Starwood Taps HP for System Development, Outsourcing Deal

The hotel chain plans a phaseout of its IBM mainframes

November 1, 2004 (Computerworld)

IT flexibility has become vital to Starwood Hotels & Resorts Worldwide Inc. And to try to make that a reality, Starwood has immersed itself in a project called Fusion that tightly couples its IT plans with business needs and includes a new reservation system that will link many of the company's hospitality services and make them more accessible online.

Starwood last week said that it has signed a seven-year, $100 million technology and outsourcing deal with Hewlett-Packard Co., which will help develop the J2EE-based reservation system and then manage it while providing a variety of other IT services to White Plains, N.Y.-based Starwood.

HP is replacing IBM as Starwood's outsourcing vendor, and the decision to build a service-oriented architecture for the new reservation system means that the hospitality company will gradually end its use of the IBM mainframes that run its existing Cobol-based applications.

Tom Conophy, Starwood's chief technology officer, said the goal is to create a system that can handle room rentals plus a range of other services, such as spa reservations for hotel guests. In addition, improved integration of back-end systems will allow for more-sophisticated credit card processing functions, he said.

Handle Future Growth

Starwood's IT team looked at IBM's ability to run Linux on the mainframe. But Conophy said the company's long-term direction of its IT architecture hinged on moving from a mainframe environment to lower-cost Unix and Linux systems that could easily increase in size to handle future business growth.

Conophy said the new system should help Starwood save $15 million to $20 million annually in IT operating costs.

As part of the project, Starwood will install HP's Itanium-based Superdome high-end systems running a mix of HP-UX and Linux. HP-UX will be used on the company's database servers, and Conophy said the Unix operating system is well designed to work with the Superdome hardware—a strength that it has over Linux. Starwood also plans to use HP's x86-based ProLiant servers.

The company, which owns Sheraton Hotels & Resorts, Westin and other hospitality chains and operates 738 hotels in 82 countries, outsourced its data center operations to IBM six years ago. IBM declined to comment about the new contract with HP, which Starwood negotiated when the deal with IBM came up for renewal.

IBM is as capable as HP is in providing technology, Conophy said. He added that the decision to switch to HP as an outsourcer was based on its willingness to be more flexible on the terms of the managed services contract than IBM would be.

Among the issues that Conophy cited was the ability to do third-party benchmarking. He said he wanted to be able to use a third-party firm to help compare Starwood's IT service-level agreements against marketplace trends over the course of the contract. HP was more willing to allow periodic benchmarking than IBM was, he said.

Stan Lepeak, an analyst at Meta Group Inc., said the use of benchmarking during an outsourcing contract could result in cost reductions for users or commitments by vendors to improve performance. And as more and more data center systems are commoditized, such benchmarking is becoming easier to do, Lepeak said.

HP will handle the following IT tasks for Starwood: OPERATE the company's core computing complex and its messaging systems. PROVIDE network management and multivendor server support services. ASSIST with application development and host Starwood's Web sites. BUILD an upgraded disaster recovery facility.