Starwood's Mainframe Is Ready To Check Out

Hotelier embarks on 7-year, $100 million deal with HP to upgrade reservation system
Starwood Hotels & Resorts Worldwidefor nearly four years 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 can be called by the newer, more nimble applications around it. Even though the gateway approach worked, it also has translated into higher computing costs, sluggish performance, and a potential point of failure. And, says executive VP and chief technology officer Tom Conophy, recruiting Cobol specialists has become particularly tough.

The deal could ax up to $20 million a year from operating costs, says executive VP and chief technology officer Tom Conophy. Photo by Bob Stefko

The deal could ax up to $20 million a year from operating costs, Conophy says.

Photo by Bob Stefko
Those problems should soon be a thing of the past, as the company embarks on a seven-year, $100 million outsourcing deal with Hewlett-Packard--revealed last week--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, coming after 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," Conophy says.

The contract with HP has two parts: a managed-service component that calls for HP to manage Starwood's servers and run two of its data centers, in Houston and Braintree, Mass.; and a professional-services agreement under which HP staff will serve as an extension of Starwood's IT department, working on development of the central reservations system and other applications.

The arrangement should save Starwood $15 million to $20 million a year in operating costs alone, more than enough to pay for the entire contract, Conophy says. And that doesn't factor in what's 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.

Having a full-blown services-oriented architecture in place will help Starwood as it looks to expand on its successful Sheraton, W, and Westin brands, Forrester Research analyst Henry Harteveldt says. 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 amenities, like the Heavenly Bed and the überhip W Hotels."