Business Studies Assignment on Journal of Information Technology Case and Application

Journal of Information Technology Case and Application
Research
ISSN: 1522-8053 (Print) 2333-6897 (Online) Journal homepage: https://www.tandfonline.com/loi/utca20
Hilton Hotels Corporation Self-Service Technology
Charla Griffy-Brown (Associate Professor), Mark W.S. Chun (Associate
Professor) & Robert Machen
To cite this article: Charla Griffy-Brown (Associate Professor), Mark W.S. Chun (Associate
Professor) & Robert Machen (2008) Hilton Hotels Corporation Self-Service Technology,
Journal of Information Technology Case and Application Research, 10:2, 37-57, DOI:
10.1080/15228053.2008.10856135
To link to this article: https://doi.org/10.1080/15228053.2008.10856135
Published online: 12 Sep 2014.
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Hilton Hotels Corporation Self-Service Technology
Hilton Hotels Corporation
Self-Service Technology
Charla Griffy-Brown
Associate Professor
The Graziadio School of Business & Management
Pepperdine University, Los Ange~es, CA, USA
Charla. BrownCQpe~~erdine. edu
Mark W.S. Chun
Assistant Professor
The Graziadio School of Business & Management
Pepperdine University, Los Angeles, CA, USA
Mark. Chun@Reaoerdine. edu
Robert Machen
Vice President of Corporate and Brand Solutions
Hilton Hotels Corporation, Beverly Hills, CA, USA
ABSTRACT
The main inflection point of this case is that the students mustjump into the “shoes” of the VP for
Customer-Facing Technology, Bill, and decide whether or not to again roll-out a technology that
was a complete failure when it was initially rolled-out in 1997. Importantly, this technology is
customer-facing which means that a failure engenders even more risks because it could result in
lost customers. Not only is there a chance of another failure, if previous mistakes aren’t
corrected, but there is still the issue of timing. While the customer-base might be ready to adopt
this technology, this roll-out could risk obsolescence given the rise of web-based self-service.
This case uses the experiences of the Hilton Hotels Corporation to complement and extend the
current understanding of technology implementation particularly in the customer-facing realm.
KEYWORDS: self-service technology; technology failure; technology adoption, hospitality
industry; customer facing technology; Hotels; IT and convenience; information systems;
information technology.
JITCAR, Volume 10, Number 2
Hilton Hotels Corporation Self-Service Technology
~ric* sighed and rolled his eyes as he walked into the hotel dragging his carry-on behind
him. There was a line at the check-in desk. It was midnight in New York and all he
wanted to do was get to his hotel room and get to bed so he could$nish preparations
early tomorrow morning for his 9 o’clock meeting. He hadjust arrived from Europe and
was on his way to back home to Los Angeles. As he slowed down to stop behind the two
people ahead of him at the front desk, his impatience was visible. A hotel staff member
suggested that Eric might want to try using a check-in kiosk they were testing near the
front desk instead of waiting in line.
Bill, the VP of Customer Facing Technology for Hilton, anxiously watched the
transaction. Hilton had invested a lot of money on self-service kiosks in the 90’s which
were a bitter failure. He now had to decide whether or not to try again and roll-out
kiosks across all Hilton properties.
To Bill, Vice President of Customer Facing Technology for Hilton Hotels Corporation, the
decision of the traveler captured in the scenario above was of more than passing interest. Hilton
Hotels had invested a considerable sum of money in self-service kiosks in its initial foray into the
technology in 1997. The company was now again investing in the technology. This had been
done to improve customer satisfaction, and thereby guest loyalty, as part of Hilton’s ongoing
efforts to enhance its long-term competitiveness in the hospitality business. Bill needed no
reminder that the initial self-service strategy that had been developed and implemented previously
by Bill’s predecessor had been a complete failure. Given the known “fallout” that often accrued
from technological innovations that dissatisfied guests in service businesses such as the hotel
industry, neither Hilton Hotels nor Bill’s own standing within the organization could afford a
repeat of the 1997 experience.
It was envisioned that this new technology would provide customers with choice, convenience
and control. Guests would get to chose from both a high touch offering (the traditional guest
check-in) and a high tech option that will provide a more efficient check-in. They would also
have the convenience of not having to wait in lines. Furthermore, checking in using self-service
kiosks allowed customers to check-in “on their own terms.” Finally, the guests would be able to
drive the process and select among options that were important to them.
HILTON HOTELS: PROVIDING HOSPITALITY GLOBALLY IN THE
INFORMATION AGE
Hilton Hotel Corporation was one of the leading global hospitality companies. As of April 2007,
there were 2,645 hotels and 485,000 rooms employing 105,000 people in more than 80 countries.
The company owned, managed, or franchised a portfolio of brands including Hilton@, Conrad@,
Doubletree@, Embassy Suiteso, Hampton Inn@, Hampton Inn & Suites@, Hilton Garden Inn@,
Hilton Grand Vacations@, Homewood Suites@ and the Waldorf Astoria Collection@. It was
founded by Conrad Hilton in Cisco, Texas and was headquartered in Beverly Hills, California.
