MANAGEMENT INFORMATION SYSTEMS

Table of Contents

Part 1 Academic Essay

1.0 Situation Analysis: Tourism in the Maltese Islands................................................. 3 2.0 Bed & Breakfast accommodation ............................................................................. 4 3.0 Introducing ICT ........................................................................................................ 5 4.0 What is ICT? ............................................................................................................. 6 5.0 Developing an ICT Strategy at Babu Bed and Breakfast ........................................ 6 5.1 5.2 5.3 5.4 Procurement System .................................................................... 7 Marketing Strategy ...................................................................... 8 Customer Relationship Management .......................................... 9 Finance Systems ........................................................................... 10

Part 2 Consultancy Report

6.0 7.0 8.0 9.0 10.0 Present Situation .............................................................................................. 11 Suggested Implementation Programme .......................................................... 11 Operations Evaluation ..................................................................................... 11 Introduction of the ICT Strategy .................................................................... 12 Conclusion ....................................................................................................... 15

REFERENCES ............................................................................................................... 16

Part 1. Academic Essay The case study presented to us, with its specific characteristics, can be analysed within the larger context of the hospitality industry in Malta. Consequently I will present a situation analysis of the industrys current standing and then consider specific characteristics of the Babu Bed and Breakfast (B&B) enterprise within the larger context of Maltese economy

1.0

Situation Analysis: Tourism in the Maltese Islands

One of Maltas main sources of revenue is tourism. It has sustained the economic development of the Island since its independence in the mid-1960s. According to the National Office of Statistics (NSO), while facing a global financial crisis, the Maltese hospitality industry remained relatively stable, with a constant increase in number of tourist arrivals between 2004 and 20081. Despite conditions not being ideal due to the international recession, Malta was still able to boast that 2008 was a record year in terms of arrivals2. Maltas adoption of the euro as a national currency, positioned the island in larger, albeit more competitive markets for increased tourism activity. A continued growth in cruise passengers was also recorded. However persons coming to Malta as cruise passengers are unlikely to use local accommodation unless they plan to use Malta as their point of departure or arrival. The introduction of low cost airlines has been a new source of arrivals for the local hospitality market. Low cost airlines offer passengers an opportunity to visit Malta with a very minimum cost allowing them to spend their money within the local economy. Furthermore, because low-cost airlines tend to avoid the metropolitan airports, these incentives generate in Malta a tourist flow from areas that have not been readily available until this present opportunity. Normally low-cost carriers are used by average-income customers and for quick business trips3.

http://www.nso.gov.mt/docs/tourism_table9.pdf http://mta-news.info/0905/pr22 http://www.euromonitor.com/Travel_And_Tourism_in_Malta

2.0

Bed & Breakfast accommodation

Bed and breakfast (B&B) at its most basic definition is often a renovated villa or small guest house/hotel, where one can spend the night and enjoy a good breakfast the following morning. Since Babu B&B, will cater only for two double and two single bedrooms respectively, choice of breakfast will be an open option according to customers wishes. The B&B customer is a tourist who likes to be immersed in a familial type of setting to enjoy the local fare. Thus such customers tend to shy away from the crowded tourist locations and the bland decorations of more expensive hotels that are very similar the world over. The B&B customer desires having the freedom to intermingle with the locals, visit local site offerings at ones own pace, taste the truly genuine native cuisine and cherish the camaraderie of local life. All this local touch comes at a minimum increase in the cost of a holiday. Malta offers an ideal opportunity for the B&B customer. The price is right. The Maltese hospitality character shines even more when one ventures outside the normal tourist locations. People are readily willing to offer information especially if this involves offering local knowledge about ones town or village. The majority of locals can understand and talk in English. They enjoy engaging interactions with foreign persons. Each location, though

characterised by small scale, offers to the venturing tourist who often hails from a more cosmopolite background lots of unique features. Public transport is readily available and fairly easy to use. Towns and villages in Malta often offer the visitor a history of at least a few hundred years. The Church and the village pjazza are the hub of local activity. Life centres around the pjazza. It is here that one encounters the local market where one can purchase the local fresh vegetables. Here you will find some bakery or confectionery to remedy for any sweet cravings. Being situated in the heart of Zurrieq, this townhouse offers peace and tranquillity to its clients. The enterprise has a strategic advantage that there is no similar outlet within a three kilometre radius. Its strategic geographical position in the South of Malta offers unique attractions to tourists. Zurrieq features a wide collection of remains like Hagar Qim and Mnajdra. The village has a large number of historical places like the Xarolla Windmill, Armery, and Wardija Tower. Renowned restaurants such as Hagar Qim Restaurant are found in Zurrieq, where one can eat
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traditional local food whilst enjoying Maltese folklore music.

