iDRM of an Automation Jeannie for Revenue Management
by Kelly McGuire and Paresh Bhandari
When revenue managers think about automation, they tend to think about the revenue management system (RMS), a solution designed to take the manual work out of setting prices. For most companies, this is the largest and most complex automation solution leveraged in the revenue management department. If used properly (and that’s a topic for another blog!), the RMS can add a tremendous amount of value to an organization, as it fully automates the process of understanding demand, pricing to capture the most potential from that demand and transmitting price and availability controls to the selling systems. When done manually, this is not only extremely time consuming, but also nearly impossible to do completely and accurately, given the thousands of decisions that need to be made across the booking horizon every day.
However, the opportunity to automate doesn’t end with the revenue management system. Every routine, manual process that revenue managers must execute is a good candidate for automation, no matter how small. Each non-revenue generating task that can be automated, gives revenue managers time back to dedicate to revenue generating activities.
What do we mean by automation? Automation refers to replacing the human or manual effort in a process with a system or technology. It can be as simple as applying conditional formatting to a cell in Excel so that your attention is called to the data, rather than having to hunt for observations that meet your qualifications.
Automation can involve adding or replacing technology solutions (like the RMS, CRS, PMS), or it can involve bots, known as robotic process automation (RPA), that wrap around existing technology on the front end and replicate the actions of the humans in the process (key strokes, copy/paste, logging in and out). It can get as complex as applying artificial intelligence to replicate routine human actions (seeing, speaking, moving), like tagging a picture, responding to an email request to the concierge, or vacuuming a room.
WHAT TO AUTOMATE?
It’s easy to get confused or be uncertain about which tasks even can be automated, let alone how much time and effort is required to do so. And of course, every leader needs to know the ROI on an automation investment, no matter how small.
Over the last few years, ZS has setup an in-house, cluster revenue management team which manages revenue management activities for ~650 midscale to upscale hotels in North America. The team looks after optimizing day to day pricing, customer and channel mix, as well as corporate and group RFPs for their portfolio. They are delivering ~6% RPI YoY growth consistently while managing ~30 hotels per revenue manager.
Automation was key to our ability to structure this team cost effectively with maximum impact. We are able to deliver consistent results and increase portfolio size of our revenue managers by automating a wide variety of highly manual, highly repetitive tasks across the spectrum of the team’s activities. Our experience has taught us a lot and we hope that our learnings and the frameworks we leveraged can help you in your automation journey.
The first step in finding automation opportunities is to engage the team and get them excited about reducing their workload (which includes reassuring them that automation is designed to refocus them not replace them). Getting revenue managers behind these activities is always beneficial as it helps in getting a steady stream of automation ideas as well as the all-important buy-in from the team. We created a dedicated Automation Team comprised of revenue managers and technology folks and led by a senior revenue manager. We charged this team with generating ideas, prioritizing impact, and helping with the change management process as we introduced new tools and processes. Not only was this extremely helpful in identifying and prioritizing the “right” activities, but it helped with buy-in, as other team members knew the ideas were generated and approved by their peers. Further, the team members who participated felt rewarded and motivated by having this interesting extra work and responsibility.
Second step is to work with the RMs on the Automation Team to identify a list of activities which are repetitive and highly manual. Once a curated list is created, map out the activities on a 2x2 matrix, as in the illustration below, where x-axis is implementation effort and y-axis is impact after implementation.
Implementation effort (x-axis) is a function of the overall process, for example, technology to be leveraged, and the number of stakeholders that are involved
Impact (y-axis) can be measured across multiple dimensions — reduction in effort or time, minimized errors, or proactive identification of opportunities
· Activities in the top left corner are quick wins and should be high priority for implementation
· Activities in the top right corner are business critical but involve more implementation effort. Leaders should discuss these activities with the team to understand the requirements, development effort and impact before going ahead with the implementation
· Activities in the bottom section are not priority currently, but can be in future. Leaders should ask the team to collect more information, think through the process and create a business case for future
HOW TO AUTOMATE?
We leveraged the iDRM framework in our automation efforts.
The iDRM framework is comprised of a series of steps:
· i = Identify problem: Work with revenue management team to clearly map out the process we are automating, list out all key requirements, challenges faced, and new features required. The process mapping must be at an extremely low level of detail to ensure that all components of the process are accounted for
· D = Design and create solution: Revenue managers and technology folks should collaborate on designing the solution. The proposed solution should focus on ease of use, have long term usability, and be flexible to add new requirements in the future. It is very important to involve revenue mangers in this step, since, as end users, their suggestions and thoughts are critical to successful design
· R = Release prototype and final version: Create a prototype and share with few revenue managers for testing. Collate feedback from pilot users, address feedback and release final version with the broader team. Team should juggle between step D and step R until all pilot users give a go ahead for the prototype. It’s easier to make updates in the prototype phase, and even pause the development if required, hence this phase will likely represent the bulk of the effort
· M = Monitor usage and release new versions: Track usage across users and collect feedback regularly. Feedback will help to identify improvement opportunities as well as new feature requests which can then be incorporated in future versions
WHEN TO AUTOMATE?:
Now. Seriously, start now. As we’ve mentioned, every minute the RM is not involved in a highly manual, repetitive task is a minute they could be thinking about revenue. The processes outlined above should help you identify low hanging fruit, even if you don’t have a lot of internal technical capability. In fact, you can use any small automation examples as a proof point and internal justification for continuing to invest in larger opportunities.
HOW IT WORKS
Here’s an example of a process that ZS automated for our RM for Hire team.
Automating Creation of Strategy Reports:
RMs had to create and share a strategy report, with historical and future data and recommended pricing and inventory updates, with each of their hotels every month. This process required about 30 minutes per hotel and was error prone, as it involved copying and pasting data from multiple data sources. Our initial assessment highlighted that the impact of automating the report was high and implementation effort was medium. Hence, the team decided this automation project should be a priority. The eventual solution saved about 20 minutes per hotel per month which resulted in about 216 hours per month (across 650 hotels) for the entire team.
We leveraged the iDRM framework during the implementation process.
· Identify the problem:
o RMs identified that they spent about 30 mins to create the strategy report for each hotel. The process included downloading data from multiple sources, copying and pasting data in the required format, reviewing data for inconsistencies, identifying special dates and events and then recommending price and inventory updates, and recording them.
o The technology team brainstormed with RMs to identify the key data sources, understand the core fields and formats that needed to be included in the report. The team then prioritized the core features of the report and also created a “wish list” of future enhancements
· Design the solution:
o The team created a process map outlining data flow, data validation, key interventions required, and error handling processes
o Developers aligned with RMs on report creation timeline, data ownership, manual inputs etc.
o The team aligned with leadership on detailed project plan, delivery timeline and internal milestones
· Create solution, release prototype:
o Automation experts recommended a process which leveraged multiple technologies including Excel, VBA, and Python
o Project execution was divided in sprints (short, fast development cycles), so the team got regular updates and could provide frequent feedback
o RMs were identified for the pilot launch of the tool, and their initial feedback helped developers to revise the process as required
· Monitor usage
o Team monitored the usage of the tool and collected regular feedback from RMs
o Feedback helped developers to introduce new features in future versions
We continue to find opportunities across the RM organization to automate some manual processes. Not every one is this complex, or this impactful, but every one makes the team more efficient and keeps them more focused on driving revenue for the hotels.
Trust us, once you start looking, you will be surprised at how much opportunity you find (and how much impact you deliver)!
