The word from Delphi: managers predict the future of information technology.

Editor's Note: The Oracle at Delphi of history began, so goes the tale, with a goatherd who noticed the disorienting effect of vapors coming from a mountain chasm. It was decided that the gases, which tended to make people babble, were the emanations of a god and that the incoherent pronouncements of those who breathed the vapors were prophesy (subject to interpretation by priests). A succession of women were placed on tripods over the chasm (so they wouldn't fall in) and an entire business of predicting the future sprang up around the Oracle at Delphi--one that lasted for over a thousand years. Thus began the trend projection industry.

Seriously, Delphi studies--which take their name from the long-ago Oracle--have been used for half a century by major corporations to predict the future. Their common trait is a lack of direct interaction between the researcher and the participants. Continuing rounds of questions are sent to the participants. Their responses evolve into a clear picture of the future.

Recently, with the assistance of CMAA, Dr. Michael Kasavana, a member of the Hospitality Technology and Financial Professionals International Technology Hall of Fame, undertook a Delphi study of the future of information technology in the club industry. The results of his research follow.

A group of club managers were invited to participate in a study designed to project the likelihood of specific information technology events for the club industry in the near-term (2007) and long-term (2027). The panel of experienced club managers was assembled from a random sample of managers provided by CMAA.

"Delphi" Survey Techniques

Beginning in the 1990s, transformations in demographics, communications, economics, technologies, and lifestyles have bombarded the club industry with unparalleled challenges and opportunities. Experienced club managers know that to maintain a sensible technology plan they must be aware and understand data processing trends and be able to forge strategies and tactics to protect member satisfaction and operational productivity.

Club Delphi Methodology

Our study used the Delphi forecasting technique--widely practiced by business for half a century. Delphi technique elicits opinions from a small selected group of experts from a particular industry. As a result of brainstorming sessions, industry input, and a literature review, a research questionnaire was developed that included predictive club technology issues and event statements. Items on the questionnaire were assigned a five-point likelihood of occurrence scale with 5 indicating "very likely to occur" and 1 indicating "not likely to occur." There were 19 statements for club managers to consider and rank in order. The survey questionnaire was divided into two prediction periods: 2007 (near term) and 2027 (long term). Respondents were also provided space to write their own open-ended predictions.

A preliminary set of event statements for this study was developed from interactions with club managers attending the CMAA BMI III program at MSU. From this input, a preliminary questionnaire was developed and tested with a small, select group of managers. Based on feedback, event statements were modified or amended and a couple of additional event statements were added.

The School of Hospitality Business at Michigan State University's alumni database and the Club Managers Association of America (CMAA) provided a rich list for selection of expert club industry panelists. Forty-one (41) club managers were identified and invited to contribute; 23 (56%) agreed to participate. Each panelist was either a general manager or departmental manager who was directly involved in strategic decision making for the club.

Results: 2007 and 2027

The club industry had consistent rankings from near-term to long-term technology considerations. The top five ranked IT events of 2007 were identically ranked in 2027. Among the most popular selections, there was unwavering support for the implementation of wireless applications, online purchasing systems, seamless POS integration, and customization of the member experience. The only upper tier event of 2007 projected to move downward by 2027 was the use of application service providers (ASPs). This event dropped to the lower third of the 2027 rankings.

The following are some of the technologies that the manager/experts found most relevant to club operations in the near and not-so-near future.

WiFi Club Technology

Why not make the club environment wireless? WiFi hot spots are surfacing everywhere from cafes, restaurants, hotels, and health spas, to office building lobbies and elsewhere. Could clubs initiate a competitive advantage by offering high-speed wireless Internet access? The answer is likely 'Yes.' WiFi is not just a passing fancy; it appears to be a permanent part of the landscape for homes and offices and gathering places.

eProcurement

Online purchasing involves more effective and less expensive searches to identify buyers, sellers, products, services, and the like, and is expected to represent an important business advantage for clubs. Club product distributors strive to match product and service availability to purchase specification. Many industry suppliers offer online sourcing websites featuring product catalogs, select client services, and auction formats.

There are numerous advantages to online purchase transactions beyond the obvious convenience. On-line transactions can be integrated with the club's back office accounting and inventory modules to create a comprehensive purchase process.

E-procurement advantages include lower transaction costs, improved pricing, enhanced productivity, preferred vendor relationships, leveraged purchasing, better product information, reduced inventory, and better communication with vendors.

On the minus side, online purchasing precludes the participating club from handling or sampling the product, taking immediate delivery, or receiving live expert advice or instruction. In addition, there are at least four major areas of concern related to online purchasing, namely training for goods purchased online, customer service, data sharing, and transaction security.

POS Technology

Club POS technology can be divided into two major branches: proprietary and non-proprietary, or "open architecture." Proprietary POS architecture tends to be inflexible, vendor-specific, and typically available from a sole source.

Open architecture facilitates searching for additional hardware sources, support and maintenance providers, and spare/replacement part vendors.

Traditionally, club management has felt that instead of fitting a POS system to the club environment, they have had to modify operational procedures to adhere to inflexible POS system parameters. While it is true some of these dysfunctions may have been the result of application software design, some have been directly attributable to system hardware.

There are perhaps no other POS user interface devices that received more attention during the past decade than touch-input and hand-held terminals. But touch pads have simply not been a popular choice for the club environment. Hand-held terminals (HHTs) rely on radio frequency for communicating tableside captured order entry data to a central processing unit for relay to the production area. Hand-held terminals appear highly compatible with the club environment, and the system reliability of hand held terminals has greatly improved, but the reality of cost justification remains a hurdle.

