For nearly four years, Starwood Hotels & Resorts Worldwide has been converting its IT environment to a services-oriented architecture while the hotelier's core centralized reservation system remained a legacy mainframe-based application.
Gateways sitting in front of the mainframe would translate the older data for use in Web services so it could be called by the newer, more nimble applications around it. Even though the gateway approach has been effective, it also has translated into higher computing costs, sluggish performance and a potential point of failure.
Those problems should soon be a thing of the past, as the company is embarking on a seven-year, $100 million outsourcing deal with Hewlett-Packard -- announced today -- in which the central reservations application, written in COBOL, will be replaced with a more flexible set of services built on Java 2 Enterprise Edition. The move--enabled by the end of Starwood's previous outsourcing contract with IBM--will let Starwood reap the full benefits of its standards-based IT strategy in which each application generates information and business processes as services that can be called by other apps. "For us to get to full realization of our technical direction, we were going to have to, once and for all, shut down the mainframe," says executive Starwood VP and chief technology officer Tom Conophy, adding that recruiting COBOL specialists has become particularly tough.
The contract with HP has two parts--a managed service component that calls for HP to run two Starwood data centers and manage its servers; and a professional services agreement in which HP staff will serve as an extension of Starwood's IT department, working on development of the central reservations system and other applications.
Conophy says the arrangement should save Starwood as much as $20 million in operating costs alone, more than enough to pay for the entire contract. And that doesn't factor in what is expected to be a substantial improvement in the amount of transactional traffic the new reservations system will be capable of handling. The system will move to UNIX platforms, running on HP-UX and Linux. Once completed, it will be rolled out to Starwood's call centers, proprietary Web sites, and 750 hotels worldwide.
Forrester Research analyst Henry Harteveldt says having a full-blown service-oriented architecture in place will help Starwood as it looks to expand on its successful W, Sheraton and Westin brands. Adding new properties to the system, or converting existing properties to the new technology, should prove quicker and easier with the services-based approach, says Harteveldt. "It's nice to see that they're being as innovative with their IT infrastructure as they are with some of the customer-facing ammenities, like the heavenly bed and the uberhip W Hotels."