* All names have been replaced with a pseudonyms
JITCAR, Volume 10, Number 2 3 8
Hilton Hotels Corporation Self-Service Technology
The original company was founded by Conrad Hilton in 1919. It separated its international
operations into a separately traded company on December 1, 1964. This company was known as
Hilton International Corporation. In 1967, the Hilton International Corporation was acquired by
Trans World Corporation, the holding company for Trans World Airlines. In 1968 it was sold to
UAL Corporation, the holding company for United Airlines. UAL Corporation renamed itself
Allegis Corporation and attempted to develop itself as a full service travel company which
included Westin Hotels and Hertz rental cars in addition to Hilton and United Airlines. The
company again renamed itself UAL Corporation in 1987 when it sold Hilton International to the
Ladbroke Group, a British leisure and gambling company. In May of 1999 this group became
known as the Hilton Group.
As a result of this activity, there were two separate and fully independent companies operating
hotels under the Hilton name. Those Hilton Hotels outside the US were Hilton International
hotels. The hotels run by the Hilton International in the US were called Vista International
Hotels. Furthermore, the hotels run by the American arm of Hilton outside the US were named
Conrad Hotels. The Vista chain was phased out and the Conrad was restyled as one of the luxury
brands of Hilton along with the Waldorf-Astoria Collection. To minimize the confusion, the
American and British Hilton companies had a joint marketing agreement under which they share
the same logos, promote each other’s brands and maintained joint reservation systems.
In 2006, Hilton Hotels Corporation re-acquired Hilton International along with its Conrad Hotels,
Scandic Hotels and Living Well Health Clubs affiliates from the British-based Hilton Group. At
this time, Hilton Hotels Corporation became the world’s fifth largest hotel operator in terms of
the number of rooms provided.
Since 1967, Hilton Hotels Corporation had worked hard to establish itself as a leader in
innovative technology in the hospitality industry. This had been a struggle in an industry not
widely known for advanced technology and where quality of service to a large extent determines
loyalty. Hilton was the only hotel company that employed a single technology platform across all
brands by sharing guest information between the front desk, reservations, and the Hilton
HHonorsB program.
This platform was called Hilton’s Integrated Property Management System. This system’s total
integration meant that if you checked into the Hilton New York, having reserved a non-smoking
room, and found yourself in a smoking room, the front desk personnel were empowered to not
only correct the problem, but do something extra for you such as giving you free vouchers for
breakfast. In addition, the next time you checked into a Hilton property worldwide, the previous
mistake would be noted in the system and the front desk personnel were not only supposed to
double-check your room and apologize again, but should also offer you something extra. They
found that mistakes were opportunities to not only learn but also enhance customer loyalty. In
fact, they found that in cases where a mistake had been made with a customer’s reservation and
then the mistake was corrected beyond the customer’s expectation, the customer loyalty rating
was higher than if no mistake had been made at all. The integrated information system enabled
the company to enhance customer loyalty, something which was both a critical metric for the
JITCAR, Volume 10, Number 2 3 9
Hilton Hotels Corporation Self-Service Technology
success of this technology implementation and for Hilton’s long-term competitiveness in the
marketplace.
The company was now considering the opportunity to directly connect to customers through selfservice kiosks. Hilton hoped its self-service kiosks would further generate value for customers
and therefore increase customer loyalty. The Hilton self-service kiosk initiative was put forward
to provide guests with more choices and flexibility through effective use of technology. They
had achieved a dramatic increase in guest recognition and loyalty scores within the previous year
across all brands with other self-service technologies such as automatic check-out using the
television screen and online access to their Hilton HHonorsB loyalty programs. The challenge
was maintaining leadership in a technology sawy competitive marketplace.
SELF-SERVICE TECHNOLOGIES AT HILTON
Over the previous years, self-service technology, as well as other technologies, had become an
emerging trend in organizations, particularly in the travel industry. As the result of an uncertain
economy and increased competition, organizations were constantly looking for innovative ideas
to increase customer satisfaction. Hilton was no different in his regard and wanted to hold the
advantage over their competitors because of their extensive use of technology. The following are
examples of the technology-enabled self-services that executives wanted to employ in addition to,
or possibly instead of, the kiosks.
Web-based check-in would enable Gold and Diamond Hilton HHonorsB members with
password-protected online accounts to check into their hotel rooms before arrival regardless of
how they made their reservation. Guests would simply access their reservation via one of the
brand websites, select a room with features that best met their needs, and print the confirmation.
Since guest information would be stored within the online personal account, the hotel would not
need to collect the same information at check-in. Once the guest checked in remotely via the
web, the hotel would be notified electronically of the pending arrival. The hotel front desk would
then complete all pre-arrival and check-in processes so that the guest’s key card and registration
packet were ready and waiting for the guest’s arrival. Upon arrival at the hotel, guests would
exchange the check-in receipt for their prepared room key and welcome packet, which would be
waiting for them at the hotel front desk.