A walk on the cliffs in the

direction of Wied iz-Zurrieq and further on to Siggiewi offers breath-taking sightseeing. Divers can explore several great caves, reefs full of aquatic sites and the shipwreck of Um El Faroud. Ghar Lapsi, which is situated some two or three kilometres off Zurrieq is another excellent location for diving.

3.0

Introducing ICT

An ICT structure can offer a number of advantages to a small startup like the Babu B & B. ICT can support the marketing function, the administrative function (payroll, purchasing, billing, etc), and telecommunication function both within and outside the enterprise. Considering the growth of Internet usage worldwide, an ICT approach can create a presence for Babu B&B that goes far beyond the Maltese public. One can conclude that organisations developed fully or nearly into digital firms4 (Laudon & Laudon, p. 7) An important starting point is to identify which category of customers Babu B&B is targeting. Considering the layout of the townhouse Babu can either focus on tourists with a low income that would prefer a bed and breakfast stay in a quiet small accommodation. Conversely, well-off customers may be interested in staying at the townhouse due to its secluded location, especially if they will be interested in what the location offers which vary from archaeological interests, to long walks, and diving. Other potential clients can be businessmen who visit Malta for a short stay, and want a remote place where they can persist on with their work. Being a small hospitality enterprise, Babus focus will be customer oriented. Since it appears that the official policy is to promote high-end type of accommodation, Babu should concentrate on the wellheeled customers. Due to the limitation of rooms, Charles should strive to give his customers individual attention, with a tailor-made service guaranteeing satisfaction hence enhancing the likelihood of returning customers. Repeat customers denotes success. For the situation presented, ICT has all the means and functions to help.
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Digital firm is one in which nearly all of the organisations significant business relations with customers, suppliers and employees are digitally enabled.

4.0

What is ICT?

Information technology surrounds us on campus, in restaurants, in schools, in small businesses and large organisations, and now also on ones mobile. It has became a vital tool in everyday life from usage of online teller machines, to making airline ticket reservations over the net, to renting a car. IT is a requisite in all businesses from the largest of all firms to the corner

grocery store - its advantage is to help businesses confront global competition and strive to succeed. IT is used differently in each organisation. No company uses the same profile of how they use information. However, there are several fundamental strategic processes to which IT has the potential to contribute like for example improving customer service, improving time to market, improving communication, improving quality and increasing global reach (Daniels N. C. p.59) The advent of global e-markets on the Internet provides an opportunity for small and mediumsized tourism schemes to improve and increase competitiveness. Although the hospitality industry is dominated by a few large chains and corporations, the vast majority of tourism agencies worldwide can be classified as small to medium-sized5.

5.0

Developing an ICT Strategy at Babu Bed and Breakfast

The project of Babu B&B is currently in its development phase (figure 1). In its initiation stage, Charles opted to convert his Zurrieq townhouse into a B2B. Development and implementation have to provide a low-cost way to get started with e-commerce, where it would be easy enough for the owner Charles, with his basic background in IT, to plan, use and update his webpage.

http://www.emeraldinsight.com/Insight/ViewContentServlet?contentType=Article&Filename=Published/EmeraldFullTextArticl e/Articles/0410130505.html

INITIATION: statement of what the problem is and what general approach will be used to attain work system improvements

IMPLEMENTATION: work system changes implemented and institutionalised

DEVELOPMENT: materials and other required resources developed and available for implementation

OPERATION AND MAINTENANCE

Figure 1: Four phases of a system (adapted from Alter., p.5) Upon opening his townhouse for guests Charles is not planning to recruit anyone else to help him run the business. Hence he will be the owner/manager combining not only ownership and management but also all managerial functions involved. Charles will have to coordinate the townhouse facilities, such as cleaning and cooking; meet guests and show them to their room upon arrival; be his own marketer, act as a purchasing and personnel officer. The role of ICT does not end once the customer has purchased the product/service (Alter, p.7). By keeping track of general information about each client, emphasising individual tastes, ICT can help Charles in building a simple database system that helps in reaching out to his customers when promoting special rates or events.

