Are You Web-Enabled?
As hospitality software continues its migration to the Internet, smart POS VARs are tapping into service revenue that goes hand-in-hand with doing business on the Web.
It stands to reason that when new hospitality software hits the market, the first splash holds the best moneymaking potential for its developers and sellers. Anything new starts out with "first on the block" sales appeal and offers VARs surefire and immediate follow-up service and helpdesk opportunities. Then, software life cycles can be prolonged indefinitely with timely upgrades. If sales begin to slump, just add a bell here and a whistle there and bingo - Waitress 2.0 becomes Waitress 2.1. Hype it just right and a whole new product launch sends sales soaring once again.
But what happens when those upgrade tricks aren't quite spiking the chart anymore? With the next big hospitality hype factor - namely Web-enabled POS (point of sale) software - still in its embryonic stage, smart hospitality VARs are now focusing on making profits through service and annuities while software makers integrate with the Internet.
Wary Of The Web?
"We see a trend in that our industry is a little slow when it comes to embracing technology," says Aloha Technologies' Vice President Martin Siebert. "When margins are this tight, you can't just throw a million dollars at something."
But caution isn't the only thing standing between the marriage of hospitality software and the Web. "It will be a while before a Web-based POS program will be able to provide the same level of functionality that a thick client can," says PixelPoint Vice President Lino D'Angicco. This is in large part due to the instability of the Web connection itself. As Siebert puts it, "There are companies out there that are claiming themselves to be totally Web-enabled POS, but they're really not. If they lose a Web connection, they're dead in the water." That's where a hybrid program bridges the gap between enterprise and Internet. It's also where the ASP (application service provider) model, and subsequently the service dollar, enter into the sales equation. A hybrid solution makes sense, D'Angicco claims, when Web-enabling some components, like back office reports, provides an advantage to the restaurateur by enabling data access via a plain browser or enabling online reservations, for example. He warns that a fully browser-based system doesn't offer any clear pluses to an operator right now. Siebert sees the reality of delivering POS functions via the Web happening with "dummy" terminals acting as backup at stores and restaurants. These terminals will maintain their own data in the case of a lost connection. When back online, the store terminals upload data to an ASP, which the store owner can dial into for access to all of his store information.
Go ASP, ASAP
The ASP model is how VARs can earn annuity income - by the year, month, or week. "As the software industry begins to move toward subscription-based billing, recurring revenue becomes a reality for both the manufacturers and the VARs," explains D'Angicco. VARs can supplement that revenue with another form of service dollar as customers learn the value of the information they're gathering. Custom reports generated from the data that customers are already paying a VAR to host for them are worth a premium. These can be created online by allowing users to query the data they want included in a report, then charging them to view the results. The more capable the product, the more leverage a VAR will have with pricing.
A Ripe Market
VARs can't ignore the profit opportunity that offering online hospitality software services can provide them. Even as economists lament shaky consumer confidence, National Restaurant Association forecasts indicate that restaurant industry sales in the United States will reach $399 billion this year, a 5.2% increase over 2000. That's close to $1.1 billion per day Americans will spend at restaurants.
Recent figures from Global Hospitality Resources, Inc. indicate the hotel industry will post approximately $25 billion in profit in 2001. While analysts expect this figure to change due to the impact of September's terrorist attacks on their fourth quarter forecasts, occupancy levels in the first three quarters have been up .2% to 63.7% compared to last year. With that kind of cash flowing through the hospitality industry, VARs shouldn't balk at any opportunity to get hospitable with restaurants and hotels.Questions about this article? E-mail the author at MattP@corrypub.com.