Electronic Folio Service would ease travel management and expense reporting and would allow
guests to access, view and print hotel folios for an unlimited number of stays at the past five
hotels visited across all Hilton brands. This service would be made possible through an online
feature provided by the company’s OnQ technology. At program launch, guests would be able to
access three months of folio history, which would then be expanded to a longer period of time
later that year. Although Hilton provided electronic folios in the past to groups and corporate
clients with negotiated rates, The Hilton brand would be the first multi-brand company within the
hotel industry to make E-Folio available to individual business travelers. This information could
be aggregated within the Integrated Property Management system and would enable Hilton to
utilize its information systems to reach deeper within each of its portfolio of business systems and
across the portfolio of the numerous business offerings and products to understand and relate to
customers better.
JITCAR, Volume 10, Number 2 40
Hilton Hotels Corporation Self-Service Technology
OnQ Technology would improve guest recognition at check-in and provide more enhanced levels
of service based on real-time access to guest preferences, information about Hilton HHonorsO,
and past and future guest stays across all brands. Once a guest created a password-protected
account, front desk team members could recognize him or her at check-in and provide more
personalized, enhanced service, including:
Welcoming a guest back when he or she has typically stayed at another of the hotels in
The Hilton portfolio and is staying for the first-time at one of the sister brands.
Delivering a guest’s top four guest preferences, including smoking or non-smoking room,
type of bed (king or double/double), floor level, and room location relative to the
elevator, among other preferences.
Accessing real-time information about an HHonorsO member’s reward status.
Making requested adjustments to a guest’s personal profile.
Changing a future reservation from the hotel in which a guest currently is staying.
On one hand kiosks could provide guests with more choices, convenience and control and they
would automate clerical front desk functions enhancing productivity. On the other hand, the
option of once again introducing kiosks was expensive and risked being obsolete with web-based
check-in or possibly other mobile technology advances such as using cell phones. The decision
to roll-out self-service kiosks again also had to take into consideration the current status of selfservice technology and the previous failure.
EVOLUTION OF SELF-SERVICE TECHNOLOGY
The critical challenge in a service-based industry was that customers did not like lines. Airlines,
banks and even grocery stores were changing customer expectations with respect to waiting in
lines. Customers expected convenience and choice. In the beginning, self-service was connected
with fast-food and then gradually moved to gasoline and other applications where price and
service were trade-offs. As technology became more pervasive and the value equation changed,
there were ATMs. At this juncture, it wasn’t that people chose self-service because it was lower
quality or cheaper but because it was more convenient. As customers became more accustomed
to the convenience offered by self-service, the perception changed so that self-service was seen as
value-added, and in some instances as providing even greater service.
The Internet played a role in the transformation of this value equation as consumers became more
and more accustomed to a variety of choices, mass customization, and immediate service. The
travel industry leveraged Internet technology by enabling customers to use self-service from
home to book airline tickets and make hotel reservations.
Eventually the airlines, besieged by long security lines and rising costs, embraced kiosks at
airports. At least 25 percent of domestic fliers used kiosks instead of desk clerks. The attraction
for airlines was obvious. Besides slicing wait times, the kiosks cost about 16 cents a passenger
whereas the ticket counter averaged $3.68 a passenger. The mathematics in the hotel industry
was similar. The cost structure for web-based check-in worked out even lower than kiosks. In
fact, if the same operational infrastructure was leveraged, such as scanning self check-in boarding
JITCAR, Volume 10, Number 2 41
Hilton Hotels Corporation Self-Service Technology
passes at the airport using existing hardware, it is estimated that the costs could be as low as 12
cents per guest.
Some surveys showed many people actually preferred impersonal machines which made them
feel in control, according to Stephen P. Boddon, an executive in the travel department at IBM.
“We asked people about their traveling experience, and they said getting to the counter was like
going in front of the school principal,” he said.
Henry H. Harridale, an analyst with Forrester, claimed that consumers, who probably booked the
flight online in the first place, had been conditioned to accept machines over people. “People
feel comfortable interacting with an ATM. Why wouldn’t they like checking in using a machine?”
Harridale said.
However, there were notable disasters. In one case of a major financial-services provider that
spent more than $100 million rolling out self-service by simply redirecting customers from the
phone to the Web. The web pages were confusing and customers resorted to calling the company
just the same as before -only now to complain about the company’s service. The result was $100
million worth of digital infrastructure that was never used. In this and other cases, getting selfservice wrong not only dissolved potential savings, but lost customers. In a study of self-service
applications, Jupiter Research noted that 91% of high-value customers surveyed were turned off a
bad self-service experience and never returned to the company. Gap Inc’s use of consumer
kiosks failed because shoppers were left alone too long and many preferred talking with sales
people. They also completely withdrew the kiosks from the stores.
