five years. Table 8 forecasts the five-year room revenue, front-desk salaries and front desk-

desk expenses and adjusted for inflation.

Table 8 - Five-year forecast for enterprise cloud option in $million

Year Room Revenue

Front-Desk Salaries

Front-desk expense

Cloud server annual fee

2015 31.29 1.30 1.462016 34.90 1.37 1.58 0.042017 38.74 1.43 1.62 0.042018 43.03 1.49 1.69 0.042019 47.78 1.55 1.77 0.04


total expenses for front desk expense. In 2015, the total cost includes an initial project

investment cost of $0.4 million. From 2016 to 2019, there is annual fee of $0.04 million for the

enterprise cloud service.


= Front desk salaries + Front desk expense + Initial investment

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= $1.297 million + $1.457 million + $0.4 million

= $3.154 million

The benefit (room revenue) is $31.288 million, and the total rate of return is:

Total Benefit - Total cost = $31.288 million - $3.154 million = $28.13 million.


= Front desk salaries + Front desk expense + cloud server annual fee

= $1.37 million + $1.58 million + $0.04 million

= $2.99 million

The benefit (room revenue) is $34.90 million, and the rate of return is:


Table 9 - Cost and Benefit Analysis for cloud sever option in $million

Costs 2015 2016 2017 2018 2019 Total


Front desk expense 1.46 1.58 1.62 1.69 1.77 8.12

Cloud server annual fee 0.00 0.04 0.04 0.04 0.04 0.17

Initial investment 0.40 0.00 0.00 0.00 0.00 0.40

Total 3.15 2.99 3.09 3.23 3.37 15.83

Benefit 2015 2016 2017 2018 2019 Total

Room Revenue 31.29 34.90 38.74 43.03 47.78 195.74

Total 31.29 34.90 38.74 43.03 47.78 195.74

ROI 2015 2016 2017 2018 2019 Total

Costs 3.15 2.99 3.09 3.23 3.37 15.83

Benefit 31.29 34.90 38.74 43.03 47.78 195.74

Return 28.13 31.91 35.65 39.81 44.41 179.91

NPV for Option 2 (cloud computing) in million dollars

The NPV is calculated using the total initial investment of $400,142.

NPV at begin of 2015 calculation

NPV = -0.40+28.531.055 +

31.911.0552

+35.651.0553

+39.811.0554

+44.411.0555

= $151.79 million

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*The NPV calculations has used 5.5% interest rate, 8% increase in revenue and 10% decrease in human resources cost.

Year Room Revenue

Front-desk Salaries

Front-desk expense

Cloud server annual fee


Initial investment paid at begin of 2015

NPV($ m)

2015 31.29 1.30 1.46 28.53 0.40 151.792016 34.90 1.37 1.58 0.04 31.91 0.002017 38.74 1.43 1.62 0.04 35.65 0.002018 43.03 1.49 1.69 0.04 39.81 0.002019 47.78 1.55 1.77 0.04 44.41 0.00

Initial cost for Option 3 (enterprise server)

Table 10 - cost estimation for option 3 (Enterprise Server -on premises)

WBS # Deliverables (outputs) Materials (Hardware)

Equipment (Software)

HR Total ($)

1 Key Card Mobile System (KCMS)1.1 KCMS - Hardware1.1.1 Lock System (wireless card, RFID,

Built-in Software)19,872

1.1.1.1 Identify Suppliers 3,5001.1.1.2 Purchase Lock System 9,072 3,7001.1.1.3 Install Lock System 3,6001.1.2 KCMS - Server 18,704.61.1.2.1 Identify Suppliers 3,5501.1.2.2 Purchase Server 6,666 3,6501.1.2.3 Install Server 1,2391.1.2.4 Test Server 3,6001.2 KCMS Software1.2.1 Software 15,8951.2.1.1 Identify Suppliers 3,4001.2.1.2 Purchase Software 1,4951.2.1.3 Install Software 3,8001.2.1.4 Integrate Software to KCMS

Server3,650

1.2.1.5 Test software Integration 3,5501.2.2 Mobile Application 139,6001.2.2.1 Identify Suppliers 3,7001.2.2.2 Purchase Application 128,8001.2.2.3 Integrate App with KCMS Server 3,5001.2.2.4 Launch App 3,6001.3 KCMS System Integration 3,6001.3.1 Integrate the entire KCMS into

the Hotel ERP system3,600

1.4 Training 4,380

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1.4.1 Organize Staff Training 7801.4.2 Conduct Staff Training 3,6001.5 Marketing 57,6001.5.1 Include the new check-in process

into marketing campaigns57,600

Cost 15,738 130,295 113,619 259,651.6Overhead Cost 10% 25,965.16General and Administrative Cost 10% 25,965.16Contingency 15% 38,947.74Total Cost 350,529.66

The total initial investment for the project is $350,530 (refer to Table 10), with the breakdown

of total investment as follows:

Material cost (Hardware): $15,738 Equipment Cost (Software): $130,295 Human Resource Cost: $113,619 Overhead Cost 10%: $25,965 General and Administrative: $25,965 Contingency: $38,948

The project life cycle is predicted to be five years. Table 11 forecasts the five-year room

revenue, front-desk salaries and front desk-desk expenses and adjusted for inflation.

Table 11 - Five-year forecast for enterprise server in $million

Year Room Revenue Front-Desk Salaries

Front-Desk expense

2015 31.29 1.30 1.462016 34.90 1.37 1.582017 38.74 1.43 1.622018 43.03 1.49 1.692019 47.78 1.55 1.77


total expenses for front desk expense. In 2015, the total cost includes an initial project

investment cost of $0.35 million.


= Front desk salaries + Front desk expense + Initial investment

= $1.297 million + $1.457million + $0.35 million

= $3.104 million

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The benefit (room revenue) is $31.288 million, and the total rate of return is:


Table 12 - Cost and Benefit Analysis for enterprise server in $million

Costs 2015 2016 2017 2018 2019 Total


Front desk

expense

1.46 1.58 1.62 1.69 1.77 8.12

Initial investment 0.35 0.00 0.00 0.00 0.00 0.35

Total 3.10 2.94 3.04 3.18 3.33 15.61

Benefit 2015 2016 2017 2018 2019 Total

Room Revenue 31.29 34.90 38.74 43.03 47.78 195.74

Total 31.29 34.90 38.74 43.03 47.78 195.74

ROI 2015 2016 2017 2018 2019 Total

Costs 3.10 2.94 3.04 3.18 3.33 15.61

Benefit 31.29 34.90 38.74 43.03 47.78 195.74

Return 28.18 31.96 35.69 39.85 44.45 180.14

NPV for option 3 (enterprise server) in million dollars

The NPV is calculated using the total initial investment of $350,530.

NPV at begin of 2015 calculation:

NPV = -0.35+28.531.055 +

31.961.0552

+35.691.0553

+39.851.0554

+44.451.0555

= $151.98 million

*The NPV calculations has used 5.5% interest rate, 8% increase in revenue and 10% decrease in human resources cost.

Year Room Revenue

Front-desk Salaries

Front-desk expense


Initial investment paid at begin of 2015

NPV ($m)

2015 31.29 1.30 1.46 28.53 0.35 151.982016 34.90 1.37 1.58 31.96 0.002017 38.74 1.43 1.62 35.69 0.002018 43.03 1.49 1.69 39.85 0.002019 47.78 1.55 1.77 44.45 0.00

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