5.1

Procurement system

Procurement is all about purchasing. Information is gathered on the available inventory, arrival date of ordered items and when it will be utilised. Having a background experience of over 15 years in the tourist accommodation industry, Charles has good interaction with the few needed

suppliers. Although Charles will be operating on his own, he still needs to emphasise the supply chain management (SCM). SCM is the overall system of coordinating closely with suppliers so that the firm and its suppliers reap the benefits of smaller inventories, smoother production and less waste (Alter, p.9). With the aid of EDI (electronic data interchange), Charles will facilitate transmission of invoices and purchase orders to and from his suppliers. Apart from reducing costs, this electronic interchange hastens the usual purchasing process where usually purchase orders are processed, printed and sent by post.

5.2

Marketing strategy

A marketing strategy has to be designed and implemented. Babu B&B has to be positioned as a cosy place offering a secluded experience with comfortable surroundings. All marketing and communications have to lead to a good website. The website will be used for current promotions and adverts in order to attract new clients and marketing the place. Since real time reservation features are more expensive to run, Babu has to ensure prompt replies to enquiry via email, as it is a well-known fact that speed is crucial in the tourism industry. The site offers any visiting customer the option to be added onto a database of contact for promotional material. Search words (Adwords) can be purchased on the Google Search engines to promote the B&B. This offers wide exposure and low cost advertising since Babu B&B is only billed on a per click basis. One way to summarise a firms sales and marketing approach is thorough analysing the nature and characteristics of a service as illustrated below: Service intangibility: A service cannot be seen, tasted, felt, heard or smelled before they are brought (Kotler & Armstrong, p. 318) therefore it is the experience that matters most. Usually conclusions on choice are drawn from the price, people, equipment and communications they can see. Hence Babu needs to promote its services as tangibly as possible. Bearing in mind the issue of giving personal and individual attention to its esteemed clientele, at the Prior reservation phase, Babu needs to offer value-added customer services on the Web (Warren and Ostergren, 1990) as
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customers do not search for the brand but for the lowest price and highest quality (Buck, 1988). For reservations, CRS can be implemented and through a good website one can link up with EDI. Service inseparability: Unlike products which are produced, stored then sold, services are first sold then consumed. (Kotler & Armstrong, p. 318). The service provider, becomes part of what he is offering thus affecting service outcome. Due to his past-training, Charles will be in a position to offer superior provider-customer interaction like for example through prompt replies to emails concerning queries or bookings. Service variability: Service variability means that the quality of services depends on who provides them as well as when, where and how they are provided (Kotler & Armstrong, p. 318). With Charles being the only member of staff, he is to ensure constant efficiency and friendliness at all times. Charles can offer special dietary requests upon reservation being effected, or chauffer driven tours to various locations tailored to meet specific interests. Service perishability No service can be stored for a later sale or use (Kotler & Armstrong, p318). This will not be problematic when demand is stable, however when it fluctuates it can create problems. The Central Reservation system will ease booking procedures and Charles can cater for all supplies needed for entertaining his guests and offering a replenishing breakfast the following morning.

5.3

Customer Relationship Management

CRM (customer relationship management) is an information industry term for methodologies, software, and usually Internet capabilities that help an enterprise manage customer relationships in an organized way6. It will help the organisation verify its marketing sectors to target the right customers. This concept is of optimum importance for Babu B & B. Charles, with the help of
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http://searchcrm.techtarget.com/definition/CRM

ICT, needs to build a database about his customers of sufficient detail so that information could be accessed and client needs matched with special offerings or to inform customers about local activities organised monthly. Through the formation of individualised relations, Charles should also be able to handle customer requests, questions and complaints quickly and efficiently, maximise profits and provide a high level of service.