Nonetheless kiosks were certainly “popping up” in more places. Supermarkets and hardware
stores were already rolling out automated check-out counters where customers scanned their own
goods. Even health care providers were experimenting with using self-service kiosks for checkin, registration for appointments and updating insurance information. IBM, which developed the
kiosks for Hilton, was working on systems for other retailers as well. However, the complexity
of human decision-making and service expectations imposed limits on the evolution of selfservice kiosks. The growing use of mobile devices and the web also presented the possibility that
kiosks might suffer from technological obsolescence.
HILTON’S INITIAL FORAY INTO SELF-SERVICE TECHNOLOGY
Exhibit 1 shows the first kiosk ever rolled out by Hilton in 1997. Guest usage during the project
was dismal. Key issues included, poor promotion, new technology coupled with an untrained
customer, product reliability, & location. In addition, there was a very high failure rate for those
guests who attempted to use the technology. Key issues included: as high as 25% failure rate of
the key encoder, an inability to locate the reservation, and general kiosk operational failures (the
kiosk would run out of keys & paper). Sometimes the kiosk could not find the customer’s
reservation because a different credit card was used, or the date for the reservation was incorrect
because the customer was early. Kiosks would terminate the session and inform guests to go to
the front desk if a room was not available. The result was frustrated guests who had to then go
wait in line after trying to use the machine.
JITCAR, Volume 10, Number 2 42
Hilton Hotels Corporation Self-Service Technology
In some cases the kiosk just did not “know” that the room was already cleaned. This meant that
customers were told by the kiosk to wait for rooms that were in fact ready to be occupied.
Needless to say, guests were extremely frustrated. Finally, the kiosks were very large and
obtrusive. As a result, general managers would place them “out of the way” so as to not ruin
lobby aesthetics. This made the kiosks difficult to find.
Not only were customers averse to using the technology in 1997, but employees, concerned about
labor issues, did not properly “feed and care” for the machines according to managers. This
resulted in some of the problems in terms of how well they worked.
Finally, the original designers had been excited about the possibilities the technology held in that
it could provide easy Internet access for finding places in the area to eat or local entertainment.
However, this created lines at the kiosks.
Figure 1 highlights critical success factors outlined prior to the potential new rollout of the kiosks
based on work with IBM Consulting Services. With these identified success factors, a project
plan was developed in which Hilton would partner with IBM to conduct a pilot test in two hotels
(Hilton New York and Hilton Chicago) focusing on basic check-inlcheck-out functionality. The
primary goal was to ensure a high success rate for all kiosk users. Significant testing also
involved customer-facing staff using the systems behind the counter to check customers in so that
system viability could be tested and holes identified in the back office before customers even
tried out the new technology.
This procedure identified pitfalls in the process, including the slow input of room ‘readiness’
information from the cleaning staff because there was no electronic way for them to do so room
by room. Therefore, the underlying architecture and process was changed so that the staff would
clean the room and then input the room number, followed by a key, through the phone system
which then inputted the information directly into the hotel information system. This way the
kiosks had real-time information. Bill also developed operational plans to ensure that kiosks
were successful, including team member support, guest promotions, technology implementation,
and training. However, the risk of failure and obsolescence was still very real, and Bill was
unsure of whether or not he should proceed. He hoped that some initial tests would help him
decide.
JITCAR, Volume 10, Number 2
Hilton Hotels Corporation Self-Service Technology
Figure 1. Critical Success Factors
Know your customer – focus transactions on targeted audience and location
Simplify the user interface – make the interface simple to use and easy to
understand – in particular, spend time on the identification process
Make self service compelling – design with the goals that the process will be
better than today and that customers can use self service every time they travel
Focus the functionality – avoid using “jack of all trades” devices
Know your infrastructure – understand infrastructure constraints and
guidelines
Location, location, location – position self service to best accommodate a
customer’s natural flow and optimized transaction speed – and ensure the
minimization of performance issues
Align with business model – avoid using self service for functions that your
business model does not support
Think adoption – assist the customer in “seeing and using” self service
through agents, signage, incentives.. . Manage operational expectations – do not expect self service to work for
every customer all of the time
Leverage staff – ensure that staff become ambassadors for self service and
consider using a self service concierge in the early days and at peak
Aggressive, controlled implementation – incorporate feedback along the way
Utilize the assets – self service is mission critical – keep it up and running
Ensure consistency – deploy the application consistently across other
channels .
INITIAL TESTING
In September 2003, installed and tested guest self-service kiosks at two of its largest wholly
owned properties. Bill was responsible for these tests, and if he decided to move forward, he
would be responsible for rolling the kiosks out across Hilton properties worldwide. Hilton had
partnered with IBM, one of the world leader’s in travel check-in kiosk systems. A part of the
IBM Global Services Division, IBM’s Electronic Access team, provided worldwide assistance for
all of IBM’s self-service application software, middleware and kiosk hardware development. Bill
decided to test self-service kiosks at two of its larger hotels in the US: the 2,035-room Hilton
New York and 1,544-room Hilton Chicago.
