Faster, smarter, safer – how are digital and automated processes changing the back office area in hotels? Where is the actual potential for the hotel industry? We spoke with Sascha de Clerque (SDC), Managing Director of allinvos, about how ordering and purchasing processes can be optimised through automation.
1) What major back office issues need to be resolved if we wish to talk about “fully automated, digital solutions”?
SDC: A great many front office processes have already been digitalised and run fully automatically. The picture is totally different when it comes to processes taking place in the background. The so-called “back office” – i.e. accounts, kitchen, housekeeping, technical services and purchasing – is still largely stuck in its infancy when it comes to the technical structure of processes and a great deal is still performed manually. This means there is little transparency and the number of staff required is unnecessarily high in many instances. At a time when there is a shortage of skilled staff and working hours are decreasing or when staff have to cater more closely to the needs of guests, rationalising processes behind the scenes, i.e. in the back-of-house area of a hotel, plays a major role, and digitalisation is of great assistance here.
2) What is it possible to achieve in practice, how far can automation go and where are the limits?
SDC: In theory, there are no limits to automation. That is what is so exciting about this mega trend: in principle, anything is possible. This is forcing us to think about things completely differently – and this of course brings a whole new raft of opportunities with it. I’m convinced that digital transformation will in future come to be seen as indispensable in the back office, too – in the same way in which no hotel can work without a front office system today. Everything that can be digitalised will be digitalised. And everything that has been digitalised will be automated. We view this exclusively from a user perspective: what do clients want, what do they need and how can we make their daily work easier? Starting from this approach, we pioneered the development of the first solutions in the area of procure-to-pay for the hotel and restaurant industry based on artificial intelligence.
3) You talk of artificial intelligence in the procure-to-pay process. What exactly do you mean by that?
SDC: We have already implemented artificial intelligence (AI) in some parts of our solutions deployed over the entire procure-to-pay process – i.e. from online ordering and digital inventory management to online invoice management and the electronic delivery note. This AI recognises when the price I pay e.g. for my tomatoes is different on the invoice to the price I purchased the tomatoes at according to the order. At that same time, our system also compares the quantity of goods received with the goods that were ordered. Any differences detected are indicated to clients immediately and they can then respond to it – in real time. In this way, clients never pay for more than they receive and they also pay a specific price for goods they ordered at that price. This goes even further: our system also offers the option of a contract management module that stores all the agreements I conclude with my vendors. The system thus makes it possible to make a comparison between the contract and the terms of delivery and payment, increasing transparency and making compliance rules easier to observe. Our contract management system can also map the duration of contracts and periods of notice.
4) What benefits result from this for clients?
SDC: Digitalisation in purchasing, procurement and invoice management is a great opportunity. It reduces staff workload and allows them to devote themselves to more important, revenue-generating tasks. The benefits can already be expressed in value terms. Personnel costs are four times cheaper and process workflows are four times faster compared with manual processes. We measured this in a research study conducted among a number of hotels in collaboration with Heilbronn University of Applied Sciences. Whereas an order including invoice verification costs a hotel working in the traditional manner over EUR 70 in personnel costs, the costs for a hotel that has implemented digital workflow to map the process from order to invoice approval only just exceed EUR 20. A large hotel with around 100 rooms has between 1,000 and 1,500 orders and as many invoices per year. You can quickly calculate what the financial benefit is in terms of personnel costs alone when you perform these things digitally instead of manually. The intelligent digitalisation of the order and invoice management process can yield process cost savings significantly in excess of 50 per cent.
5) What reservations do hotel operators have and how do you dispel them?
SDC: We launched our technologies back in 2018 and it is only in the last two years that the market has begun to recognise the benefits. In the case of clients to whom we presented our solutions in person, we were able to immediately dispel any concerns that they had and generally convince them directly and for the long term. We rarely lose clients once they choose our smart tools. Typical concerns we were confronted with, and still sometimes face, are the fear of change and also the loss of jobs. We cannot prevent things changing as a result of digitalisation and automation. However, the fact that staff have more time for revenue-generating activities leads to greater opportunities.
6) What are the challenges posed by a changeover, and what points should be focused on?
SDC: The biggest challenge consists in achieving the buy-in of hotel staff and having them trained by us. Our solution is extremely simple from the point of view of setting up, and after you have worked with it once, it is self-explanatory and intuitive. This was extremely important for us during development, as was the fact that allinvos can be simply integrated with other systems via an interface, e.g. with common financial accounting systems like DATEV, Filosof, FibuNet, Navision, SAP etc.
7) Where does digitalisation of the back office go from here?
SDC: There are new digital solutions continuing almost every day. Developments will generally never again be so slow as today. This is already taking on significant proportions comparable with the great changes that happened during the industrial revolution. Besides fully automated invoice approval on the basis of existing delivery notes, digitalisation in procurement will in future play a major role for topics such as predictive purchasing planning by linking back office and front office systems, voice control like voice-to-order and the control of procurement management. And the need for such systems goes far beyond the hotel industry. There is now also a demand for our products from the services sector, retailing, in the field of healthcare and also from the restaurant and catering trade.