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White Lodging Revamps Budgeting Process with Clarity

  • July 01 2004, 1:00am EDT

REVIEWER: Carolyn Cochran, vice president of accounting for White Lodging Services Corp.

BACKGROUND: White Lodging Services Corp, established in 1985, is a fully integrated hotel ownership, development and operating company and a recognized leader that has defined and cultivated the ability to achieve consistent, sustainable growth among mid- to large-scale hotels across the country. White Lodging manages 87 hotel locations and employs 5,000 people.

PLATFORMS: Windows 2000, Microsoft SQL Server 2000.

PROBLEM SOLVED: White Lodging Services Corp. has a history of sustainable, profitable expansion. We retain a loyal and growing customer base - and that has created an almost enviable problem. We were getting too large to control our budget process efficiently and needed the ability to control the process centrally. The budgeting process we previously implemented was an awkward system of e-mailing Excel worksheets back and forth. Keeping track of budget versions and approved budget changes became very difficult. Regional and corporate budget consolidations were also extremely difficult because multiple files had to be linked together. We needed a solution that was easy to use, low-cost and flexible. The solution also had to work well with White Lodging's established IT infrastructure.

PRODUCT FUNCTIONALITY: We use Clarity Performance Management (CPM) to forecast our business based on budgeted trends and have plans to use it for cash flow forecasting. We use a report called flow-through, which is very important for monitoring how well hotels are bringing revenue changes to the bottom line. Flow-through is essentially a flexible budget. We take our budgeted factors and apply them to actual sales. The resulting flexible budget is compared to actual results, and the favorable or unfavorable variance is "flow-through." Our flow-through calculations have been modeled into CPM and are now turned over within one day of period-end completion. This is a process that previously would have taken two weeks. CPM has also improved communication by transferring spreadsheet data directly via the Web rather than indirectly via e-mail. All our general managers and regional vice presidents are now using this information to measure performance and to see what line items are out of control.

STRENGTHS: The main strength of Clarity Systems CPM solution is the power it gives our organization to revamp our budgeting process in order to cut our budget cycle time and draw more value from the process. CPM has allowed us to make information more accessible for decision making. We are now able to move our organization toward one central repository for financial information - previously, everyone had to pull numbers from multiple information sources.

WEAKNESSES: End-user success can be dependent on the age of computer hardware, browser version and operating systems in use. The template and report design must consider who will be running the report because accessible bandwidth is also a key factor.

SELECTION CRITERIA: We did look at other solutions, but CPM allowed us to leverage our Essbase technology to the fullest. Others said they could do the same thing, but no other solution was able to demonstrate it. CPM easily showed that it could. CPM also met the easy-to-use stipulation, even in a complex environment.

DELIVERABLES: Monitoring daily occupancies and rates is critical in our industry. Through the use of daily cubes, we have designed daily sales recaps and occupancy by day of week reports that can be run individually or consolidated by brand, cluster, region or entire company. This is a powerful tool for revenue managers, quickly giving them the ability to monitor trends by day of week, region and cluster. Because the Clarity application provides the ability to create a report by accessing multiple cubes, we have been able to combine budget comparison information onto these reports. We have also built labor reports, business forecasts, five-year comparisons of key statistics, color-coded financial recaps and ranked performance reports. We continue to add reports each day. By using the application and the Essbase technology, we feel we can streamline our budgeting process even more and reengineer our procedures and timeline for the 2005 process.

VENDOR SUPPORT: We have been very happy with support. When I have a problem that I can't resolve, I can e-mail Clarity and get it resolved right away. That means we can support the CPM system mostly from within the accounting department without involving our IT support.

DOCUMENTATION: Clarity Systems documentation complemented the great implementation support we have received. It is clear and easy to understand.

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