Bill demonstrated the process to some employees. “Business travelers want things quick and
easy,” said Bill, as he demonstrated the technology for a reluctant front-office staff. “It’s a linebusting application,” he said as he slid a credit card into the thin machine to check into the hotel.
In seconds, the machine spat out a room key. The process worked for him, but it was clear Hilton
was still “crossing the chasm” between early majority and late majority adopters even amongst
employees. In addition, it was not clear that this solution would not be an investment which
JITCAR, Volume 10, Number 2 44
Hilton Hotels Corporation Self-Service Technology
needed to be made given the possibility of leveraging existing infrastructure and using web-based
check-in via the Internet.
Bill made it clear that the kiosks were installed to improve customer service, not replace
employees. However, he added that, if they were successful, employees might be “re-allocated.”
If the three-to-six-month test was successful, Bill would have to decide whether or not to continue
the roll-out to the 2,400-hotel chain. If they were going to move forward, he would have to
install kiosks in up to 25 more hotels in the next year.
Figure 2 highlights the benefits and Figure 3 highlights the challenges for the introduction of the
Self Service Kiosks in an industry where one experience that doesn’t meet expectations could
mean the loss of a customer.
Figure 2. Hilton’s Perceived Benefits for Self Service Kiosks
Customer Benefits
Choice – Guests get to chose from both a high touch offering (the traditional guest
check-in) gncJ a high tech option that will provide a more efficient check-in.
Convenience – It’s often easier and more convenient to check in using selfservice technology. “On My Terms”
Control – I get to drive the process and select among options that are important to
me. “I’m in control.. .no surprises.”
HHC Benefits
Guest Lovalty – Customer benefits will continue to improve customer loyalty.
Competitive Positioning – Technology driven differentiators will continue to
cast Hilton as the technology leader.
opera tin^ Efficiencies – Automation of clerical front desk functions should
enhance productivity.
Guest Acceptance – Guest usage during the project was dismal. Key issues
included, poor promotion, new technologyluntrained customer, product reliability,
& location.
Reliability – Very high failure rate for those guests who attempted to use the
technology. Key issues included: as high as 25% failure rate of key encoder,
inability to locate the reservation, and general kiosk operational failures (kiosk
would run out of keys & paper)
Room Availability – Kiosks would terminate the session and inform guests to go
to the front desk if a room was not available. Created guest frustration.
Size and Placement – Kiosks were very large and obtrusive. As a result, general
managers would place them “out of the way” so as to not ruin lobby aesthetics.
Hilton Hotels Corporation Self-Service Technology
Figure 3: Hilton’s Perceived Challenges for Self Sewice Kiosks
Guest Acceptance – Guest usage during the project was dismal. Key issues
included poor promotion, new technologyluntrained customer, product reliability,
& location.
Reliabilitv – Very high failure rate for those guests who attempted to use the
technology. Key issues included: as high as 25% failure rate of key encoder,
inability to locate the reservation, and general kiosk operational failures (kiosk
would run out of keys & paper)
Room Availabilitv – Kiosks would terminate the session and inform guests to go
to the front desk if a room was not available. Created guest frustration.
Size and Placement – Kiosks were very large and obtrusive. As a result, general
managers would place them “out of the way” so as to not ruin lobby aesthetics. –
being used by 10-12 percent of guests on average within the hotels that offered the service.
Exhibit 2 shows the pilot results for the initial tests. Exhibits 3 and 4 show the new kiosks and
an example of the user interface for the kiosks rolled-out during testing.
As Bill sat back in his chair, he realized that the window for making this decision would not be
open long. Other technological possibilities for self-service were quickly coming online. In
order to still have an impact he had only a short-time to make this decision and justify his case to
the Management Team.
JITCAR, Volume 10, Number 2
Hilton Hotels Corporation Self-Service Technology
Exhibit 1. Hilton’s First Kiosk
Hilton Hotels Corporation Self-Service Technology
Exhibit 2. Pilot Results
Proiect Timeline
Collaborative Design Process with IBM – 2 months
Development, Testing & Implementation – 3 months
Total Time to Market – 5 MONTHS!
Deployment
New York, Chicago – 14 Kiosks
All kiosks continue to operate reliably
Guest Usape
10% – 12% of daily Check-In’s (Chicago is averaging 15%)
8% – 10% of daily Checkouts
Guest Satisfaction – Extremely Positive (6.4 avg. on a 7 point
scale)
Guest Reaction – They are emotional about it. They “love” it. –
JITCAR, Volume 10, Number 2
Hilton Hotels Corporation Self-Service Technolc
Exhibit 3. Hilton’s Kiosk 2004
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Hilton Hotels Corporation Self-Service Technology
Exhibit 4. Example of Kiosk Interface
Welcome Patricia Smithson to the Hilton New York.
Please review your reservation and select Conf~nue to proceed with your check-in.