Flat panel terminals occupy significantly less space than the traditional POS terminals they replace. Flat panel screens, which measure less than three inches thick, can be mounted from walls, counters, or shelving units. Flat panel screens are just beginning to be selected by clubs as a preferred data entry option.

The two most significant recent developments related to POS systems are wireless applications and off-premises POS applications. Up until recently HHTs were the sole wireless POS option, but now wireless desktop terminals are available that provide unrestricted flexibility in dining room design and POS configuration. To date, few clubs have opted to adopt this type of POS scheme.

MRM Data Mining

Member attraction, retention, and prediction are three essential factors for successful club management. Traditionally, clubs have captured and stored member transactional and activity data in a manner that made it difficult to access, evaluate, or apply to decision-making. Recent innovative technology--involving a central data storage (data warehouse) that enables effective categorization (data matting) and analysis (data mining) to enhance member relations and profitability--has become available to the club industry.

From a technical perspective, a data warehouse is a subject-oriented collection of raw facts used to support managerial decision-making. A data warehouse can serve as the central focal point of a club information system and provide outcomes unavailable through traditional database query methods. A data warehouse is created to serve as a facility for integrating data from a diverse set of internal (operational) and external (environmental) applications. Internal data entering a data warehouse is transformed from raw application data (e.g. financial transactions) and flows from operational departments into meaningful characteristics that are subject specific (e.g. member activity or buying patterns). External data is captured and classified so that meaningful comparisons to internal activities can be conducted.

A data warehouse contains integrated, historical data that is common to an entire club. The data warehouse contains both summarized and detailed information. Each operational unit contributing data to the warehouse is referred to as a data mart.

A department manager may rely upon a data mart to provide relevant information for local decision-making. In general, there are two types of data mart users: "farmers" and "explorers." A farmer is described as someone who knows what data he wants and regularly and predictably goes to the same place to find it. For example, the golf professional may review past history of lessons or rounds played. An explorer is an individual who does not know what data is desired and follows a random, sporadic data hunt. Consider the golf professional seeking to identify clothing sales on Tuesdays and Wednesdays. The data mart structure tends to have a very strong bias for farmers, not explorers.

Data mining can be defined as the extraction process used to derive information from a data warehouse or data mart. The key to successful data mining is to take disparate data sources and extract information for enhanced decision making. Simply stated, data mining involves the discovery of new information through an identification and understanding of trends, patterns, and variable correlation.

Current attempts to find information buried deep within a data warehouse or data mart generally fall into two categories. The first is termed "drill-down" (or top down) analysis and the second involves the use of client-based "pattern discovery" tools, which often operate independent of a database.

Drill-down data mining allows users to get answers from the general questions (queries) posed and then drill down into the underlying data to extract more detail. Recently, many data mining vendors extended drill-down products to provide additional statistical functionality to enhance the analysis capabilities against relational data. Fundamentally, this approach allows users to test hypotheses concerning data rather than providing a mechanism that automatically uncovers patterns in data. Client-based pattern discovery tools, on the other hand, automatically detect patterns in data, assuming the data is in the proper format. These tools generally run on a workstation client connected to a database server. After the pattern discovery process the patterns are presented to the user in a graphical format.

ASP Subscription

The club industry has always involved outside data processing agencies for some of its most basic services (e.g. payroll, reservations, communications, etc.). The evolution from service bureau to outsourcing to application service provider really moves the technology full circle.

In general, an application service provider develops software and rents it to an end user. Application service providers are third-party agencies that manage and distribute Internet-based software services and solutions to clients from a central data center. ASPs enable companies to outsource some or all of their information technology needs.

An application service provider is an entity designed to sell and distribute software and software services to disparate computing users. An ASP can dramatically reduce the costs of such software and software services. The concept of an ASP is analogous to many other conveniences that we come in regular contact with, including telephone systems, airline companies, and business rentals. Instead of building and supporting a complex communication system, a user merely buys an affordable telephone and then purchases phone units (access and cost per minute charges).

Many popular software applications are becoming available through ASP sponsorship. The objective of an ASP is to enable club management to focus on member service, not technology infrastructure. The most popular ASP applications to date are workforce training, customer relationship management, accounting and purchasing functions, financial packages, and human resources software.

Conclusion

Technology can provide a club with a competitive advantage through product differentiation, unique service, cost reduction, and informed market segmentation. In addition, productivity may be improved through gains in both data processing and workflow processing procedures.

The club industry rankings among near-term and long-term were surprisingly stable. The club industry focus on wireless applications, proprietary member information, and interest in advancement of customized experiences (member relationship management) appear to be constant themes. Overall, the expert panelists provide an interesting movement of important IT events across the club industry landscape from 2007 to 2027.

A Delphi study is premised on expectations, which are personal intervening variables that mediate between changes in the environment (stimuli) and a group's responses to these changes (behavior or action). They are a class of attitudes that point to the future and reflect the degree of probability of an event happening.

While the projections found in this study may not be perfect, the considered opinions of experts in the club industry are probably the clearest crystal of the future of club information technology we can expect to achieve.

Michael L. Kasavana, Ph.D., CHTP, NAMA 

Professor in Hospitality Business, The School of Hospitality Business, Michigan State University