5.4

Finance Systems

The finance function within a business is a support activity that handles transactions involving money, financial statements, and taxes (Alter, p. 15). In the case of Babu B&B one has to take into consideration the scarce resources, therefore the financial scheme has to be simple, costefficient and proficient. Babu B&B should use sage for all his accounting necessities in dealing with purchases and suppliers. Charles should also engage the services of a payment gateway to enable payments through credit cards. Moreover, the system should be able to issue itemised client bills and receipts to the satisfaction of clients. The ICT system should also be able to handle reservations for the Babu B&B. It should be able to indicate to any prospective client trying to access the B&B on the Internet what rooms are available on specific dates. It should then offer Charles record data of occupancy over time. Such information would enable Charles to offer certain incentives on the low time and do price adjustments in times of high demand. It would be ideal if the system would also generate revenue data for each customer allowing for a loyalty or preferential customer system. Human resource is the foundation of the tourism industry (Mulcahy, 1999). Although presently Charles is a lone ranger in the business, his ICT system might in future have to deal with recruited employees. Thus the payroll system will also deal with leave days entitlement, benefits, social security withholding and taxes for each part-time or full-time employee. The ICT system might also keep track of the services that Charles outsources for later payment.

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Part 2: Consultancy report 6.0 Present Situation

Mr. Charles Darmanin is a person with 20 years of experience in the hospitality industry. Although possessing no formal education Mr. Darmanin developed a varied career path acquiring managerial experience. After deliberation, he decided to convert his townhouse in the heart of Zurrieq into a small B&B accommodation. Charles appointed Ms. Marvic Cuschieri as an ICT consultant to provide him with required advise on his current situation concerning Babu Bed & Breakfast. Although being aware that the use of ICT may prove to be fundamental, he is still unsure on which strategy to implement.

7.0

Suggested Implementation programme

After analysing the situation and given the size of the B&B, it is being proposed that the implementation of ICT strategy should concentrate on CRM. Mr. Darmanin will target the well off patron who wants a customised service. Such customers would normally have high demands but then are ready to pay the extra money.

8.0

Operations Evaluation

Strengths within the business y y y y y y Expertise in the hospitality Established relations with suppliers Excellent location in Zurrieq Within ten minutes drive to the airport Buses and taxis within walking distance Basic knowledge of ICT applications

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Identified weaknesses within the business y y y y y Working on his own No market strategy whatsoever Limited financial budget Difficulty in penetrating the market Lack of organisation design

Opportunities from the business y y y y Be unique as B&B accommodation is relatively new on the island Zurrieq is a pristine area still untouched by the hospitality market Can target high-end customers ex divers, businessman etc Can offer highly personalised service due to its size

Threats to the business y y y y Uneven tourist demand Limited customers High competition Very small operation in an area with little infrastructure for such businesses

9.0

Introduction of the ICT Strategy

Requirements: Hardware: 2 PCs: 1 to be utilised in Charless personal quarters upstairs, another one in the reception area, ADSL modem for internet connection, router for wireless access, network printer, fixed telephone line, POS Credit card reader.

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Software: Microsoft Office package, web-design software, email software, simple database software, Microsoft Access/Filemaker PRO, Nero. Microsoft Outlook. Considering the situation at Babu, it is being suggested to initially invest upfront in an ICT system that would handle the bare basics. The communication for the operation of the enterprise through a website (figure 2) set up for marketing, inquiries and reservation purposes. The website will host a feedback mechanism, where prospective customers can leave their particulars. This will establish a customer database with profiling for CRM purposes that Babu utilises for future promotions and special offers. Instant chat programs such as Skype, used during stipulated days and time, gives real-time and prompt response to queries. Other promotional material regarding local activities can be sent via email to initiate interest in visiting the Maltese island and residing at the B&B. A good website will benefit to monitor ones presence on the Internet and instigate use of Google Ads. Marketing strategy is not only through Internet. Charles should use other means of mass media to advertise his service. In view of the strong customer oriented service, Charles can charge a price that is just above the normal going rate (at least for the initial stage). The aim being to target clients of above-average disposable income. Rather than use only the internet to maximise exposure with the risk of finding one's Internet adverts lost amongst several others, Babu will target its clients using traditional media, in particular print and in particular high end niche magazines eg. diving magazines and travellers guide.
Other links to places of interest in the vicinities of Zurrieq and Malta Instant chat HOMEPAGE Prices Link to Google Ads Details & pictures of townhouse Enquiry form (including optional personal details) Email facility
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Formatted: Font: Bold, Underline Formatted: Font: Italic Formatted: Font: Italic Formatted: Font: Italic Formatted: Font: Italic