Room Features If available, high speed internet, high floor near elevator
Your room has been upgraded
Travel Partner Air Canada 12344556677
Payment Card Mastercard ‘*’*’***** 4545
JITCAR, Volume 10, Number 2 50
Hilton Hotels Corporation Self-Service Technology
Hilton Hotels Corporation Self-Service Technology
Research Note
Charla Griffy-Brown
Associate Professor
The Graziadio School of Business & Management,
Pepperdine University, Los Ange~es, CAI USA
Mark W.S. Chun
Assistant Professor
The Graziadio School of Business & Management,
Pepperdine University, Los Ange~es, CA, USA
Robert Machen
Vice President of Corporate and Brand Solutions
Hilton Hotels Corporation, Beverly Hills, CA, USA
INTRODUCTION
There has been a growing research interest in understanding how firms use information systems
(IS) to improve their operations, processes and services and create competitive advantage(eg.,
Montealegre, 2002; Montealegre, 1999). Firms are constantly facing the challenge of adopting
and diffusing information systems in order to establish a stable, yet nimble and effective
environment for business operations as well as capturing strategic advantage. OAentimes, we
find that managers need to effectively prioritize the use of limited resources and to ensure its
proper utilization, particularly in the services sector (Fitzimmons and Fitzimmons, 2004).
Significant research studies have been conducted on the constantly emerging phenomenon of IS
implementation, services theory, and practice (e.g., Collier, 1983; Fitzimmons & Fitzimmons,
2004; Wemmerlov, 1990). These studies have demonstrated that there is a great opportunity for
firms to learn from past failures. Furthermore, firms that look closely at failures are better able to
evaluate new opportunities to implement IS to improve operations and services. However, there
exists a limited body of literature that seeks to better understand how firms should carefully
manage the adoption and diffusion of innovations and IS incorporating lessons from previous
failures.
The general body of diffusion of innovations research literature has focused on independently
understanding the systems development lifecycle and how to best approach IS adoptions and
implementations (eg., Moore, 1999). The main contribution of this case is that it leverages the
diffusion of innovations theory to provide a better understanding of the benefits and challenges
that firms face when adopting and diffusing innovations. In particular, we use the diffusions of
innovations theory to discuss the benefits and challenges that Hilton faced as they implemented
its self-service technology within its business operations. This case is unique in that it
specifically focuses on services and the customer facing technology that provides these services.
Finally, of relevance to this case is the “Customer Delight” literature that suggests that there is an
important difference between customer satisfaction and customer delight (Berman, 2005). More
JITCAR, Volume 10, Number 2 5 1
Hilton Hotels Corporation Self-Service Technology
specifically, customer satisfaction is a baseline in which customer expectations are met or
exceeded. Customer Delight occurs when customers experience a mixture of joy and surprise
(Berman, 2005). In this regard Paul Hemp (2002) finds that meeting customer expectations at
high end hotels is not enough but rather customer needs have to be anticipated and that great
customer service in this industry is based on dynamic principles rather than a rigid formula
(Hemp, 2002). This poses significant challenges for using technology to achieve high end
service. Furthermore, the very human concepts of “empathy” and “selflessness” must be
powerfully embedded in employees in order to achieve what Hemp labels “extreme” customer
service. These issues must be considered when implementing technology, particularly selfservice technology at a high end hotel.
DIFFUSION OF INNOVATIONS THEORY
The diffusion of innovations theory argues that for most members of a social system, the
innovation-decision depends heavily on the innovation-decisions of the other members of
the system. Diffusion is generally defined as the process by which an innovation is
communicated through certain channels over time, and among the members of a social
system (Rogers, 1962, 2003). Decisions are understood as neither authoritative nor
collective. Within a social system, each member is faced with hisfher own innovationdecision styles and processes. This decision process typically follows 5-steps, which
include: 1) Knowledge (a person becomes aware of an innovation and has some idea of how it
functions), 2) Persuasion (a person forms a favorable or unfavorable attitude toward the
innovation), 3) Decision (a person engages in activities which oftentimes leads to a choice to
either adopt or reject the innovation), 4) Implementation (a person puts an innovation into use),
and 5) Confirmation (a person evaluates the results of an innovation-decision already made).
Empirically, researchers have found that the successful spread of an innovation follows an Sshaped curve (Moore, 1999). After about 1 O-25% of system members adopt an innovation, there
is a relatively rapid adoption by the remaining members of the social network, followed by a
period where holdouts finally adopt. Innovation decisions are typically made through a series of
analyses where the major hurdle is uncertainty. People generally adopt innovations if they
perceive that it will enhance their productivity or utilization of firm resources. Hence, adopters
must have the perception that the innovation may yield some relative advantage to the idea it
supersedes
Rogers (1962, 2003) first proposed the diffusion of innovations theory, which was the study of
how, why, and what rate new ideas and technology spread through cultures. Early research
found that the most influential channel of influence was not from some broadcast medium, but
down an echelon of levels, from a small number of early adopters to a larger number of secondary
adopters, and from them to “tertiary adopters”, then to “quandary adopters.” His research found
that there was lateral influence within each level. In general, research has found that people were
more likely to adopt, or even consider adopting, if people they know and respected had adopted.
Imitation was the strongest influence channel.
Rogers (1962, 2003) postulated that innovations oftentimes spread through society in an s-curve,
as the early adopters select the technology first, followed by the majority, until a technology or
innovation is common. Figure 1 graphically describes the general shape of trends in the
successful spread of innovation according to Roger’s theory.
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Figure 1. General Shape of Trends in the Successful Spread of Innovation
t Sales Per Time Period t Cumulative Penetration
of Sales
I Bell Cu we
r
Time
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Time
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He argued that the speed of technology adoption is determined by two characteristics p, which is
the speed at which adoption takes off, and q, the speed at which later growth occurs. Applied to a
general technology adoption, a cheaper technology might have a higherp, for example, taking off
more quickly, while a technology that has network effects (eg., a web-blog, where the value of
the technology increases as other utilize it) may have a higher q.
Moore (1999) extended the work of Rogers (1962, 2003) and argued that there is a chasm
between the early adopters of the product (the technology enthusiasts and visionaries) and the
early majority (the pragmatists). In general, he postulated that visionaries and pragmatists have
very different expectations. His research focused on exploring the differences and to suggest
techniques for adopters to successfully cross the “chasm.” These techniques included choosing a
target market, understanding the whole product concept, positioning the product, building a
marketing strategy, choosing the most appropriate distribution channel and pricing.
Moore’s (1999) contributions to the diffusions of innovations theory was closely related to the
technology adoption lifecycle where five main segments are recognized: innovators, early
adopters, early majority, late majority and laggards. However, recent critics have argued that
Moore’s theories have only been applicable for disruptive or discontinuous innovations, citing
that the adoption of continuous innovations (that do not force a significant change of behavior by
the customer) were still best described by the original technology adoption lifecycle. Confusion
between continuous and discontinuous innovation is a leading cause of failure for high tech
products.
In our research we use the example of the Hilton Hotels Corporation to provide data and a
discussion that focuses on how IT and business managers need to be able to identify, understand,
and leverage failures in order to improve the implementation of technology and cross the chasms
of innovation diffusion. This case extends diffusion theory by bringing into the decision making
process the reality of competing technologies as well as learning from previous technology
failure. In addition, the Hilton case is one in which it is clear that the initial roll-out was a
discontinuous innovation where as the new roll-out would be a continuous innovation because
kiosks were readily being used by customers in other industries the second time around. This case
demonstrates the importance of working through the theories discussed above in terms of the
practical implementation of new technology. In this case, the customer’s perception and usability
of the technology were two key constraints to the systems’ adoption and implementation as
discussed in innovation diffusion theory. However, the reality is that these decisions are not
made in a vacuum. Not only was there a previous failure in the implementation of the selfservice kiosks at Hilton, but at the new decision point, there are competing self-service
technologies such as the Internet. We apply the diffusion of innovations theory to this selfservice technology implementation in order to discuss the implications of overcoming the chasm
between the early majority and the late majority adopters, as well as the complicating reality that
often these decisions involve making choices between competing technology options.
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THE TECHNOLOGY ACCEPTANCE MODEL
Davis (1989) TAM is a frequently cited technology adoption model in information systems
research. TAM compares Behavioral Intentions and Usage and states that behavioral intention is
an indicator of computer usage. Additionally, TAM states that Attitude directly influences
Behavioral Intentions. Attitude is defined as the individual’s attitude toward using the system.
According to Davis (1 989), several studies have found a relationship between attitude and usage.
TAM considers the impact of external factors on Attitude, and thus Behavioral Intentions, by
adding two constructs that influence the technology adoption process. The first construct,
Perceived Usefulness, is defined by Davis (1989) as the probability that using a specific
application will increase a prospective user’s job performance. The second construct, Perceived
Ease of Use, is the degree to which the system is expected to be free of effort to use.
Both Perceived Ease of Use and Perceived Usefulness influence Attitude in TAM, and thus
influence Behavioral Intention through its direct relationship with Attitude. In addition to its
influence on Behavioral Intention through Attitude, Perceived Usefulness has a direct relationship
with Behavioral Intention. TAM has satisfactorily predicted intentions and usage for individuals,
primarily in an organizational context and is a well established theory.
There is a link between the TAM theory and technology adoption and diffusion. According to
Teo and Lim (1999) if a system is easy to use, it requires less effort on the part of the users,
thereby increasing the likelihood of its adoption and diffusion. In addition, there is a body of
literature which links the determinants of user satisfaction and technology acceptance (DeLone
and McLean, 2003). In this body of literature, user satisfaction is linked to behavior-based beliefs
found in the TAM and beliefs and attitudes related to customer satisfaction. The relevant
concepts of customer satisfaction and customer delight are discussed below.
CUSTOMER DELIGHT THEORY
In addition, this case requires careful consideration of the notion of personalized, high touch
service or “Customer Delight” in the context of self-service technology. Customers at high end
hotels tend to value the experience of having their expectations exceeded and even anticipated.