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Figure 2: Proposed layout of website At start-up phase, purchasing will be minimal. Charles already knows the market and its suppliers. Limited funds are available as the majority of the liquidation sum will be spent in the adaptation of the townhouse into a B&B and on marketing schemes. A 10mb Internet connection from an ISP is suitable to provide Mr. Darmanin and all guests with a 24/7 internet access. A wireless router will supply Internet access across the entire building. However considering the small size of the B&B, each bedroom should have a fixed network point to provide guests with constant Internet connection speed. A more powerful bandwidth will be installed and operated short term and according to demand. Charles has to be able to cater in case when all the rooms are occupied and thus the people on the bandwidth are not affecting each other. He has to have some control over the download limit and ideally a system that monitors that the download limit is not being abused and/or exceeded. It is being proposed that Mr. Darmanin will install 2 PCs (figure 3). One to be situated in his office upstairs that should solely be used for accounting purposes and the second one to be placed in reception area that should incorporate MS Office. This will be used for office automation. Microsoft Access (MA) or Filemaker PRO to be installed for accounting purposes such as purchase orders, purchase invoices and sales invoices. MA can also be utilised later on for payroll and management data input. As illustrated in figure 3, a network printer should also be installed to be commonly used by Charles and his guests. Data backup is proposed to be scheduled weekly on both PCs using Nero Backup Software. During the initial stages, for booking purposes, Mr. Darmanin should use Microsoft Outlook. This particular software is equipped with modules like contacts, diary and tasks. This system is referred to as peer-to-peer. In the longer term Charles has to start looking at other options such as installing more pc equipped with basic email and word processing software in a common area where the guests can check their email accounts, browse and print. This ICT update will eventually alter the Babu Guesthouse position vis-a-vis its competitors where guests, with a relatively low fee, will enjoy the benefit of free internet and have a good breakfast as well.

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QuickTime and a decompressor are needed to see this picture.

Figure 3 Proposed network layout Readily available generic solutions are available for the hospitality industry such as Fidelio (http://www.micros-fidelio.co.uk/). These are known to be relatively expensive especially yearly licences and maintenance. Additionally, implementing common commercial relational database packages such as Oracle was not considered as these are on the high-end side not only as an initial outlay but also to upkeep. Alternatively one can use open source packages such as MySQL which enjoy lots of support, however one still expects a high outlay price.

10.0

CONCLUSION

It is important for hospitality industry to proactively incorporate ICT to improve service quality and succeed in the sector. One can appreciate Mr. Darmanins entrepreneurial spirit. Often such a spirit is the reason behind any successful venture. ICT can provide Mr. Darmanin with an infrastructure making such an investment possible. However, the scale of the project is too small to make it economically viable and Mr. Darmanin might have to wait some time before seeing a return for his investment.
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REFERENCES Alter, S., (1999) Information Systems: A management perspective 3rd edition. US: AddisonWesley Educational Publishers Inc. Daniels, N., C., (1995) Information Technology: The Management Challenge. US: AddisonWesley Educational Publishers Inc. Kotler, P., H., & Armstrong, G., (2001) Principles of Marketing, 9th edition. US: PrenticeHall Inc. Laudon, K., C., & Laudon, J., P., (2007) Management Information Systems: Managing the digital firm 10th edition. US: Prentice Hall Inc. Mulcahy, J.D. (1999) vocational work experience in the hospitality industry: characteristics and strategies, Education and Training, Vol. 41 No. 4, pp. 164-174 Warren, P. & Ostergren, N.W., (1990), Marketing your hotel: challenges of the 90s, The Cornell HRA Quarterly, May, pp. 56-9 http://searchcrm.techtarget.com/definition/CRM http://www.emeraldinsight.com/Insight/ViewContentServlet?contentType=Article&Filename=P ublished/EmeraldFullTextArticle/Articles/0410130505.html http://www.nso.gov.mt/docs/tourism_table9.pdf http://mta-news.info/0905/pr22 http://www.euromonitor.com/Travel_And_Tourism_in_Malta

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