Furthermore, according to Customer Delight theory (Hemp, 2002; Berman, 2005) high quality
service should be empathetic and provide a mixture of “joy” and “surprise”. Typically, selfservice technology, such as ATMs, can be viewed as an attempt to save money by commoditizing
the experience. However, in some circumstances self-service can to a certain extent be
empathetic and even anticipate the needs of the customer. These circumstances include:
1. A target market which values time and convenience as high quality service
2. The information and choices anticipate customer needs based on previous data
3. The information and services provided allow for highly personalized service based on
previous data
4. Choices of a machine or person are both equally available
5. Achieving this with self-service is a very complex and difficult task highly related to the
level of technology adoption and diffusion.
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CONCLUSION
The general body of diffusion of innovations theory states that for most members of a social
system, the innovation-decision depends heavily on the innovation-decisions of the other
members of the system. In addition, current theory holds that innovation adoption involves gaps
at various stages of the technology life-cycle. This case confirms this aspect of innovation theory
but provides insight into the reality that in business practice in the 21″ century, technology
diffusion happens amidst multiple competing technologies and that learning from past experience
will impact current and future decision making. The main contribution of this case is that it ties
together the diffusion of innovations theory and an actual IS implementation of a self-service
technology. Furthermore, it incorporates the TAM and the concepts of Customer Delight. This
case demonstrates the importance of thinking through and these theories and extending them in
light of the reality of learning from mistakes. It also provides insight into the unique process and
technical challenges associated with adopting and diffusing IS in the customer-facing realm for a
service provider.
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Davis, F. D. (1989). Perceived usefulness, Perceived ease of use, and user acceptance of information
technology. MIS Quarterly, 1 3(3), 3 19-340.
DeLone, W.H. & McLean, E.R. (2003). The DeLone and McLean model of information systems success:
A ten-year update, Journal of Management Information Systems, 19(4), 9-30.
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technology, (4thcd), New York: McGraw Hill.
Hemp, P. (2002). My week as a room-service waiter at the Ritz Harvard Business Review, June 2002.
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Conference on Information Systems, August, 1999,506-5 1 1.
Moore, G. (1999) Crossing the chasm, Marketing and selling high-tech products to mainstream customers,
New York: Harper Collins.
Rogers, E.M. (1962). D~fision of Innovations, New York: Free Press.
Rogers, E.M. (2003). Drfision of Innovations, (5Ih ed.) New York:Free Press.
Teo, T. S. H &. Lim, R. Y. C. Intrinsic and extrinsic motivation in Internet usage.. OMEGA: International
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ABOUT THE AUTHORS
Charla Griffy-Brown, Ph.D., is currently an Associate Professor of Information Systems and
holds the Denny Academic Chair (2007-2009) at Pepperdine University’s Graziadio School of
Business and Management. In 2004 she received a research award from the International
Association for the Management of Technology, which recognized her as one of the most active
and prolific researchers in the Technology Management and Innovation field. A former
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researcher at the Foundation for Advanced Studies on International Development, Tokyo, Dr.
Griffy-Brown has also served as an associate professor at the Tokyo Institute of Technology. Dr.
Griffy-Brown graduated from Harvard University, is a former Fulbright Scholar, and holds a
Ph.D. in Technology Management from Grifith University in Queensland, Australia. She has
worked for NASA at the Kennedy Space Center and served as a consultant for the United
Nation’s Global Environmental Facility and the European Commission. Dr. Griffy-Brown has
conducted research at companies such as Honda, Hilton Hotels and Pratt-Whitney
RocketdyneBoeing. Dr. Grim-Brown’s research has been funded by an SAP University
Alliance Grant and the Rothschild Research Endowment. She also has research support from the
Pepperdine VoyagerILilly Foundation as well as the Graziadio School of Business Funds for
Excellence.
Mark W.S. Chun earned a PhD in Information Systems from the University of Colorado at
Boulder. He received an MBA from the University of California, Irvine, with an emphasis on
business and strategy. He holds a Bachelor of Business Administration degree with an emphasis
in management information systems from the University of Hawaii. He has worked for
companies such as Intel Corporation, Pepsi Co. / Taco Bell, Coopers & Lybrand, and the Bank of
Hawaii. Dr. Chun’s research focuses on the use of information technology to create value and to
transform organizations. His research interests also include the integration of information systems
and the management of knowledge. Dr. Chun has conducted research at companies such as
Qwest, Honda, Hilton Hotels, Kaiser Permanente, Mattel, NASA, Pratt-Whitney Rocketdyne &
Boeing. He has also spent time in Asia conducting research on the diffusion of information
technology in less-developed (Asian) countries.
Robert Machen graduated from Harding University and is currently Vice President of Corporate
and Brand Solutions for Hilton Hotels Corporation. He has also served as Vice President of
Customer Facing Technology for Hilton Hotels and has more than 15 years of experience in
implementing information technology solutions in large corporation